Virginia Republican Party Chair John Whitbeck joins us in studio, and we get an update on Congress and D.C.'s "Death with Dignity" bill from D.C. Del. Eleanor Holmes Norton.
During the past five years, countries around the globe have struggled to recover from severe recessions while managing their debts. The United States, Great Britain and the European Union chose austerity, slashing spending and reducing services. But recent elections in Italy and elsewhere suggest voters are tired of scrimping and want to focus on recovery. We explore the backlash against austerity around the world.
- Ryan Avent Economics Correspondent, The Economist
- Matthew O'Brien Associate Editor, The Atlantic
MR. KOJO NNAMDIWelcome back. This much is not getting lost in translation. People in countries around the world are souring on austerity. During the past several years, lawmakers in countries from the United States to Britain, to those across the euro zone, have taken on the task of taming their debts, willingly and unwillingly, while also reviving economies in crisis.
MR. KOJO NNAMDIThey've slashed spending, cut programs and reconfigured their safety nets, and in many cases did so while unemployment ballooned and while those living at the bottom of the economic food chain dove deeper and deeper into misery. Late last month, voters in Italy, which is suffering its worst recession since World War II, sent a resounding message that they're tired of austerity by voting the man and the party linked to their program out of office.
MR. KOJO NNAMDIThis hour we'll explore what lawmakers here in the U.S. can learn from the political fallout from austerity measures put in place across the globe and what it will mean if the pendulum is truly swinging back toward populism. Joining us in studio is Matthew O'Brien. Matt O'Brien is an associate editor at The Atlantic where he writes about business and economics. Thank you so much for joining us.
MR. MATTHEW O'BRIENGreat to be here.
NNAMDIJoining us from studios at The Economist is Ryan Avent. He is an economics correspondent at The Economist. Ryan, thank you for joining us.
MR. RYAN AVENTIt's good to be here, Kojo.
NNAMDIYou, too, can join this conversation. Give us a call at 800-433-8850 or send email to email@example.com. Matt, late last month an election in Italy produced a hung parliament, and voters essentially booted the party associated with their austerity program. You wrote that the Italian election made it clear that the financial crisis in Europe has officially given way to a political crisis which could trigger another financial crisis. What's your argument?
O'BRIENSo the euro zone has three problems. It has a financial problem, an economic one and a political one. So originally there was fear that the bond markets were going to melt down, that the borrowing costs for all these countries was going to become unsustainably high, and that this would force them to leave the euro zone, which would, you know, spark an enormous banking crisis.
O'BRIENAnd last year, the head of the ECB said that he would do whatever it took to prevent this from happening. And those words alone were enough to end the financial crisis or the panic in the markets. And since then, policymakers have kind of relaxed, and they've said, you know...
O'BRIEN...problem solved. But the economic crisis continues. You know, Italy, Spain, Greece, they're stuck in depressions or near depressions. Unemployment's catastrophically high, and there's really no hope in the short term for that to improve. And so that's, you know, turned into a political crisis now in Italy where you're voting in politicians who are not so credible, but they are saying that this is not working.
O'BRIENAnd that's enough to get voters to say, let's give them a chance. And if those politicians actually, you know, follow through on the threat to leave the euro or to, you know, step up a game of brinkmanship, it could get to a point where the ECB says we're not going to stop the financial panic.
NNAMDIOne of the parties that benefited from this austerity backlash -- you mentioned that some of these people are not credible. One of these parties was literally led by a former comedian. We now are familiar with the name Beppe Grillo. What does this say to you?
O'BRIENIt says that the mainstream parties aren't willing to, you know, think about ending austerity and that if there's no one credible there, you're going to get, you know, people who aren't credible who are going to step into that political void.
NNAMDIPeople who were, prior to this, perceived as being on the fringes of politics.
O'BRIENRight. You're going to have -- you know, step by step, the mainstream parties are going to be discredited. If they keep saying, let's do this thing that's failing and let's just keep doing it because that's the plan, eventually you're going to get someone who says, you know, this isn't working.
NNAMDIRyan Avent, you wrote at the beginning of the year that while you appreciate the European Central Bank's focus on ending a debt crisis, that you also think it's clear economies across the euro zone are performing terribly. What do you see when you look at the political developments in a place like Italy?
AVENTWell, I think that Matt has got the story broadly right. And essentially what we've seen is an approach that's sort of come down from the so-called core of the euro zone from German leaders, from officials of the European Commission. And that approach is that the first priority has to be reigning in deficits and getting back to sustainable -- what they see as sustainable levels of debt.
AVENTAnd, unfortunately, when you try to do that sort of thing in the aftermath of a broad economic and financial crisis, it tends to backfire. It tends to generate high unemployment. And it tends not to contribute much to actual improvements in budgets because you're not getting as much tax revenue. You have a lot of people claiming things like unemployment benefits.
AVENTAnd so I think that what we're observing now is the response -- the political response to the commitment to this plan that is sort of fundamentally not working. It's really -- it's not achieving its desired budget goals. It's not achieving this sort of economic improvement you'd like to see. And so voters are going to the polls and trying to find someone who can offer a credible response.
NNAMDIIt's important to note that the austerity program underway in Italy is essentially something that was imposed on it by the European Central Bank. Is it fair to say at this point that voters in places like Italy are showing that they're more afraid of living in what seems to be a never-ending depression than they are of making their euro partners angry or even remaining part of the euro zone at all? I'll start with you, Ryan.
AVENTWell, I think things are moving in that direction. I think that broadly people are still committed to the idea of the euro zone. And they're also very afraid of the consequences that might result if a country were to drop out of it. I mean, that would be, as Matt said, something that might provoke a global banking crisis. So I don't think yet we're observing sort of a broad souring on the idea of the euro zone.
AVENTBut I think that these elections are warning shots to leaders that have been pushing the current approach to say that if we don't pay more attention to the crises of unemployment, you know, if we don't recognize what these people are upset about, then these -- then eventually that sort of, you know, broad dissatisfaction with the euro might translate into pressure for a breakup.
NNAMDI800-433-8850 is the number to call. Do you think countries around the world, including the United States, are paying too much attention to their debts and not enough attention to reviving their economies and addressing unemployment? What do you think? 800-433-8850. Send us an email to firstname.lastname@example.org, or send us a tweet, @kojoshow. Matt O'Brien, why do countries like Germany remain so insistent that controlling debt in countries like Italy, Greece and Spain is essential for the good of everyone else sharing their currency?
O'BRIENThere are a couple things at play here. I mean, if -- first they're worried about the problem of moral hazard. They don't want the ECB to guarantee low borrowing costs for these countries if those countries are then going to, you know, act irresponsibly. And so there is, you know, a logic there that makes sense. Unfortunately, they haven't done anything to help those countries start recovering.
O'BRIENAnd the second part is they look back at their experience in the last decade, and they say, this worked for us. So 10 years ago Germany was, you know, "the sick man of Europe." And they did, you know, something, you know, what economists would call an internal devaluation. You know, they held wages in check basically for the last 10 years. If you adjust from inflation, German wages have been pretty stagnant.
O'BRIENAnd because of that and because of the euro they've become much more competitive. And now they have, you know, an enormous export or trade surplus. And so they look at that, and they say, hey, why can't you do what we did? You know, it was painful, but it worked. And the problem, of course, is that everyone can't do that at the same time, that if everyone's trying to, you know, trade more with their trading partners that, you know, it's going to fail, so the fallacy of composition.
NNAMDIAnything you'd like to add to that, Ryan Avent?
AVENTWell, I think that, you know, the big issue for Germans is that, you know, they see themselves as having entered into an organization that will only work if there's sort of a sense of collective responsibility where no one feels that as a matter of course, you know, bank failures, pinching costs, all those things are going to be handled by everyone else. And so they don't need to budget responsibly.
AVENTGermans are very concerned that they're going to be taken advantage of by countries that sort of think along these line, along the European periphery. And so they are determined to put rules in place that limit borrowing around the south. Now the time for that couldn't be worse, I mean, given the circumstances. But I think they see that, you know, if they sort of voluntarily bail out these countries and spare them any pain at all, that will just cement the idea that, you know, individual responsibility is going to go by the boards in the new euro zone.
NNAMDIRyan, we spoke with Paul Krugman on this broadcast about a year ago. He argued at that time that countries like Spain and Ireland were essentially being forced to undertake the kind of austerity measures that conservatives here in the United States want to see here, and that they've seen the worst of Europe's economic devastation result from it. What would you make of that argument?
AVENTWell, I think there's something to it, certainly. I think that, you know, you can't look at the situation in Spain or in Ireland and think that, you know, cutting budgets is going to have the effects that some people say that they will have, which is that it's going to raise confidence and spur growth. That's just not what has materialized.
AVENTYou know, the international monetary fund which is generally seen as kind of a button-down organization that is, you know, typical of -- or full of serious people has said that, in general, we've over -- or underestimated the costs of short term budget cuts in terms of the hit to growth. So I think that we need to be aware of that dynamic here in the U.S., that relative to other time periods budget cuts, whether tax increases or spending cuts, are probably going to translate into more of an impact on hiring and on growth than they normally would.
AVENTThe only thing that I offer as a caveat is that the U.S. is in a slightly different position from say Spain, in that the U.S. has its own central bank, it has the Federal Reserve, which can print dollars and take a lot of steps to boost the economy. Spain gave that up. They handed those abilities to the European Central Bank. And so the U.S. is going to be slightly better able to offset fiscal policy, to offset budget cuts than Spain is able to do. But I still think that's Krugman's argument is probably correct.
NNAMDI800-433-8850 is our number. How urgent a problem do you think debt should be for policymakers in the U.S.? What concerns do you have about the incoming federal spending cuts that are part of the so called sequester, 800-433-8850? Matt O'Brien, is some of this coming from what some people would consider almost a morality-based view of economics, a view that the crisis in Europe was caused by irresponsibility and that people need to be punished for it? You have to pay a price.
O'BRIENI think that that plays a large part on the German world view. You know, there's a sense that the southern European countries behaved irresponsibly. Either they -- you know, their governments borrowed a lot or their private sector borrowed a lot. And that this is kind of the penance they have to go through to get back to a healthy economy. And that view is, you know, fundamentally fought. It's not going to get those countries back to where they need to be.
NNAMDIHere's Toni in Northwest Washington. Toni, you're on the air. Go ahead, please.
TONIHi. Thank you, Kojo. I had a question about taxes. Isn't it true that Germans and, well, basically Scandinavian nations are pretty good about paying their taxes in general and that the Greeks were not very good about it? And when the United States shows we're going to become like Greece, isn't it more that people in the United States are advocating civic responsibility in not paying their taxes?
AVENTIt's certainly true that outright tax dodging is a problem in southern Europe and especially in Greece. And I think that's one of the things that's been a problem for Greece in trying to right its fiscal ship, is that if you raise taxes, you encourage more people to dodge taxes. And so you don't get the revenue you wanted to earn. The U.S., I think, is in a slightly different situation in a few ways.
AVENTI think in part, you know, when you hear someone like Mitt Romney talk about the 47 percent, people who aren't paying taxes, those people aren't, for the most part, dodging taxes. They're just taking advantage of quite legal loopholes and deductions in the tax code, and many of which are put there for good reason, to try to help people who are retired or poor. And so it's different in sort of, you know, we don't have the large black market, you know, under-the-table economy here that is seen in parts of southern Europe. Sorry, go ahead.
NNAMDINo, please keep talking, Ryan.
AVENTI would say that the other issue is, you know, when people warn that the U.S. is going to become like Greece, that sort of elides a lot of nuance -- or actually it's not particularly nuance. I mean, the U.S. is a giant economy and one with its own central bank and own currency. And so, you know, you can argue that there'd be cost to too much U.S. borrowing, but it's very unlikely that we would experience those costs in the way that Greece has experienced them because it's just in a very different situation.
NNAMDIToni, thank you very much for your call. Matt, in medicine a doctor would not treat a patient with heart disease with medication meant to help a common cold. How much does diagnosing the root cause of these crises matter when it comes to the economic policies to improve their financial situations?
O'BRIENWell, it's crucial. If you look at the euro zone, really only Greece had a problem with government overspending before the crisis. They're an outlier. But every other country in southern Europe that's run into trouble had a private sector that went crazy. And then when the crisis hit, you know, they had a bust. They had, you know, a terrible economy that kills revenue, it increases safety net spending. So then you have a deficit. The deficit was the consequence, not the cause, of their problems.
O'BRIENAnd so if you say you have to reduce your deficits, well, that's not addressing what was the problem, which was over indebted households and businesses who are now cutting back spending, saving, trying to, you know, get out from under water, under, you know, big mortgages or credit card debt. And so if you have the government and the private sector cutting back at the same time, you're in big trouble. You're going to end up in a very severe recession, and that's exactly what's happened to southern Europe.
NNAMDIGot to take a short break. When we come back we will continue this conversation on the advantages and disadvantages of austerity programs as seen in Europe and now here in the United States. But you can still call us at 800-433-8850. You can send email to email@example.com. Do you think countries around the world, including the U.S., are paying too much attention to their debts and not enough attention to reviving their economies and addressing unemployment? I'm Kojo Nnamdi.
NNAMDIWelcome back to our conversation on austerity measures with Ryan Avent, economics correspondent at The Economist, and Matthew O'Brien, associate editor at The Atlantic where he writes about business and economics. You can call us at 800-433-8850. Ryan, there's been some skepticism that the austerity underway here in the United States is really austerity.
NNAMDIBut you pushed back pretty hard that spending cuts that have already been taken are real cuts with real consequences. How did this argument questioning, well, the austerity of austerity gain steam, and why do you think it was important to push back against it?
AVENTWell, I think it's -- you know, there's a few things going on. One is that people who, you know, have different viewpoints on what the United States should be doing are often inclined to sort of play games with baselines to try to make their point. You know, depending on where you start the counter, you know, the amount that the U.S. is cutting from its budgets can look like quite a lot or not so much. And I think that, you know, if we really want to have an honest discussion about this, we need to do our best to stick with a consistent set of facts.
AVENTIn my view, that consistent set of facts includes the fact that borrowing in the U.S. has come down quite a lot since 2009 during the thick of the crisis, that it's going to continue to come down, and that that's not just due to the fact that the economy is recovering and that we're getting more tax revenues and spending less on unemployment benefits.
AVENTIn fact, we actually are making real cuts that the level of spending in various parts of the government, including defense is, you know, if you actually look at the number of dollars that are going out the door, it's going to be less than it was a few years ago. And so I think that's, you know, if you're going to try to interpret the impact of those cuts on the economy now and then down the road, we need to make sure that we're keeping that in mind.
NNAMDIWhat do you think will be the impact of the sequester cuts?
AVENTWell, I think the direct impact will be smaller than probably a lot of people fear. I think it will be larger in places that have a bigger defense presence. Here in Washington we may feel it a bit more than other places. I think that the sort of bigger concern is that budgeting isn't taking place responsibly and that these cuts come on top of a lot of things that have already hit. You know, we had a payroll tax cut that was sort of giving us a few extra dollars in our paychecks over the past two years.
AVENTThat expired at the end of 2012, and so a lot of households are just adjusting to that. So you add that onto the sequester and other cuts that may be coming down the road. When you put all that together, it ends up being something that could have a real impact and could prevent us from, you know, bringing down the unemployment rate as quickly as we'd like to see.
NNAMDIWhat do you think, Matt O'Brien?
O'BRIENI think that the biggest problem with the sequester is the indiscriminate nature of the cuts. If you look at non-defense discretionary spending, it's about to hit its lowest level since 1970 in the next year or two. And what does that mean? It means, you know, the kind of spending on infrastructure, schools, R and D, that helps the economy grow over the longer term. So we're cutting from the place where we should be cutting the least. And if you ask the CBO, they say that the sequester will cost us about three-quarters of a million jobs over the next year.
NNAMDIOn to the telephones. Here is Sandra in McLean, Va. Sandra, you're on the air. Go ahead, please.
SANDRAGood afternoon. I was just wondering, I rarely hear mentioned the pension obligation which is going to come due. They're legally bound to pay these pensions, the state and local governments, and they don't have the money. So what's going to happen to the unfunded pensions, and how will that affect the economy?
O'BRIENWell, that's absolutely right. The state governments have overpromised and underfunded a lot of their pension plans. They've assumed pretty aggressive investment returns on the market to, you know, make up for the fact that they haven't put enough money in there, and politically they're going to have to make some tough decisions about how much are they going to increase taxes, how much are they going to reduce these benefits that they've promised, and, you know, that's going to hit retirees who thought they had more money coming to them than they're going to get.
NNAMDISandra, thank you very much for your call. You know, the employment rate in the United States dipped to its lowest point in years last month. What would you say to those people who feel the numbers suggest, well, austerity is working here, Ryan Avent?
AVENTWell, it's, you know, I think there are a couple ways that you could sort of approach it. I mean, I think one is to say that, you know, Matt mentioned earlier that what you'd like to do when the private sector has borrowed a lot, as we did early in the 2000s and then suddenly faces the need to pay a bunch of it back as we did during the financial crisis, you want the government to step in and offset some of that by borrowing more. And then once you move past that crisis point, then the two can sort of switch roles.
AVENTAnd so as we get to the point -- and we are getting to that point now where households feel a little bit more comfortable going back out borrowing and spending -- then the government can go back to tightening its budget. And so, I think, to some extent, the U.S. has gotten the fiscal policy mix broadly right, compared with other countries, and that's why when you look at our unemployment rate and compare it to places like in Europe, things look pretty favorable.
AVENTBut I would warn against tightening too quickly. I mean, that's sort of the thing is -- give me fiscal prudence, but not quite yet because there is a lag between when you start cutting budgets and when you see that impact on the economy. And so just because we're sort of holding up all right right now doesn't mean that the sequester won't have sort of nasty effects a few months down the road. And so I -- you know, I think it's always times to be cautious.
NNAMDIWell, your thoughts on the same issue, Matt, in addition to which David Cameron also argues the same in Britain, that there's proof their program is working. What say you?
O'BRIENWell, David Cameron's proof is that their borrowing costs are low, and, you know, low compared to what? They're not low compared to the U.S. They're not low compared to the core eurozone countries that, you know, aren't in crisis. And lowering borrowing costs rights now are not a good thing. They mostly reflect the fact that markets expect growth to be weak, you know. Right now if interest rates start to rise a little bit, it shows that the private sector is a little bit, you know, more optimistic.
O'BRIENThey think that the economy is going to be growing a little bit more. So, you know, an austerity program, (unintelligible) caps growth. It makes, you know, markets more pessimistic, will lower borrowing costs for a terrible reason. Now as far as the U.S. is concerned, you know, right now we still have a horrible long-term unemployment problem. You know, we still have people who have been out of work for six months or longer. That rate is higher than it's been at any time in the post-war period still.
O'BRIENSo we still have this horrible crisis of people who have been out of work for six months, and if you look at this relationship between the number of vacancies and the unemployment rate, there's usually a very straightforward relationship between the two where it's an inverse relationship. And it looks normal for people who have been out of work for six months or less. So the job market's working fine if you've been out of work for less than six months.
O'BRIENBut if you've been out of work for longer than six months, it's horribly dysfunctional. And so those are the people that we're really failing, and they're at the back of the line as far as employers are concerned. And, you know, at the pace that we're creating jobs right now, it would take us maybe 8, 10 years to get to the point where unemployment is back to normal basically.
NNAMDISo the fact that your borrowing costs are lower, does not necessarily mean that that is help to go drive the engine of your economy by providing more jobs for those unemployed, especially the long-term unemployed.
O'BRIENExactly. And we want to see borrowing costs rising. That would be a sign right here that people are more optimistic and they think the economy is going to start growing. They'd rather be taking some risks than putting their money in treasuries.
NNAMDIOn to the telephones again. Here is Mark in Charlestown, West Va. Mark, you're on the air. Go ahead, please.
MARKHow you doing? I was just wondering if your panel knows whether the other countries did the same thing the U.S. did as far as Social Security. Did they actually cap the wealthy how much they had to pay towards something which endangered the Social Security, and did they also borrow a lot of money from their Social Security program and use it for other programs and not put it back in?
AVENTWell, certainly other parts of Europe have done lots of shady accounting tricks, and I think that's, you know, one thing that we've seen that's frustrated, you know, the core countries like Germany that have demanded things from Greece is that, you know, they sort of said that the austerity that Greece is embracing is not exactly what they had in mind. It's more fudging the numbers.
AVENTThat said, I think that in general, you know, the issue is not necessarily related to sort of the long run costs. You know, when you look at the U.S., and people worry about the budget deficit, that's not being driven by the long run issues that we worry about when we think about budget problems, whether that's health care for retiring citizens, whether that's Social Security.
AVENTAnd the same is true in Europe, that the issue is more a focus on -- in Europe especially a focus on short-run costs associated with failing banks and bad loans, and the way that that had contributed to high levels of government debt. And so I think that, you know, those are the issues we really need to be thinking about over the long run, and -- but they're not necessarily something that's cause for panic in the short run.
NNAMDIMark, thank you very much for your call. Here is Eman in Chantilly, Va. Eman, your turn.
EMANKojo, thank you for taking my call. I just, you know, don't get it when I hear about in this -- most of -- you know, they do need a hospital, they need roads, they need bridge, they need ambulances, they need police officers, but nobody wants to pay. I don't get this logic, where it comes from. At the same time, there's people who keep attacking the government. Governments do create jobs.
MR. VICTOR CHAThey hire small contractors to build (unintelligible). But this notion that the people that trust wars and spend all our surplus are the ones that we have to fight back and explain to them how we can build this country again. I don't get this notion that Republicans are using most of the time. Can someone explain to me this, please?
NNAMDIWell, I'll add to what you said, Eman, an email we got from Beth here in Washington D.C., who said, "A key media myth is that Republicans have long pursued deficit reduction. In reality, Republicans merely use deficit reduction as a weapon when Democrats are in the White House, i.e. Reagan against Carter, Gingrich against Clinton, and the current GOP against Obama. When Republicans get into the White House themselves, they're actually not stupid enough to execute severe budget cutting on their own watch.
NNAMDI"I assume politicians in other countries play these games too, so how do the political games impact the economic outcomes?" Well, it would seem that politicians in other countries, in particular Italy, were not playing these games, which is why they find themselves in the situation that they're in now. But, I'd just like to hear your thoughts, first Ryan Avent, on the caller, and what I just read.
AVENTWell, there was a lot there in the call. I think, you know...
NNAMDISo people want stuff, but they don't want to pay their taxes for it.
AVENTYou know, that's absolutely right. Everyone ideally would love to have, you know, wonderful services and not have to pay much in tax. And I think that to some extent, the U.S. particularly is an example of this problem in that we try to deliver a lot of the welfare state that Europe delivers while also having low rates of tax compared to Europe.
AVENTAnd the way we sort of, you know, hide that is by providing a lot of our welfare state through what we call tax expenditures, which are all sorts of loopholes and things that appear in the tax code that encourage -- that help private people provide a lot of these things for themselves.
AVENTSo I think to some extent there's a reckoning that needs to occur in the United States, where we need to better match up what we're providing to people with what we're bringing in in terms of tax. But again, I would say that that's more of a long run conversation. That's not something that we need to settle immediately. That's not something that's going to drive us into crisis in the short term. Really, the short-term crisis is more about the unemployment rate.
NNAMDIMatt, you wrote last week that there's no evidence that the United States will ever reach a tipping point with its debt that will start to make it look like Greece. Why do you feel that way?
O'BRIENWell countries that borrow in currencies they control, they have their open central banks, they play under a different set of rules. You know, they can never -- we can never run out of the dollars. If we get to a point where we're running out the Federal Reserve could print them, and that wouldn't be advisable, but we could always do that. And since we can never actually default, there can never be this kind of self-fulfilling loop where markets are worried that we're going to default and they push up our borrowing costs, and that makes us more likely to actually default.
O'BRIENAnd that's what's been happening in the eurozone with the troubled countries, and that's what the, you know, they short circuited that last summer when they said they would do whatever it take to save the Euro. But that's something that we don't have to worry about.
O'BRIENNow, if you look at other advanced countries, you know, Japan has gross debt to GDP over 200 percent. We don't want to get in a situation where we have that much debt, but they have lower borrowing costs than we do. You know, there's little to no evidence that -- or actually no evidence that countries that borrow in their own currencies can run into these type of problems.
NNAMDIWhen it comes to the eurozone, Ryan, what do you see being at stake on both sides of the Atlantic? Do you think the shared currency is going to be sustainable in the long run?
AVENTIt can be. I think with the right policy choices it can be, and I think that we should all hope that it is sustained, because most likely a breakup would be pretty unpleasant. I think it would be a good chance that it would send Europe into a depression and probably knock the U.S. back into recession. But what it's going to take to save is a few different things. I think, you know, the main gap in the structure of the eurozone that needs addressing is the fact that they have a common monetary policy.
AVENTThey have a common money in central bank, but they don't have any of the common fiscal institutions that the United States has. They don't have a central government that collects tax revenue. They don't have a central government that stands behind bank deposits to prevent bank runs, all of these things. And those are really the things you need to ensure that, you know, monetary dislocations or banking crises don't sort of spiral into this, you know this sort of existential threat.
NNAMDII'm afraid we're just about out of time. Ryan Avent is economics correspondent at The Economist. Ryan, thank you for joining us.
AVENTThank you, Kojo.
NNAMDIMatthew O'Brien, is an associate editor at The Atlantic where he writes about business and economics. Matt, thank you for joining us.
O'BRIENThank you, Kojo.
NNAMDI"The Kojo Nnamdi Show" is produced by Brendan Sweeney, Michael Martinez, Ingalisa Schrobsdorff, Tayla Burney, Kathy Goldgeier, and Elizabeth Weinstein, with help from Stephannie Stokes. Our engineer is Tobey "The Wizard" Schreiner. Natalie Yuravlivker is on the phones. Thank you all for listening. I'm Kojo Nnamdi.
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