As part of a series of posts dealing with the impact of the COVID-19 pandemic for the financial world, George Calhoun discusses the idea of Federalism in the United States.
With overlapping jurisdictions in terms of states and the federal government, this leads to uncertainty about who has authority over what in times of crisis. In these cases, Calhoun states that eventually, the public will expect the Federal Government to take control and steer the country in the right direction. In the EU, this concept of having a strong, structured federal government in combination with member states authority does not exist. As a union, the EU cannot tax, and cannot spend nearly as much as the US government, and “each country sets its own policy, raises its own revenues, and spends as it wishes”. During this pandemic, this has led to several issues and controversies in several countries that belong to the EU. Overall, this crisis will bring several changes to the EU’s current financial system.
George Calhoun is the Director of the Hanlon Financial Systems Center as well as the Founder & Director of the Quantitative Finance Program at the Stevens Institute of Technology. He has spent 25 years in the high-tech segment of the wireless communications industry. He is author of several books on wireless technology, and his new book "Price & Value: A Guide to Equity Market Valuation Metrics" was published this year (2020) by Springer/Apress.