Congratulations to Tom Sargent

I just came back from the New York University dinner gala celebration for Tom Sargent in recognition of his award of the Nobel Prize.  It was a really grand affair in the Plaza Hotel – a wonderful old style New York Hotel with an elegant ballroom.  In his speech, Tom gave an interesting comparison of the crisis in Europe to the founding of the US. (Click here for paper.)   This probably has some insights for the African Union.  Tom spoke about the founding of the United States, the debts held by states versus the central government and the very formation of the United States.  Like Europe, the US at Independence had a weak central government and strong states.  At some point the states had lots of debts, many went belly up, and in negotiations over this a much stronger central government emerged.  Later, in the constitution, states were then forced to have balanced budgets.  Alexander Hamilton figures in these conversations as the forceful personality enabling strong decisions to be made.  Parallels with Europe today are obvious.  I am going to promise myself to read more about this subject.  I am of course really curious about the African Union, especially attempts by some of the regional bodies to impose currency and eventually economic unions, as for example with ECOWAS for West Africa.   The current European crisis and the connection with the US at its independence is relevant to the African debates.  Perhaps we can get Tom to focus some of his wisdom there.  Anyway, congratulations Tom! Your values and humility are really inspiring to all of us.