I have really got to start cross-posting on AFOE. They've given me permission; I just don't feel like my Europe stuff lives up to their standards.
Anyway, the Economist had an interesting column about Iceland and the European Union. The conventional wisdom is that Iceland would like the euro. But there are political difficulties.
So why not associate with the United States? I don't mean become a state, that would be stupid. Icelanders aren't Americans, and truth be told, they don't seem real likely to become Americans. They don't listen to reggaetón or country, they don't build malls, they don't put neon-tubing on the underbodies of their cars or shoot guns for fun. (Cue Jussi telling me that I'm a nationalist. I am coming around to his point of view. That is not a good thing.) But what about becoming a Commonwealth, like Puerto Rico or the Northern Marianas? They'd have to give up membership in the European Economic Area, but what has that ever gotten them? They wouldn't have to give up membership in all those Nordic agreements, although they would have to allow Americans to become Icelandic citizens after one-year residency, same as Puerto Rico does.
So what would this magnanimous move cost the American taxpayer? Nothing! Icelanders over age-65 wouldn't qualify for social security under current law; they haven't paid anything in. But let's say the U.S. waived that, and paid Icelandic pensioners the minimum benefit, just to be nice. What would be the cost?
A back-of-the-envelope calculation:
|Social security taxes||$571,032,371|
|Total tax payments||$997,819,024|
|Social security benefits||$305,818,800|
|Revenue sharing and federal agencies||$281,807,447|
|Total federal expenses||$888,738,298|
And that's worst-case, in which Washington bribes Icelandic seniors (who would still get whatever they get from the government of the Commonwealth of Iceland) and Icelanders remain as poor as they are and collect all the food stamps they can. These estimates are seriously biased in favor of maximizing the fiscal cost of an Icelandic commonwealth to the federal government of the United States; the actual costs would likely be substantially lower.
Better still, the above figures don't count the additional benefit to Iceland of all the officials whom they can shift to the federal payroll. Icelanders get the dollar, the support of the U.S. Navy in fishing disputes, an additional $700 a month for their retirees, and the ability to fob off a good chunk of the expenses of government onto the American taxpayer. Americans get $109 million per year and a great location for an anti-missile base, even though said antimissile system makes no sense and they have to put up with 300,000 new citizens whose musical traditions hark back to ... German pop music.
Sounds like a win-win to me. Nordic readers? Americans? What do you think?
And most interestingly ... can any of our Canadian friends make a similar calculation for your great federation? Y'all don't have commonwealths, but surely someone must be able to ballpark the fiscal effect of a Province of Iceland.