Splitting America three-ways

If you refounded North America, how many currencies would you go for?

If you refounded North America, how many currencies would you go for? Whatever the answer, you probably wouldn't insist on Vancuver and Seattle being different.

The whole thing is reminicisent of the debate around Europe. In May, a JP Morgan research note revealed that the Eurozone was more diverse than pretty much every other possible monetary union:

The x-axis is a measure of similarity between countries. It measures over 100 economic, social and political characteristics. Michael Cembalest, the report's author, then applied this measure to 11 hypothetical monetary unions, as well as to the major countries of the Eurozone (he excluded smaller countries like Cyprus and Malta, but the results aren't that different if they are included; nor does the inclusion of Greece affect the results all that much).

What he finds is that many monetary unions that came close to existing exhibit far more similarity than the Eurozone. This includes Latin America, the Gulf states, and Central America. He then pushed it further: reconstituting several former empires, including the USSR, Ottoman Empire, and the British Empire in Africa, would also result in unions with more similarity than the EU.

Now, three academics from the Democritus University of Thrace have performed a similar analysis on the US and Canada, and found that – economically, at least – the present borders make little sense. E. Chrysanthidou, P. Gogas, and T. Papadimitrioy apply Robert Mundell's theory of Optimal Currency Areas (OCA) to the hypothetical issue of a north American currency union.

An OCA is an area where the macroeconomic conditions between two or more regions are suitable for creating a monetary union. All such unions have potential benefits – eliminating currency risk means that conditions are much more favourable for trade within the union – but they also have potential downsides, as the eurozone is demonstrating presently. If the various involved regions are similar enough, the benefits are likely to outweigh the risks.

The theory, which stems from the 1960s, was originally based on an examination by Mundell of the US and Canada, but it took on a more practical bent with proposition of the European Monetary Area. Since then, it has been largely applied to Europe and similar cases of actually-existing, or at least widely proposed, currency unions.

The authors return to the source, and attempt to work out, using two different methods (Correspondence Analysis and Hierarchical Cluster Analysis), what the groupings between the fifty US states and ten Canadian provinces ought to be.

The conclusion is not two, but three different countries, one on each coast and one in the middle:

The authors describe the differences:

The first one includes regions mainly from the East that are industrialized, and characterized by high levels of economic activity as this is measured by the macroeconomic variables used in our analysis.

The second part includes regions mainly from western US and Canada with diverse levels of economic activity and prosperity.

Finally, a third group of regions can be identified. This group includes a geographically diverse set of regions as it spans from east to west. The common factor though that links these regions is the relatively low level of economic prosperity as it is measured in our study in terms of income, growth, imports, exports, etc.

It would be rather awkward, to be sure – but no less awkward than the current arbitrary line drawn along the 49th parallel.

The US-Canada border. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland