When I composed "The Other Side of Keynes: A Structural Approach To Macroeconomic Analysis", one of the comments in the conclusion was that there exist structural imperatives that are ignored at the risk of inviting perils or rejecting opportunities associated with these imeratives.
These situations are magnified in unions such as the European Union, the United States of America and Canada, mentioning those with which I have the most familiarity.
In order to clarify how the multiplicity of imperatives interact and either suppliment or detract from each other, the idea of an Ambient Interest Rate needs to be expanded. This rate of interest is the result of the structure of the economy and is unique to one structure which may be set by the combined structure of all the component parts of the union or it may be set by any one of the component states or it may be set by an exogenous mechanism such as a market.
However it is set it will be of advantage to some of the component parts and not others. Some will receive a positive synergy from the union and others a negative synery. A neutral synergy, although possible, is extremely unlikely.
If the Ambient Interest Rate (AIR) of one of the component members of a union is higher than the rate set by the market that offers the funding for whatever program is being funded this situation will provide a Structural Advantage or positive synergy in that the money being offerred is cheaper than the iternal ambient rate. The opposite is also the case.
In any union there are going to be those members who are at a disadvantage in this one area and others that find the situation advantageous. By modifying the structure these advantages and disadvantages can be managed and either reduced or increased depending on the preferences and needs of the members. Management at the union level could be the arbitrator of these advantages and disadvantages.
To reiterate, ignoring these structural imperatives is not recommended if the highest level of functioning is the goal of the union.
Canada has been able to modify its structure to some degree through equalization programs that have modified not only the federation's structure but also those of its component parts. Much of this may have been inadvertently the result of the cultural and political environments rather than intentional structural policy despite my earlier admonishions to do so.
