As Thomas Sargent observed in his Nobel Lecture, Americans faced a similar, perhaps even more pressing situation a long time ago, after the Revolutionary War. [19] The Articles of Confederation had placed fiscal sovereignty largely in the hands of the states. But the young republic was creaking under the strain of common war debt.
Thus larger Nations tried to grow even bigger by grabbing up smaller nation states, and we had at least one war per generation on this continent. After World War II we tried another way. As a consequence, larger states were to give up their sovereignty in two key areas, which used to be important for the war industry, coal and steel.