Last year, things were really looking bad, but Mario Draghi, the new president of the European Central Bank, has managed to slow the deterioration. But there is a growing perception that in the long run, in the absence of greater European political integration, prospects for the Euro and the Eurozone are not good.
A book by Harvard professor Dani Rodrik, published last year, explains the problem:
"The Globalization Paradox: Democracy and the Future of the World Economy, W.W. Norton, New York and London, 2011, forthcoming.
Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center.
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets."
In summary, by creating a common currency before political integration, Europe has put the cart before the horse. Probably because the horse simply wasn't going to happen.
In a recent interview with the Swedish journal Respons, Rodrik explains his views in detail. This is the best and clearest explanation of the European dilemma I have read. For anyone interested in European affairs, I recommend reading it.
After reading the article, I conclude that the best solution is to do away with the Euro. There plainly is no risk-free approach to a viable future for the Euro. Better to do away with it sooner than later.
Why does this matter to Americans? We export a lot of goods and services to Europe. Another European recession is not good news for the US economy.
Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center.
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets."
In summary, by creating a common currency before political integration, Europe has put the cart before the horse. Probably because the horse simply wasn't going to happen.
In a recent interview with the Swedish journal Respons, Rodrik explains his views in detail. This is the best and clearest explanation of the European dilemma I have read. For anyone interested in European affairs, I recommend reading it.
After reading the article, I conclude that the best solution is to do away with the Euro. There plainly is no risk-free approach to a viable future for the Euro. Better to do away with it sooner than later.
Why does this matter to Americans? We export a lot of goods and services to Europe. Another European recession is not good news for the US economy.
Posts
No comments:
Post a Comment