Sunday, April 26, 2009

Krugman, Euroskeptic?

Paul Krugman notes that the British have been getting some good mileage out of their abstention from the European monetary system: "In addition, the fall in the pound has made British products a lot more competitive. ... So I’m actually fairly hopeful about Britain; right now, the fact that it’s not on the euro is serving it well."

But isn't this "beggar-thy-neighbor" economics? Protectionism through devaluation? Of course, Krugman thinks, rightly, that the ECB is culpable for not lowering interest rates and expanding the money supply more aggressively, so he no doubt thinks Britain's enhanced competitive position is only the just reward of a recalcitrant central bank. But British abuse of regulatory and rate competition is one reason why the ECB has been so conservative. To my mind, progress toward cooperation would be a much more positive sign than clever exploitation of competitive advantages made possible by being outside the Eurozone.

"You Say You Want a Revolution ..."

Charles Bremner takes up the "revolutionary situation" remark of Dominique de Villepin and finds reason to doubt that it reflects reality. As May approaches, of course, thoughts habitually turn to the street. JDD considers the parallels with May '68 and notes the radicalization of the student (and faculty) movement after four months of agitation in the universities and several months of sequestrations in the factories.

I think the revolution watchers are getting ahead of themselves. If there is to be a spring upheaval in France, it will happen next year. If the crisis deepens, if there are more layoffs, if the government response remains weak, and if the Socialists continue to dither, diminishing the likelihood of any political relief in the foreseeable future, then large numbers of people might be willing to take the risk. For now, I think there is still too much uncertainty about where things are headed. To be sure, the mood in the universities is turning increasingly angry, and students, who have less to lose than workers, are often the catalyst for wider disruption. But, unless I miss my guess, the mood among students is far less buoyant and far less radical than it was in '68. The complaints remain limited, small-bore, and, pour tout dire, corporatist.