Monday, March 29, 2010

The Euro and Its Enemies

Who knew the euro had so many enemies? They're everywhere now, not only in Germany. Two more surfaced today, here and here. Of course, all sorts of agendas are being mixed together in these critiques. Is the real target the policy of the European Central Bank, the theory of inflation targeting, monetary economics more broadly, the north-south cleavage in Europe, the peculiarities of EU institutions, the fecklessness of southerners, the (self-)righteousness of northerners, the evils of real-estate speculation, currency manipulators, the absence of currencies to be manipulated, etc. etc. Journalism is of course not the place to look for analytic clarity (nor are blogs, usually). But the moment really calls for a historian of applied ideas to follow the remaking of conventional wisdom among the "serious people" who stroke their chins and ultimately make decisions with the stroke of a pen that will affect the lives of hundreds of millions of people. It's really rather appalling to see recommendations of such sweeping magnitude made with so little basis in theory and no substantiation by data.

One can, however, smile at the suggestion of  "neuro" and "sudo" as the names for two future European currencies, one for the northern tier and the other for the southern. One other point that few commentators have made: Turkish membership of the EU will now be postponed indefinitely. If the southern tier can't hack it because economies there are so differently constituted from the northern economies, then Turkey, whose GDP per capita makes it a real outlier, would be even more differentially affected by any future crisis. To be sure, it wouldn't have to join the Euro zone. But Europe itself is now so fractured that there is little enthusiasm for further expansion, especially to the east. The implications for tomorrow's geopolitics will need careful analysis.


brent said...

Having just returned from a first visit to Turkey, I can only say how sad a consequence it is of both the crisis in the Euro and the rise of Islamophobia if Turkish entry into the EU is now derailed (as it certainly seems to be). Not only was it clear to us from visiting historical sites how thoroughly implicated the Anatolian region is in the history of the 'West' but also what a source of vitality and potential wealth is there today. And yes, France and others could learn a lot about the coexistence of religious and secular values from a closer acquaintance with the Turkish model.

James Conran said...

The shoddy and reckless treatment of Turkey is indeed sad. But I think the "rising Islamophobia" factor is more telling than the Eurozone crisis - Turkish membership already looked very doubtful before the crisis. (I think there are legitimate reasons not to favour Turkish membership, but they aren't necessarily the reasons that make Turkish membership unlikely. I also think the good reasons are superseded by the promises that have been made to Turkey.)

On the economic issue - is the level of Turkey's GDP so important in assessing how differently its economy would react to crises within the EU/EMU? Surely how it fits in to the "European" economic cycle (if such exists) and who it trades with are more important. Is the GDP per capita gap between Turkey and the EU so much bigger than, say, the gap between states in the US?

Unknown said...

I especially liked the Starbatty piece. "frivolous budgetary policies" was one I'd never heard and is a superb expression that anyone would wish to have invented. It reminds of a 19th century primary school teacher about to beat up a kid.

Incidentally, Starbatty is one of the four chaps who took the Amsterdam treaty to court in Germany and lost, obviously. He also ran for the Bund Freier Bürger in mid nineties elections. This was a (lunatic?) fringe group set up to fight against the Maastricht Treaty. At least, we can say approvingly of this chap that he is very consistent in his ideas. Which include France joining Germany in a new stable bloc... Well I'd much rather join the UK than a Starbatty kind of Germany (memories anyone?). Fortunately, despite the NYT exposure, there is no future for a Starbatty Germany (Germans on the whole are not nutters, despite the image chaps like him project), so I guess we'll keep muddling through rather than contemplate yet again his kind of discipline. And keep on not being perfect.