The Mudcat Café TM
Thread #35616   Message #732136
Posted By: Ringer
18-Jun-02 - 08:48 AM
Thread Name: BS: Should UK join the Euro ?
Subject: RE: BS: Should UK join the Euro ?
I thought I'd let you stew for a year or so, Wolfgang (*BG*), before I answered your question of 20-June-01 above (about how/why the single currency introduced in 1871 within the German statelets which became Germany succeeded). I know almost nothing of German history of that time, so feel free to shoot me down. Could it have had anything to do with
  1. a common language?
  2. Bismarck having imposed it by force, suppressing any opposition?
1 is the killer, imo. If the euro is to work, then, since the economic safety valves of floating exchange-rates and individual interest-rates are not available, there must be migration from slump areas to boom areas if vicious circles of slump in the former and boom in the latter are not to get out of hand. But the lack of a common language militates against such migration.

Can you, for example, see unemployed Greeks migrating en masse to Finland for jobs? One or two, sure. I saw a recent survey suggesting that inter-country movement in the EU was only 3% of inter-state movement in the USA (and it's less now than it was thirty or forty years ago). And that's why a single currency in the US works, but in the EU won't.

I saw a reference to Sir Christopher Meyer, US Ambassador to UK, indicating that the euro was almost irrelevant to US companies seeking to invest in Europe. "Factors such as a common language, culture and a more flexible market were far more important" (The Business, 9 June 2002 - can't find it on the Web, I'm afraid).

As regards 2, look at Yugoslavia for an example of how compulsion can keep disparate peoples together, but only for a while; release the force and it all flies apart. And nobody's asked the people of Europe whether they want to be joined in a EU. (Britain, 1973: "remain in the Common Market?"; France & Denmark: "join the euro?" - and France only just said yes, Denmark No; Ireland: "is Nice OK?" - No).

All the pressure for integration comes from hubristic, egotistic, bureaucrato-maniacal politicians motivated to a greater or lesser degree by anti-USA-ism. But this pressure is lessening, I think. Schroeder is less keen on the EU than Kohl was (specially when he's got an election to win - or more probably lose), Chirac than Mitterand. Both know that knocking the EU ups them in the popularity stakes, but neither will (publically) draw the obvious conclusion: "The EU is unpopular. Let's call a halt to further integrationism till people catch up." (An alternative would be: "The EU is unpopular. Let's dismantle it.")

I notice, incidentally, that I'm in good (or at least august) company in predicting the failure of the euro: Sir Alan Walters, economic guru to Margaret Thatcher, recently made the same prediction, and with the same timescale (5 years, though, since I made my prediction a year earlier than he did, my 5 years terminates a year before his). Like or loath his economics, his predicting track-record is not unimpressive.

I make another prediction: the much-vaunted expansion eastwards of the EU will not occur. And it won't be (entirely) Ireland's responsibility, although I hope that the Irish will raise two fingers to the politicians, who simply can't take No for an answer, and overwhelmingly vote No again!

I've wandered off the point, as usual: how does my answer score?