Krugman: The EU may have been a great idea. The euro, not so much.

[pampango]

Annoying Euro Apologetics

Yes, I’m a dumb uncouth economist, completely unaware of the role of politics and international strategy in policy decisions, who never heard of the European project and its origins in the effort to put Europe’s legacy of war behind it, not to mention strengthen democracy in the Cold War.

Well, actually I do know all about that. The point, however, is that while the European project has at every stage combined economic objectives with broader political goals – it’s about peace and democracy through integration and prosperity – the project can’t be expected to work unless the economic measures are a good idea in and of themselves, or at least a non-catastrophic idea. What happened in the march to the euro was that European elites, in love with the symbolism of a single currency, closed their minds to warnings that currency union – unlike the removal of trade barriers – was at best ambiguous in its economic logic, and arguably, even ex ante, a very bad idea indeed.



After that slump, Finland experienced a long stretch of solid economic growth. But so did Sweden, and it’s hard to see any real difference in their degrees of success. There’s certainly nothing there to indicate that euro membership was crucial to growth. Since 2008, on the other hand, Sweden has – despite bobbling its monetary policy – done much better.

As I said, maybe there are good arguments against the proposition that the euro was a mistake. But pointing out that politics matters, and economies grow, doesn’t cut it; these aren’t the factoids you’re looking for.

http://krugman.blogs.nytimes.com/2015/07/22/annoying-euro-apologetics/?_r=0

[Nye Bevan]

1. Love her or hate her, Margaret Thatcher predicted this over 20 years ago.

This paragraph is from "The Path To Power," where she discusses conversations with John Major (her successor) about negotiating with the rest of Europe. She just totally nails the inflation and competitiveness angles:



The following is from "Downing Street Years," and again concerns her discussions with John Major.



See: http://www.businessinsider.com/margaret-thatcher-on-the-euro-2013-4