Why do Americans have such a dismal view of the European project? Many American commentators believe that: the common European currency does more harm than good; that it would be better if the Euro was abandoned and Europe returned to national currencies; and that the whole European project is ill-conceived. The latest comment to remind me of this pessimistic American view of European unity is from Joseph Stiglitz. He is quoted in the AFR on Tuesday as saying that the Euro is “an experiment that may be faltering”. Further, “It is perhaps better to admit failure and move on than to extract a high price in unemployment and human suffering.”
It seems to me that the common currency is working quite nicely for Europe. Without the Euro the Greek Government would not be forced to face up to its structural problems in the Greek economy. Instead, Greece could devalue its currency and continue on its road to ruin. The integration of the PIIGS into the financial and political system of Europe is forcing them to take tough measures that will be highly beneficial in the long run. Because they share the same currency as Germany they are being forced to become a bit more like Germany. That will be good for them.
A common currency in the absence of labour mobility caused dislocation. Stiglitz and other American’s think the solution is to give up on the Euro. Why not stick with the Euro and wait for labour mobility to evolve? Why don’t Greeks move to Germany to work? Principally because of cultural impediments and lack of skills, especially language skills. Moving towards political union in Europe is the process of breaking down those barriers and the common currency helps in that process.
It is easy to forget how young the European project is. It began in the decade after WWII and it is more or less only 55 years old. A mere two generations. That is not long when we consider how far Europe has moved toward integration. The people of Europe in rejecting proposed European Constitution have said enough integration for now. I think that is wise. The economic integration of Europe needs time to evolve and become deeper before any greater political integration can take place.
Perhaps American commentators don’t understand the real purpose of the European project. It is in essence political rather than economic. It is intended to end conflict in Europe, and especially conflict and tension between France and Germany which had riven Europe in one way or another from the late 10th Century until 1945. The American urging of Europe to admit Turkey I think shows the shallowness of their thinking on Europe. Turkey has as much chance of becoming the 51st state as it has of joining Europe.
Americans should ease up on Europe. They helped to lay the ground for the European project with the reconstruction of Europe and rearming of Germany. They should be proud of that. I bet that Americans will be grateful for a unified, strong and outward looking Europe before this century has run its course.