The Euro Paradox

Something that strikes me as a bit surprising about the conventional wisdom on this side of the Atlantic about the Eurozone is how few people seem willing to take the obvious victory lap. When the euro project was inaugurated in the 1990s, the vast majority of American economists across the political spectrum were deeply skeptical. Today, that skepticism is being vindicated. The euro has turned out to be exactly the bad idea that many people thought it would be, and for roughly the reasons that the skeptics thought. So why aren’t more people calling for this disaster to become an opportunity to unwind a policy that never should have been implemented in the first place? The conventional wisdom is that this is “unthinkable” because un-euroizing would be a “disaster” which it would be. But keeping the 330 million people of the Eurozone and their $13 trillion economy locked in an unworkable monetary system is pretty disastrous as well.

Adding Poland, Latvia, Lithuania, the Czech Republic, Hungary, Bulgaria, and Romania to the scheme as is currently projected to happen will do no favors to those countries nor do anything to make the system any less unworkable. I think “kicking the can down the road” is generally an underrated crisis-time option, but a lot of euro-related can-kicking seems to also involve doubling down on a terrible wager.