I don’t believe it….but I agree with Milton Friedman

On this issue anyway. I wrote previously here, how the issues in the euro were linked to two failures. Firstly the failure of risk managers within the banking sector to regulate themselves, putting bonuses ahead of sound investment management and secondly the issues in the euozone are essentially cultural. We have numerous countries with different social and cultural perspectives and unless these can be resolved (which is of course impossible re: the Balkans, then real economic union cannot take place.

After all, the euro is essentially a political project and before an economic project. The failure to address divergent views on economics and society and/or the lack of escape mechanism leaves some states free to continue with unsound policies in the light of monetary union. This is particularly true after the end of the EU social fund which invested heavily in Greece, Portugal and Ireland to the detriment of real growth. Once this funding ending, the gap was filled by borrowing which is never sustainable.

In this article, Friedman moves beyond his usual inhuman mathematical modernism and highlights the importance of the society in state and economic building. Remarkably it is in fact the Germans who were always going to be liable to bankroll the Euro. They, rather than the French are the only powerful state with a real functioning economy with finance to spare. The French economy is a slight mirage of success while the other large economies of Italy and Spain (within the eurozone) are plagued with huge structural issues coming from their societal make-up and near fraudulent economics (poor record on tax payment, state inefficiency, paternalism, huge black market) from the government down.

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