This book is written by a man who wants to see the European experiment succeed, but is not confident that it will succeed.? I think this is a fair book on the topic; it does not absorb all of my biases on why I think the Eurozone is hopeless: a) Currency unions have never worked; they must either become a nation, or break up.? b) I have a saying, “Governments are smaller than Economies, and Economies are smaller than Cultures.”
This saying puts things in their place.? Government can’t in the long run prevent things that are economically successful, those things fill human needs.? But cultures are bigger than economies; we don’t live to consume. We live for ideals.? Different cultures have different ideals, and it means that a purely individualistic or collectivist view of economics won’t be accepted in the Eurozone.? They muddle in the middle.
The Eurozone is a political and economic experiment, and was pretty successful and harmless until they began to seek a common currency.? Yes, there were other problems, bureaucrats in Brussels, seeking human perfection though regulation, helped to strangulate a previously more competitive Eurozone economy.? That said, the common currency offered some offsetting advantages of efficiency.
Other Troubles
But there are other troubles.? There are unaffordable pensions in many countries that lie behind that economic problems.? As one who is 51, and well off, why should anyone, aside from oil wildcatters, who endure a lot of physical stress retire at age 50 on the largess of the taxpayers, that is, if you have taxpayers.
Even retiring at age 60 is ridiculous, which France has recently reverted to from 62.? France will never be able to afford it as a nation.
But then there are cultural issues: do you care what your laws are?? Would you care if immigrants are ruled by Islamic Law?? Would you care if your grandchildren, a minority like the Maronites (Roman Catholics) in Lebanon, are ruled by Islamic Law?
The Main Economic Issue
After all of the strangu-regulation, what if economies can’t grow at levels sufficient to exceed the rates at which they borrow?? They slowly fail, as debts grow, and doubts about repayment grow.
In the Euro-zone this is particularly pertinent, because countries can’t depreciate; they must repay in Euros.? When the Euro was introduced it was heaven for many nations, because they could borrow cheaply.? Eventually, they had too much debt, and lenders rebelled.
This is the nature of an area that is not a natural currency area — the Eurozone.? This was an experiment doomed to fail.
Quibbles
None, but I would be a full Euro-sceptic.? This can’t work.? More effective human labor is always better than less.
Who would benefit from this book:?? If you want to learn about the problems in the Eurozone from someone that is fair, you will find it here.? If you want to, you can buy the book here: The Decline and Fall of Europe.
Full disclosure: The PR flack asked me if I wanted the book, and was kind enough to send me the book.
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Pension age as a criteria on affordability is not making sense: you could spend the same money on pensions — whatever is acceptable to the payers — and change the age up or down by changing the pension level up or down. If the French want smaller and longer pensions why couldn’t they do it? Ultimately the way the pension question is going to be resolved (worldwide) is probably by making the limit between work and not work more fluid: more part time work for those who want to live a higher maintenance lifestyle they can’t afford on a basic pension, without necessarily keeping full speed in the rat race until they drop. This will also benefit younger people — working in debilitating jobs 45 hours a week with 2 weeks holidays a year, in an era where technology has liberated us from having to work hard for basic needs, doesn’t make much more sense at 30 than it does at 60.
The muddle between individualistic and collectivist is one of the things were pretty much of the Eurozone broadly agrees. You have to go out of the Eurozone to find some disagreement, e.g. the UK or Eastern Europe, and even there the view there is closer to that of the Eurozone than that of say the US or Hong Kong. Of course there’s a variety of individual views (hence a muddle needed as a consensus) but that same variety exists within each member state.
As for the bureaucrats in Brussels, there are fewer of them than in the municipal administration of a modern large city, and most of the regulation was intended at replacing local regulation: instead of a manufacturer of widgets having to comply with 20 different regulation on widgets, needing to redo their compliance work again every time they want to sell widgets in a new market, there’s one pan-European standard for safe widgets. Even if they err on the side of regulating too much on occasion, it’s hard to see how they could manage to get it so wrong as to make it more complicated for the widget manufacturer than the sum of local regulations. We know you like multiple regulators for insurance/banks, where duplication of work provides some system robustness (and work for your fellow actuaries), but for ordinary stuff, really?
you write–
“…why should anyone, aside from oil wildcatters, who endure a lot of physical stress retire at age 50 on the largess of the taxpayers…?”
There are a lot of physically arduous jobs, many of them in the public sector. Some relevant public-sector examples include law enforcement, fire and rescue, and the armed forces. These ought to be mostly jobs for young people.
People who work in these jobs into early middle age tend to get hurt, and to heal slowly–a 40 year-old fireman humping 100 lbs. of gear up a stairway is at high risk for a back injury.
In many communities, this commonplace situation is (expensively) managed through a generous interpretation of “disability.”
There are many analogous private sector jobs–in farming, construction, and shipping, for instance. This is a real issue for older blue collar workers. Universal pensions for 50 year-olds perhaps aren’t the answer, but it is an issue for both the public and private sectors.