Wynne Godley on the Euro in 1992
I mentioned Wynne Godley’s prescient observations about the Euro back in 1992 in a debate on the Mind Your Business program on Ireland’s RTE Radio 1 about half an hour ago. Godley’s remarks–no doubt seen as extremist when he uttered them–have proven to be utterly prophetic:
Some writers (such as Samuel Brittan and Sir Douglas Hague) have seriously suggested that EMU, by abolishing the balance of payments problem in its present form, would indeed abolish the problem, where it exists, of persistent failure to compete successfully in world markets. But as Professor Martin Feldstein pointed out in a major article in the Economist (13 June), this argument is very dangerously mistaken. If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation.
The entire article can be read here:
http://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that
I also wrote a feature on it for Business Spectator:
If you liked this post, go check out my subscription site, Debunking Economics, where I go into this in more detail. SK.
What a great article “Maastricht And All That” is.
Godley’s partner at Cambridge, Nicholas Kaldor said all those things as early as 1971 – which I quoted in my blog post
http://www.concertedaction.com/2012/08/16/nicholas-kaldor-on-the-common-market/
Parallel national currencies alongside the Euro for international trade were suggested by a German economist recently:
http://www.businessinsider.com/bring-back-the-deutsche-mark-2012-9
Maybe you should patent your ideas, steve.
http://t.co/SN3Uvaxe
Great interview. The boldest expression of the need for a jubilee yet. As for the interviewer’s question about inflation…the compensated retail discount of Social Credit is the perfect POLICY response to it.
It’s way past time for the adult and actual control of the money system instead of the false idol worship of markets which can’t actually exist without the wise policy of Grace that a citizen’s dividend and retail discount will enable.
Wisdom, the higher order thinking you can trust.
Dean Baker makes an argument against the consumption depressing effects of a private debt overhang in a recent blogpost:
http://www.cepr.net/index.php/blogs/beat-the-press/the-non-debt-overhang-economics-and-arithmetic-5467
I personally also see the US taxsystem break down and then the US will be in deep, deep trouble.
But that requires that there’re any taxrevenues that can be shared, in the first place.