Euro proving repulsiveNick Land / text
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Euro proving repulsive
Shanghai Star. 2003-09-25
By Nick Land
The recent Swedish vote to reject membership of the "common" european
currency - the euro - by an impressive margin of 14 per cent, is yet another
sign that the world monetary order is unlikely to be revolutionized by events
in Europe anytime soon.
For many years now exaggerated expectations about the impact of the
currency have been undermined by the dismal economic performance of the
Euro-Zone, which has consistenctly fallen behind that of neighbouring
European countries, to say nothing of countries in other and more dynamic
regions, such as North America and East Asia.
As denizens of a relatively open and globalized economy with high standards
of administrative probity, despite a garganuan welfare state and concomitant
stratospheric taxation rates, Swedes proved unwilling to commit themselves
to a multinational economic arrangement whose prospects seem cloudier by
the month.
The benefits of uniform European money are superficially compelling, based
upon the elimination of the currency transaction friction bedevilling crossborder business and tourism. Yet these advantages are dwarfed by the
potentially devastating costs resulting from entanglement in the Euro-Zone's
failing social and economic model.
Those glibly comparing the euro to the US dollar purely on the respective
sizes of the two "economies" have typically been at the forefront of the euroboosters, predicting a rapid take-off of the euro as a world reserve currency.
Such predictions have begun colliding with certain uncomfortable realities,
such as the fact that the Euro-Zone does not constitute an "economy" in any
way comparable to the US - in which people share a language, an
entrepreneurial culture and a willingness to move freely within a continent in
search of work or business opportunities.
Regional economic fortunes are ultimately based upon productivity (more
particularly upon TFP or Total Factor Productivity, in which gains from
increased inputs are discounted, leaving only sheer improvement in
economic efficiency).
In this regard Europe's recent performance has been extremely weak, with
the upward spiral driven by post-war reconstruction now thoroughly
exhausted amid trade union obstructionism, a deteriorated welfarist culture,
massive over-regulation and a back-drop of calamitous demographic decline.
The market-phobia pervading the cultural environment of the Euro-Zone
countries is now reaping its inevitable consequences: economic decay, mass
unemployment and petty geostrategic vindictiveness. Under these
circumstances an enthusiastic world-wide uptake of the euro would be
nothing short of miraculous.
France and Germany are now in open defiance of the European Central
Bank rules they previously endorsed so keenly, leaving smaller Euro-Zone
countries increasingly embittered by their cynical double-standards. As such
conflicts intensify, in an atmosphere darkened by prolonged economic
stagnation and rising social tensions, even the continued existence of the
euro is likely to come into question.