Jörg Bibow — Euro Union – Quo Vadis?

No doubt Greece is in crisis, in economic, political, and humanitarian crisis. But the actual crisis in Europe today runs much deeper and is bound to ultimately tear the continent apart unless the actual fractures that undermine the euro finally get addressed....

Europe used to see itself as the beacon of democracy in the world. But democracy appears to be the ultimate victim of the crisis of the euro currency union, as one people turns against another. The euro as a means to prosperity turned out to be a pipe dream. As a flawed and dysfunctional currency union, it is impoverishing the continent instead. For how much longer will it be a means to secure peace then? 

What is to be done?

Most importantly, in dealing with the legacies of their joint blunders in solidarity, they need to look towards the future and remember what the European ideal was all about. It is high time to re-launch the euro on a sounder footing, beginning with organizing investment [that increases demand] rather than insane austerity [that reduces demand]. 

Through joint investment into their common future Europeans need to refocus on striving for higher productivity, efficiency, and living standards – rather than getting entrapped in a race to the bottom in the name of “competitiveness” (misconceived as underbidding each other in terms of wages and social protection). For Europe there isn’t all that much room to fall further from here without unleashing mayhem. Greece may be the final wake-up call.

Multiplier Effect
Euro Union – Quo Vadis?

Jörg Bibow | Professor of Economics at Skidmore College and a Research Associate at the Levy Institute at Bard College