That progenitor is former University of Chicago economist Robert Mundell. The architect of "supply-side economics" is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell's research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.
Mundell, then, was more concerned with his bathroom arrangements. Professor Mundell, who has both a Nobel Prize and an ancient villa in Tuscany, told me, incensed:
"They won't even let me have a toilet. They've got rules that tell me I can't have a toilet in this room! Can you imagine?"As it happens, I can't. But I don't have an Italian villa, so I can't imagine the frustrations of bylaws governing commode placement.
But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)
"It's very hard to fire workers in Europe," he complained. His answer: the euro.
The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."
He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.
The Guardian 2012
Greg Palast: Robert Mundell, evil genius of the euro
6 comments:
"Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession."
This is monetarist and not even how it works..,,
Greece, Spain, Portugal, Italy ...
What about them? they can run at least a 3% "deficit!" under the EUR treaty...
Mundell is talking about "money supply!" and BS like that... "printing money!"...
a 3% savings rate is pretty good....
US GDP is 19T.. 3% would be 570B we dont save that much the whole "deficit!" is about that including foreigner USD zombie hoarding....
btw US is not part of the EUR system...
So what is your and Mundell's point??????
The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
Mundell: "The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession."
Then officials would have to "leave it to the market" to work out.
This is indeed what has happened, with the result being the takeover of neoliberalism and the destruction of social democracy in the EZ.
"to pull a nation out of recession."
We wouldnt go into recession in the first place if govt maintained a more consistent policy...
3% deficit should work Tom... there is nothing wrong with a 3% limit...
We're not saving 3% and we have just posted 3.1% 2nd quarter and could do much more with healthcare,etc...
"Removing a government's control over currency" he's not talking about fiscal policy he is talking about "money supply!" and BS like that...
Matt, give me control of your finances and I'll demonstrate how the EU works.
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