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James Roberts
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I have two main comments--first, that these arguments seem to me to be "deja vu all over again," meaning that that are pretty much the same (basic) arguments made against a common US currency among the states in our past. The single currency should and will survive, precisely because its framework provides a means for member states--and their people--to address the problems, while still enjoying the benefits--as we have since a single currency was introduced--of the single currency and the rapidly integrating economies. Second, the arguments presented spring more from an ideological position than anything else--government intervention is bad, pension benefits are excessive, etc. Most of these arguments are simply not supported by the data--especially when they are investigated at the country and sub-national levels. Few countries in Europe use either a collectivist system or exist as "welfare states." An in-depth look at the health care expenditures of the US v. European countries would immediately show the enormous--and I emphasize enormous--savings in the European systems. Likewise with the labor markets: That they differ from the US labor markets (and there are quite a few--n.b., the Californian market v. e.g., the Georgia market) does not make them "rigid," it makes them different. Making them conform to the US model would be so disruptive as to swamp any putative benefits of the shift. Can you say "massive unemployment?" Moreover, the European countries would lose what benefit they have of their existing labor markets, which are abundant. No doubt there need to be some changes. That need exists in all economies at every moment. It does not follow that ideologically-driven prescriptions, bereft of sufficiently rigorous data analysis, would be the right approach.
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Feb 5, 2010