Nobel Laureate Joseph Stiglitz Says the Euro Needs Big Reform

Roger Lowenstein in the New York Times Book Review:

The nasty headlines from across the Atlantic — Brexit, terrorism, debt crises — almost make us forget that these were supposed to be Europe’s salad days. With a common currency and increasing integration, Europe was, finally, bidding adieu to cross-border conflict and economic crisis. Turmoil and strife were so very 20th century; the future was to be only digital apps and polyglot cafes.

Well, they still have Chartres, and they still have Goethe. They also have millions of migrants, rising nationalism, recurrent recessions and plummeting birthrates. What went wrong?

Joseph E. Stiglitz, the former chief economist of the World Bank and winner of the Nobel in economic science, proposes a simple answer. In “The Euro: How a Common Currency Threatens the Future of Europe,” he argues that the chief source of Europe’s malaise is its 17-year-old currency experiment. “While there are many factors contributing to Europe’s travails,” he writes, “there is one underlying mistake: the creation of the single currency, the euro.”

Stiglitz is not speaking about the obvious fact that 19 independent states use a common currency, but about their failure so far to create the quilt of institutions and shared regulations to make it work. This sounds wonky, and though Stiglitz spews plenty of populist rhetoric, “The Euro” is thick with dense paragraphs (imagine an economics text written by Michael Moore). Still, the underlying idea is ­simple.

More here.