Politics, cultural beliefs and other factors have left the euro with an unclear future, a University of North Georgia professor told a gathering Thursday.
Lance Bardsley tackled the history and possible fate of the currency during a Great Decisions lecture, the seventh in the 2013 series of eight, at University Center | GA 400.
Bardsley explained to the crowd of about 100 that the euro is the common currency used throughout the eurozone, which was established in 1999 and includes 17 of the 27 nations in the European Union.
Unfortunately, problems associated with politics of the separate nations have led to instability in some places. Bardsley said the common currency has had problems since it debuted in 2002.
“When they created the monetary union, the politicians pushed aside the economists,” Barnsley said.
He called the eurozone “unique” in that it uses one currency, but the 17 nations maintain separate national identities.
“You’re talking about national sovereignty,” he said.
Bardsley compared the European Union to the 13 original colonies of the United States.
“You have to remember when our country was founded we were under the Articles of Confederation and one of the things we’re learning now is that there was a long and exhaustive debate about ratification, and people were very fearful of giving up the sovereignty that their state had to this new national government,” he said.
“We kind of see it in retrospect that all of the framers were all wonderful, but everyone wasn’t happy. And if there was a referendum at that time, it probably would have been defeated by popular vote.”
Bardsley said probably the main problem with the euro is that the member nations remain politically and culturally divided.
“[The United States] is a successful monetary union,” he said. “But we had complete political integration first and then [common currency] followed.
“They are doing it the opposite way and that has created problems.”
The poor economic status of some countries compared to strength in others is creating issues as stronger countries have to bail out weaker ones, he said. A primary example of that is Greece and Germany.
Citing an opinion poll taken throughout Europe, he said, most Europeans “basically see the Greeks as a problem” whereas “everybody loves Germany.”
“They need to because that’s the only country that’s going to keep them afloat,” said Bardsley, pointing to the country’s robust economy.
But he noted that even countries such as Germany with stronger economies that have helped others with weaker economies are falling short, which further muddies what may be the euro’s fate.
“Germany’s GDP for 2012 was .5 percent and that’s the engine of the European Union and it’s now slowing down,” he said. “And how long are the Germans going to be basically willing to fund this?”
Bardsley noted that economists have said there are basically three possibilities when it comes to the euro.
The first, he said, is “more of the same. They’ll just keep muddling through and that will continue until one of the wealthier northern economies and people just say no, no more.”
A second option would be “throwing out the system,” or at least Greece.
“A lot of people say the exit of Greece would be good,” Bardsley said. “It would be painful initially, but by having their own currency … it would restore international competitiveness, which would then allow the economy to grow and get people back to work, etc.”
The final option he said is “rebuilding the system.” But that would be difficult.
“You’re talking about structural changes,” he said. “But that will require enormous political wealth, because you’re giving up national sovereignty.
“Are the Germans going to give up their fiscal policy? No. I don’t think the Dutch would [either] and definitely the French wouldn’t.”
The Great Decisions series concludes at 6:30 p.m. March 7 with “Humanitarian Inter-vention” presented by professor Randy Parish Jr.