Here’s What the 'Inventor of the Euro' Thinks Now

[fredxmertz]

Greg palast points to another (far right) 'inventor of the euro': (gregpalast.com/currency-rules-but-its-not-ok/)
Currency rules - but it's not OK

Sunday, June 4, 2000
Give me two good reasons why I should listen to some American tell me about the euro.
All right. Number One: We don't care. There's no emotional baggage here. Frankly, I couldn't care less whether the Queen's nose remains on your coinage or not.
Number Two: Americans invented the euro. And it's time you learnt why.

In 1970, Professor Robert Mundell, now at New York's Columbia University, proposed the 'Europa', based on his theory of optimal currency areas. It won him the Nobel Prize. On the Continent, Mundell is dubbed 'father of the euro'.

But in the US, he is best known for the other creation he spawned. To Americans, Mundell is 'father of Reaganomics', the supply-side monetarism and tear-down-the-government philosophy which is the heart, soul and agenda of the extreme free marketeers.

Mundell was, even more than Milton Friedman, their leader. 'Ronald Reagan would not have been elected President without Mundell's influence,' wrote the Wall Street Journal's Jude Wanniski.

Canadian-born Mundell is a clever and cohesive thinker. It would be impossible to accept one side of his coin - the euro - without accepting the flip side: supply-side economics. They're inseparable, like marriage and lies.

Let's begin with Mundell in his own words. 'They won't even let me have a toilet,' he told me last week. Mundell has bought a castle in Tuscany. (Like many supply-side economists, he created prosperity, at least for himself.)

His problem is that, to preserve the ancient structure, local officials won't let him simply rip out a couple of walls to put in a bath and WC. His point is this: 'Europe is over-regulated. Regulated to death.'

There's more than plumbing on Mundell's long list of bureaucratic bugaboos. 'It's very hard to fire workers in Europe,' he complains. To solve such problems, Mundell conceived the euro. 'It puts monetary policy out of the reach of politicians.'

Yet that does not seem the most direct route to eliminating government. Even defenders of monetary union argue that each nation will remain in control of fiscal policy.

Oh no they won't , says Mundell: 'Monetary discipline forces fiscal discipline on the politicians as well.' The Maastricht rules, the conditions for entering the euro - limiting annual deficits to 3 per cent of GDP and total debt outstanding to 60 per cent - leave little room for active government. As Mundell explains it, Maastricht limitations mean individual nations will have nothing left to entice inward investment except lower tax rates and de-regulation. Governments will compete by shrinking.