The Euro: How a Common Currency Threatens the Future of Europe

by Joseph E. Stiglitz

Overview

The Nobel Prize–winning economist and best-selling author explains why saving Europe may mean abandoning the euro.

When Nobel Prize–winning economist Joseph E. Stiglitz posed this question in the original edition of The Euro, he lent much-needed clarity to a global debate that continues to this day. The euro was supposed to unify Europe and promote prosperity; in fact, it has done just the opposite. To save the European project, the euro may have to be abandoned. Since 2010, many of the 19 countries of Europe that share the euro currency—the eurozone—have been rocked by debt crises and mired in lasting stagnation, and the divergence between stronger and weaker economies has accelerated. In The Euro, Joseph E. Stiglitz explains precisely why the eurozone has performed so poorly, so different from the expectations at its launch: at the core of the failure is the structure of the eurozone itself, the rules by which it is governed. Stiglitz reveals three potential paths forward: drastic structural reforms, not of the individual countries, but of the eurozone; a well-managed dissolution of the euro; or a bold new system dubbed the “flexible euro.” With trenchant analysis—and brand new material on Brexit—The Euro is urgent and timely reading.

Product Details

ISBN-13:	9780393354102
Publisher:	Norton, W. W. & Company, Inc.
Publication date:	11/28/2017
Edition description:	Updated
Pages:	512
Sales rank:	919,974
Product dimensions:	5.40(w) x 8.20(h) x 1.00(d)

About the Author

Joseph E. Stiglitz is a Nobel Prize–winning economist and the best-selling author of People, Power, and Profits: Progressive Capitalism for an Age of Discontent; Globalization and Its Discontents Revisited: Anti-Globalization in the Age of Trump; The Price of Inequality; and Freefall. He was chairman of the Council of Economic Advisers under President Clinton, chief economist of the World Bank, named by Time as one of the 100 most influential individuals in the world, and now teaches at Columbia University and is chief economist of the Roosevelt Institute.

Table of Contents

Introduction to the Paperback Edition xi

Preface xxix

Acknowledgments xii

Part I Europe in Crisis

1 The Euro Crisis 3

2 The Euro: The Hope and the Reality 34

3 Europe's Dismal Performance 63

Part II Flawed from the Start

4 When can a Single Currency Ever Work? 85

5 The Euro: A Divergent System 124

6 Monetary Policy and the European Central Bank 145

Part III Misconceived Policies

7 Crises Policies: How the Troika Ensured Depression 177

8 Structural Reforms that Further Compounded Failure 214

Part IV A Way Forward?

9 Creating a Eurozone that Works 239

10 Can There be an Amicable Divorce? 272

11 Toward a Flexible Euro 296

12 The Way Forward 306

Afterword: Brexit and its Aftermath 327

Notes 361

Index 439

Editorial Reviews

"Stiglitz’s verdict is convincing.… We should brace ourselves, over the next few years, for what may be a difficult economic divorce."

New York Review of Books - Rana Foroohar

"Cogent.… Stiglitz’s prescription is compelling."

Bethany McLean

"Much more than a demolition job. These chapters are full of constructive proposals—a glimpse of what the ‘rescues’ would have looked like had the troika, perish the thought, hired their critic Stiglitz to design them."

Financial Times - Marin Sandbu

"Stiglitz argues with his customary force and lucidity that adopting a single European currency was a fatal error."

New Republic - Jeet Heer

"Stiglitz seeks to salvage the Eurozone experiment and the future of globalized Europe. And not a moment too soon!"

Vanity Fair - Anderson Tepper

"[Stiglitz] is surely right. Without a radical overhaul of its workings, the euro seems all but certain to fail."

The Economist

"Stiglitz lucidly and forcefully argues that [the euro] was an economic experiment of unprecedented magnitude.… [He] gives a detailed and persuasive list of measures that would help save the euro."

New Yorker - John Lanchester

"Terrific and clarifying."

The New York Times - Peter Goodman

"The euro is a modern tragedy.…As its embarrassments have mounted, its supporters club has teemed with political romantics and Europhile journalists. Stiglitz’s message to such people is that they are inadvertently destroying what they most cherish."

Times Literary Supplement - Paul Collier

06/27/2016
Nobel Prize–winning economist Stiglitz (The Great Divide) notes early on that the failings of the current European economy are “important for the entire world,” but the emphasis in this dense book is on Europe nevertheless. Most of it is spent amassing evidence (sometimes in graph form) to buttress his contention that there is a simple answer to why, despite “advances in economic science,” the European economy has failed: the 1992 decision to adopt the euro, a single currency for 19 separate countries. Stiglitz believes that the euro has failed to meet its economic and political objectives, and he methodically lays out in detail why that has happened. His concluding section offers advice for a productive way forward that would save the euro and achieve the “shared prosperity and solidarity” that it originally had promised. Despite Stiglitz’s best efforts, this is not an easy book for casual readers; the subject matter, which requires analysis of sophisticated economic phenomena such as quantitative easing, is just too complex to be made accessible, though Stiglitz tries to leaven the complexity with grimly amusing and digestible anecdotes. (Aug.)

Publishers Weekly

"Many of Mr. Stiglitz’s most damning observations are on target."

Wall Street Journal

08/01/2016
According to Nobel Prize-winning economist Stiglitz (economics, Columbia Univ.; The Great Divide), the creation of a single currency, the euro, for the European Union (EU) was a mistake. This book details both the problems as well as potential solutions. The 2008 financial crisis tested global economies, and in Europe, economics and politics remained out of sync, without sufficient structures in place to accommodate the economic diversity of the EU member countries. The first three parts of the text look at the issues, in both policy and structure, of a single currency for such diverse member nations, while the final section offers viable options for moving forward, including reforms, a more flexible single currency, or eliminating the euro altogether. VERDICT Stiglitz does not provide a history of the euro or the EU, but rather focuses on the economic implications and alternatives to the euro as it is today and could be in the future. This title will appeal to those with an interest in economics and politics.—Elizabeth Nelson, McHenry Cty. Coll. Lib., Crystal Lake, IL

Library Journal

2016-06-01
A tale of monetary union and its discontents.Nobel Prize winner Stiglitz (Economics/Columbia Univ.; Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity, 2015, etc.), long a nuanced critic of globalization, turns his attention to the doomed project that is the single European currency, the euro. Doomed, that is, because it presupposes an economic integration into a single economic community that has not been matched by the necessary political integration. The eurozone may be a single entity in theory, but in reality, it harbors competing national interests. Furthermore, any government requires the ability to develop and enforce its own regulations, a cause for conflict within any overarching union. Stiglitz sees within the push for the single currency the same neoliberal motivations as for globalization, a related process, and those, not surprisingly, involve making the rich richer at the expense of the poor. In the case of Europe, the byword for the poor is Greece, the nation that has perhaps suffered most in the cause of economic integration, where wage and pension decreases have had catastrophic effects, including a general devaluation of the economy. "Internal devaluation increases economic fragility by bringing more households and firms to the brink of bankruptcy," he writes. "Inevitably, they cut back on spending on everything." Lack of spending in a consumer economy yields disaster, and in the case of Greece, "the best evidence is that a country that goes through a deep downturn never bounces back to make up for what is lost. What is lost is lost forever." Short of dissolving an economic union that he regards as ill-advised, Stiglitz examines possible palliatives, including allowance for more economic flexibility within the EU, with different areas trading at different values. That economic union can and should be saved, he writes, but only if it truly means the creation of "the shared prosperity and solidarity that was part of the promise of the euro." A cogent and urgent argument of compelling interest to economists and policymakers.

Kirkus Reviews