MANNHEIM – The European Union’s policy of saving the euro at all costs is enough to guarantee the euro’s survival. But is preserving the “one-size-fits-all” euro really worth sacrificing the eurozone’s competitiveness and, ultimately, European solidarity?
It was the single market’s establishment in 1992 – not the euro’s introduction seven years later – that brought free trade, increased competitiveness, and new wealth to Europe. In fact, the monetary union has become a political and economic nightmare, plagued by recession, record-high unemployment, social unrest, and rising distrust among member states.
But, even as politicians and economists run out of arguments in favor of the euro, few dare to challenge its fundamental structure, let alone propose alternatives. To escape the crisis, EU leaders must recognize the shortcomings of the eurozone’s one-dimensional framework, and develop a system better suited to managing a multi-faceted monetary union.
Excessive centralization and harmonization are decimating the subsidiarity and competition needed to drive Europe’s economies, as the socialization of debt undermines weaker economies’ accountability. Furthermore, closing competitiveness gaps – essential to saving the euro – would not only require weaker economies to become more productive; strong economies, like Germany, would face pressure to become less efficient, diminishing Europe’s overall competitiveness vis-à-vis the rest of the world.