Magazine

The Lunacy of an Expanded Euroland


How is it that, writing from Rio de Janeiro, your reader Carlos Araujo can see the "inherent fragility" of the European Monetary Union, yet Europe's politicians, business leaders, and economists cannot (Readers Report, July 16, replying to "The euro on trial," European Edition Cover Story, July 2)? History has proved how frail currency baskets, mechanisms, and cocktails can be: The snake, super snake, and exchange rate mechanism all failed. The Treaty of Rome in 1957 proposed economic and monetary union as a central plank of then-Common Market policy, despite the obvious ethnic and cultural barriers. But the vision of an expanded Euroland, where economies recently moved from collective to market-driven status are accepted into the euro "club," is political lunacy.

Obviously, euro-based multinationals would love a single medium of value exchange, since such would remove both the need for multicurrency accounting and exchange risk exposure. Similarly, politicians desire larger power bases. However, the stark fact is that about 98% of all EU businesses (excluding agriculture and the public sector) are small and medium enterprises. With the vast majority of global trade denominated in U.S. dollars, a large exchange risk overhang still exists for those trading outside euroland.

If the EU were made up of 15 Switzerlands, then the euro would work. If, however, each economy were as fiscally stable as Switzerland, there would be no point.

Michael C. Feltham

Shoeburyness, England Microsoft Corp. ("Microsoft: New rules of the road," American News, July 16) reminds me of an old fable.

A frog on a riverbank is approached by a scorpion that is trying to find a way across the river: Says the scorpion: "Dear frog, would you be so kind as to carry me across on your back?" The frog replies: "I will not, as I fear that you will sting me and then I will die." The scorpion says: "Dear frog, reason with me. Were I to sting you while you are carrying me, you would die, and I would drown. Why would I do such a thing?"

The frog considers this, and consents to carry the scorpion. As the frog struggles against the current with the scorpion on his back, he suddenly feels the piercing sting of the scorpion's tail. The dying frog asks: "Scorpion, why did you do that? Now we both shall die!" The scorpion shrugs: "It's in my nature."

John Favaro

Pisa, Italy

Contrary to your suggestion in the Microsoft story, innovation and consumer benefit have never been driven by "a court-appointed special master judge." Innovation and creation are always driven by smart, risk-taking entrepreneurs who see an opportunity and create a market within an environment of creative destruction.

Middat Yildiz

New York Maybe Archer Daniels Midland Co. CEO Allen Andreas could add a second pillow to his collection, one that is inscribed: "Some days, it's not so great to be an ADM shareholder" ("A different kind of Andreas at ADM," People, July 9). That might help to remind him that shareholders would have more confidence in his ability if they had reason to feel more confidence in the board. This is essentially the same board that presided over the company during the price-fixing scandal.

Nell Minow

Washington I hope that no manufacturer takes any notice of Stephen H. Wildstrom's comments about useless keyboards "designed to perpetuate the myth that Windows can be run without a mouse" ("The little laptop that couldn't," Technology & You, July 9).

Of course it can, and of course it should, just like any other software. I personally find this paramount, especially when using laptops. Testing and using computers obviously are very different things.

Laurent Colard

London Robert J. Barro's "Why would a rock star talk to me?" (Economic Viewpoint, July 16) is misguided. AIDS in Africa is claiming the lives of people in the most economically active age group--those age 24 to 40. Meanwhile, debt repayment for some countries absorbs as much as one-third of export earnings.

Property rights, rule of law, and free markets are, to be sure, important prerequisites for economic development. Nevertheless, how do we in Africa invest in health and human capital when most of the money goes towards debt repayment, and the human capital is dying of AIDS?

M. Kaunda

Harare, Zimbabwe

John Maynard Keynes said that in the long run we're all dead, but in many parts of the world this economic truism still applies in the short run as well. People such as Bono are trying to initiate something to help change this awful situation. In the meantime, let's keep the economic theory in the classroom.

Neil Ryan

Dublin

Barro says that his understanding of economics keeps him from believing that debt relief and assistance for AIDS would foster development and save lives. Perhaps this is just the problem--that he and many powerful and influential people like him are so immersed in a commercial and self-referencing worldview that they find it impossible to even begin to imagine alternatives. It's not necessary for 19,000 children to die every day for want of basic health care. Every last fish does not have to be taken from the ocean. The purpose of life is not consumption. Another way and a better world are possible.

Graham Caswell

Arklow, Ireland


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