On purely economic grounds, the holdouts from the single currency -- Sweden, Britain, and Denmark -- have plenty of reason to be skeptical. The euro has long been touted as an economic tonic, yet growth in the euro zone figures to be an anemic 0.5% or so this year, well behind the U.S. and even perhaps Japan. Financial discipline is breaking down, with France and Germany running huge deficits and openly flouting the budget deficit rules. And there's widespread dissatisfaction with the policies of the European Central Bank, which seems to be less concerned with growth than with its reputation for for being tough on inflation.
The economic downside to joining, of course, could diminish, especially if the global economy continues to recover and the ECB runs a more expansive monetary policy. It will be harder to ease the more deep-seated fears about Europe evidenced in the Swedish vote. Like the Euroskeptic British, Swedish no-voters are reluctant to give up sovereignty to a mega-entity. While Euroskeptics are often caricatured as small-minded isolationists, they have a point. The European Union often operates in a top-down manner that makes citizens feel powerless. In a world where flexibility and decentralization are key, Europe seems to be moving in the opposite direction, with labor and other rules dictated from Brussels. Such problems make it possible that Europe's new constitution, now getting its finishing touches, may get voted down in countries such as Ireland, where a referendum is required.
To be sure, one country's vote -- especially a country with a history of neutrality -- doesn't undermine the logic of a single European currency. The 10 countries from Eastern Europe, the Baltics, and the Mediterranean scheduled to join the EU next May are still happy to be joining the club. And the process of knitting the continent into a single economic entity has already gone further than doubters thought possible.
Nevertheless, Sweden's thumbs-down points to flaws in the EU. Unless they are addressed, voters are likely to express their frustration whenever they have a chance.