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The eurozone is a political project, not an economic one If you try to understand the eurozone as an economic policy idea, you'll quickly start to see that it's a pretty stupid idea. That will lead naturally to the conclusion that its architects were stupid people, and that the policymakers in Brussels and Frankfurt who oversee it today are also stupid people. And if you try to understand everything that's going on through the lens of stupid people doing stupid things, you'll end up misunderstanding the situation. The single most important thing to understand about the eurozone — the group of 19 European Union member states who use the euro as their official currency — is that it's primarily a political project, not an economic one. And despite the considerable problems with European economies, it gives every indication of succeeding in its political goal of pushing deeper and deeper integration of European countries. Ireland's main trading partners are the United States and the United Kingdom. Finland's main trading partners are Russia and Sweden.

Economics simply can't explain why they would want to be in a currency union with Italy and Portugal and Greece. () The eurozone's member states — Portugal, Spain, France, Luxembourg, Belgium, the Netherlands, Germany, Italy, Austria, Ireland, Finland, Cyprus, Estonia, Malta, Greece, Slovakia, Slovenia, Lithuania, and Latvia — have all forsworn sovereign control over monetary policy and handed it over to the European Central Bank in Frankfurt. The ECB sets interest rates, controls the quantity of euros in circulation, and generally performs for its members the functions that the Federal Reserve does for the United States or the Bank of Japan does for Japan. As an economic policy, this is an idea with some serious flaws.

The eurozone is not what economists call an optimal currency area — its economies are too big and disparate. One way this flaw plays out is that Europe has very limited labor mobility compared with, say, the United States. If the economy is strong in the Netherlands but weak in Spain, it's difficult for Spanish people to simply move to Amsterdam, as they don't speak Dutch. European countries maintain separate welfare states, and have very different average living standards.

Consequently, economic conditions can be very different in one part of the eurozone than in another, making it difficult for the ECB to create policy that is appropriate everywhere. Encyclopedia britannica 2013 ultimate edition torrent download pc. These problems are why economics writers fall all over themselves these days to come up with stronger condemnations of the eurozone's fundamental flaws. It 'a doomsday device for turning recessions into depressions,' which is pretty good. But European Economic and Monetary Union isn't a blunder, it's an incredibly ambitious political idea. In the late 1940s and early 1950s, European leaders decided that World War II was not just a uniquely horrible event but the culmination of a centuries-long process of great-power rivalry. They committed to the construction of a series of institutions — first the European Coal and Steel Community, then the European Economic Community, then the European Union — that would make war impossible.

By integrating the steel industries of France and Germany, it would be impossible for either country to produce war material without the cooperation of the other. Deeper integration in subsequent decades only makes military hostility even more difficult. The slogan underlying these efforts is 'ever closer union,' and the monetary union is a step toward that goal. And indeed, while the past five years have been a time of economic trouble for members of the eurozone, those very troubles have pushed the member states toward even closer forms of political and economic integration on subjects like budget discipline and bank regulation.

The political meaning of the eurozone and the European Project differs a bit from place to place. To France and Germany, it means the end of war. To Ireland, it means independence from the United Kingdom. To Finland and Latvia and other eastern states, it means independence from the Russian sphere of influence. For Spain and Portugal, it means the end of dictatorship and integration into the realm of democracies. For Greece, it means (unlike Turkey) certification as a real European country.

These big political ideas are what drive the eurozone and the vast majority of mainstream European leaders. It's why these countries are willing to put up with a lot of pain to keep the eurozone alive. Everything beyond the survival of this dream — including the practical economics — is secondary. The eurozone crisis isn't really over One view is that the eurozone crisis is a thing of the past, something that began in 2010 but was brought to an end in 2013. If you're adopting the viewpoint of a banker, a bank regulator, or a Treasury Department official who needs to worry about the American economy, then this makes sense. Europe's economic problems no longer pose a threat to financial stability in the United States.