The Euro: a Political Failure and an Economic Disaster

Alain Parguez is right when he claims that the “euro” is a political failure and an economic disaster, in which French politicians and economists seem to have played a significant role. France’s elite envisaged being a dominant political power on the Continent after the two military defeats of Germany in 1918 and 1945. The two strategies the elite tried were very different, but they both failed. A heavy war indemnity in 1919 and the common European currency in 1990 were seen by the French elite as instruments to suppress Germany’s potential economic (and political) superiority. The French economic elite, represented by F. Perroux and Jacques Rueff, supported the elite’s aspiration of being the leading power within a united Europe by academic arguments. The academic support for the Mitterrand government’s European Union (EU) policy was organized by the former economics and finance minister (and later president of the European Commission), Jacques Delors. He headed the Committee for the Study of Economic and Monetary Union, which unanimously recommended a common European currency “to the benefit of European prosperity.” According to Parguez, the resulting common currency created at a French initiative is the prime reason for the present European economic defeat, which has frustrated the French aspiration to play a leading role as primus inter pares on the Continent. This is so because the rules we are bound to follow make no economic sense for Europe as a whole, which is collectively denied by the European elites. This short commentary discusses whether the economic profession not only in France, but in general, is incompetent, ideologically biased, or simply a “rent seeking” profession.