Why is the euro not a good idea?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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First of all, we have to note that not everyone actually thinks that the creation of the euro was a bad idea.  There are many people who still think that it is very good for Europe to have a single currency.  In this answer, however, I will accept, for the sake of argument, that the euro is a bad idea and I will give reasons for this point of view.

The major problem with the euro is that it imposes a single currency on a set of countries that are very diverse.  The countries that use the euro are too different from one another for the euro to be a good idea.  These differences are both economic, political, and social.

Economically, the euro binds together countries with very different economies.  These include countries like Greece with weak economies and countries like Germany with strong economies.  The problem here is that these very different economies need different things.  They need, for example, different monetary policies because they are so different.  With the euro, they have a single currency and therefore have to have the same monetary policies.  This means that the monetary policy will inevitably be a bad fit for some (and maybe all) of the countries that use the euro.  The euro, then, is a bad idea because it forces countries with very different economies to share common policies that end up not fitting most of the countries.

Socially and politically, the euro binds together countries with different histories, different attitudes, and no real feeling of solidarity.  The various countries of the euro zone do not share a common language.  They do not share a common history and, in fact, can even be historical enemies.  The people of the various countries do not identify with one another as fellow members of the euro zone.  Instead, they continue to think of themselves as nationals of their own countries.  This is a problem because the people of the various countries do not necessarily have any reason to feel that they are connected to one another.  The people of Germany, for example, might not feel connected to the people of Greece and might not want to make many sacrifices to help the Greeks. 

In short, the countries of the euro have different needs and different identities.  They do not feel the commitment to and trust for one another that are needed in order to have a single currency.  The euro was a bad idea because it tried to impose a single currency on countries that do not trust one another and which do not have the same needs.

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