In the quote that opens Prof. Syll's post Godley is highlighting the political problem created by the Eurocrats "Camel's nose under the tent flap" approach to selling the ultimate plan, that the currency was only a half measure and that without the Federalisation of the continent the result would be imbalances that could only be resolved by drastic measures - ultimately emigration.
This was spelled out in Godley's 1992 LRB essay "Maastricht and All That" to which Syll links.
Then Professor Syll goes further and points up the de facto undemocratic approach that the Eurocrats must implement if the structure is to be saved and to which Chancellor Merkel was obliquely hinting in her November 21 comments at the Konrad Adenauer Stiftung, that nation-states must give up their sovereignty
From Malmö's own Professor Lars Syll:
9 December, 2018 at 15:27
If there were an economic and monetary union, in which the power to act independently had actually been abolished, ‘co-ordinated’ reflation of the kind which is so urgently needed now could only be undertaken by a federal European government. Without such an institution, EMU would prevent effective action by individual countries and put nothing in its place …And now Syll:
What happens if a whole country – a potential ‘region’ in a fully integrated community – suffers a structural setback? So long as it is a sovereign state, it can devalue its currency. It can then trade successfully at full employment provided its people accept the necessary cut in their real incomes. With an economic and monetary union, this recourse is obviously barred, and its prospect is grave indeed unless federal budgeting arrangements are made which fulfil a redistributive role … If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation … What I find totally baffling is the position of those who are aiming for economic and monetary union without the creation of new political institutions (apart from a new central bank), and who raise their hands in horror at the words ‘federal’ or ‘federalism’. This is the position currently adopted by the Government and by most of those who take part in the public discussion.
The euro crisis is far from over. The tough austerity measures imposed in the eurozone has made economy after economy contract. And it has not only made things worse in the periphery countries, but also in countries like France and Germany. Alarming facts that should be taken seriously.In this next post Professor Syll highlights the inherent deflationary nature of the euro which the ECB is attempting to battle and which because it is structural can't be solved - hence the ECB's kick the can down the road approach over the last decade:
Europe may face a future with growing economic disparities where we will have to confront increasing hostility between nations and peoples. What we’ve seen lately in France shows that the protests against technocratic attempts to undermine democracy may go extremely violent.
The problems — created to a large extent by the euro — may not only endanger our economies, but also our democracy itself. How much whipping can democracy take? How many more are going to get seriously hurt and ruined before we end this madness and scrap the euro?
10 December, 2018 at 11:10Here are Professor Syll's blog, homepage, CV, publications etc.
Wynne Godley on what it means for a nation not to have its own currency
Finally, some of our Godley ephemera, The first sentence of his obituary in the Times:
As Professor of Applied Economics at Cambridge, a civil servant in the Treasury and later as one of the Treasury’s panel of “six wise men”, Wynne Godley was the most insightful macroeconomic forecaster of his generation. He made major, though as yet not fully recognised, contributions to macroeconomic theory....and more on that LRB essay in October 2012's "The Genius of Wynne Godley: "Maastricht and All That"":
You could probably tease out my feelings about Professor Godley from the headline of last month's "Professor Wynne Godley: The Man Who Foresaw the Euromess Twenty Years Ago".If interested see the above ref'd "Professor Wynne Godley: The Man Who Foresaw the Euromess Twenty Years Ago" for even more good Godley.
Here's more.
We're coming up on the 20th anniversary of a piece he wrote for the London Review of Books, 8Oct1992:
Maastricht and All That
A lot of people throughout Europe have suddenly realised that they know hardly anything about the Maastricht Treaty while rightly sensing that it could make a huge difference to their lives. Their legitimate anxiety has provoked Jacques Delors to make a statement to the effect that the views of ordinary people should in future be more sensitively consulted. He might have thought of that before.Although I support the move towards political integration in Europe, I think that the Maastricht proposals as they stand are seriously defective, and also that public discussion of them has been curiously impoverished. With a Danish rejection, a near-miss in France, and the very existence of the ERM in question after the depredations by currency markets, it is a good moment to take stock.
The central idea of the Maastricht Treaty is that the EC countries should move towards an economic and monetary union, with a single currency managed by an independent central bank. But how is the rest of economic policy to be run? As the treaty proposes no new institutions other than a European bank, its sponsors must suppose that nothing more is needed. But this could only be correct if modern economies were self-adjusting systems that didn’t need any management at all..
I am driven to the conclusion that such a view – that economies are self-righting organisms which never under any circumstances need management at all – did indeed determine the way in which the Maastricht Treaty was framed. It is a crude and extreme version of the view which for some time now has constituted Europe’s conventional wisdom (though not that of the US or Japan) that governments are unable, and therefore should not try, to achieve any of the traditional goals of economic policy, such as growth and full employment. All that can legitimately be done, according to this view, is to control the money supply and balance the budget. It took a group largely composed of bankers (the Delors Committee) to reach the conclusion that an independent central bank was the only supra-national institution necessary to run an integrated, supra-national Europe....MORE
Professor Wynne Godley: The Man Who Foresaw the Euromess Twenty Years Ago
London Times Obituary: "Professor Wynne Godley: economist"
"Embracing Wynne Godley, an Economist Who Modeled the Crisis"
The Genius of Wynne Godley: "Maastricht and All That"
"New Blog On Monetary Economics by Wynne Godley student "
