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Anyone who did an economics 101 class could predict that forcing such diverse economies with populations reluctant to move to richer parts of the union into a s

Anyone who did an economics 101 class could predict that forcing such diverse economies with populations reluctant to move to richer parts of the union into a single currency would result in net wealth reduction. [1] Even the bureaucrats in Brussels knew about this. It was still pushed through because they wanted to accelerate the political union via the currency union, ignoring the financial costs. What they did not expect was the US subprime crisis to hit europe that hard and that early. [1] https://en.wikipedia.org/wiki/Optimum_currency_area https://en.wikipedia.org/wiki/Optimum_currency_area

blue1 10y ago
I remember reading an interview with Romano Prodi, former president of the European Commission, saying that it was well known from the beginning that the currency union alone could not work. The idea was that it would have eventually caused the political union to happen.
simongray 10y ago
I don't disagree with your point, but just wanted to point out that "Anyone who did an economics 101 class" is usually not the best people to get advice from. Economics is field where the agreed mainstream consists of some simplistic views of how an model economy could work in a sort of "perfect vacuum" where certain unrealistic parameters apply: perfect information and perfect competition, for example. The real value to economics as a discipline does not lie with the introductory concepts, but rather on everything learnt after Economics 101, i.e. the mess that is the real-world economy which features transaction costs, political institutions, and all of the aggregated effects of 7 billion agents with different psychology.
- ivan_ah 10y ago
  Is there anything in ECON that's good then? I'm thinking 70% of first-year ECON would be bullshit, but surely some ideas about demand and supply are useful. Are you an economist? Or did you study economics? I'd like to publish a book in the spirit of "Economics, only the good parts," and would be interested to hear your opinion what to include. For example, I really liked this class: https://www.edx.org/course/principles-economics-calculus-caltechx-ec1101x-0 https://www.edx.org/course/principles-economics-calculus-cal...

blue1 10y ago

I remember reading an interview with Romano Prodi, former president of the European Commission, saying that it was well known from the beginning that the currency union alone could not work. The idea was that it would have eventually caused the political union to happen.

simongray 10y ago

I don't disagree with your point, but just wanted to point out that "Anyone who did an economics 101 class" is usually not the best people to get advice from. Economics is field where the agreed mainstream consists of some simplistic views of how an model economy could work in a sort of "perfect vacuum" where certain unrealistic parameters apply: perfect information and perfect competition, for example. The real value to economics as a discipline does not lie with the introductory concepts, but rather on everything learnt after Economics 101, i.e. the mess that is the real-world economy which features transaction costs, political institutions, and all of the aggregated effects of 7 billion agents with different psychology.

ivan_ah 10y ago
Is there anything in ECON that's good then? I'm thinking 70% of first-year ECON would be bullshit, but surely some ideas about demand and supply are useful. Are you an economist? Or did you study economics? I'd like to publish a book in the spirit of "Economics, only the good parts," and would be interested to hear your opinion what to include. For example, I really liked this class: https://www.edx.org/course/principles-economics-calculus-caltechx-ec1101x-0 https://www.edx.org/course/principles-economics-calculus-cal...