The Nobel Prize–winning economist and best-selling author explains why saving Europe may mean abandoning the euro.
When Nobel Prize–winning economist Joseph E. Stiglitz posed this question in the original edition of The Euro, he lent much-needed clarity to a global debate that continues to this day. The euro was supposed to unify Europe and promote prosperity; in fact, it has done just the opposite. To save the European project, the euro may have to be abandoned. Since 2010, many of the 19 countries of Europe that share the euro currency—the eurozone—have been rocked by debt crises and mired in lasting stagnation, and the divergence between stronger and weaker economies has accelerated. In The Euro, Joseph E. Stiglitz explains precisely why the eurozone has performed so poorly, so different from the expectations at its launch: at the core of the failure is the structure of the eurozone itself, the rules by which it is governed. Stiglitz reveals three potential paths forward: drastic structural reforms, not of the individual countries, but of the eurozone; a well-managed dissolution of the euro; or a bold new system dubbed the “flexible euro.” With trenchant analysis—and brand new material on Brexit—The Euro is urgent and timely reading.
Nobel Prize winning economist Stiglitz (The Great Divide) notes early on that the failings of the current European economy are "important for the entire world," but the emphasis in this dense book is on Europe nevertheless. Most of it is spent amassing evidence (sometimes in graph form) to buttress his contention that there is a simple answer to why, despite "advances in economic science," the European economy has failed: the 1992 decision to adopt the euro, a single currency for 19 separate countries. Stiglitz believes that the euro has failed to meet its economic and political objectives, and he methodically lays out in detail why that has happened. His concluding section offers advice for a productive way forward that would save the euro and achieve the "shared prosperity and solidarity" that it originally had promised. Despite Stiglitz's best efforts, this is not an easy book for casual readers; the subject matter, which requires analysis of sophisticated economic phenomena such as quantitative easing, is just too complex to be made accessible, though Stiglitz tries to leaven the complexity with grimly amusing and digestible anecdotes.