The Euro: How a Common Currency Threatens the Future of Europe

There are two Joseph Stiglitzes: the brilliant economist and the repetitive polemicist.Unlike “The Price of Inequality,” a book wrapped by Stiglitz the rambling, Nobel-flashing celebrity blogger around the nucleus of a very incisive article written by Stiglitz the brilliant economist, this forward-planned, structured book is 100% the work of the brilliant economist. To be sure, he is starting to sound a lot like his alter ego, but the transformation is far from complete and what we have here is a genuinely exhaustive, if not amazingly deep, treatise that has a beginning, a middle and an end.The book is divided in five sections (that are however grouped in four parts):• First a “you are here” section that lays out the author’s views of where we stand and how we got here• Second, a three-part expo on (i) how currency unions are meant to work, (ii) where the Euro diverges from this ideal and (iii) the (negative) role of the ECB• Third, a long whine against the Troika’s work in Greece and (less so) Ireland• Fourth, the Stiglitz manifesto of how to (semi-centrally, you have been warned!) run an economy, mischievously mis-branded “Creating a Eurozone that works”• Fifth, a daring and provocative “what next” sectionA quick read through chapter 9 (the manifesto) may be the best starting point for the reader. Read that and you will calibrate how much to the right you are of the author (or to the left for the 5% of the human population who are thus inclined). Agree or disagree, you are now reading the book with the author’s ideal world in mind and that’s how you will get the most out of it.The bits I thought were unparalleled in the literature were the section entitled “Internal devaluations and external imbalances” (pp. 97 to 110) that nestles inside the already very strong chapter on “When can a single currency ever work,” the entire chapter on how the ECB was conceived, how it thinks and whom it serves (brilliant, brilliant) and the final section of the book that takes you through how we can go about executing on “more Europe” or “less Europe,” as opposed to muddling through to assured destruction.That said, the final section will make your stomach turn if you are German, and you will be right to object. If Europe was the only economy on earth, I can see how perhaps Germany could pay its workers more / restrict its trade surplus / whatever. I’m not saying I buy it, I’m just saying I can see it. But it’s competing with Japan, China and South Korea, to say nothing of the US. Not Italy. Not Spain. Not even France any more. Most certainly not Greece. I’d say it has the most luxurious setup for its workers from all of its competitors. Hell, Angie picked up 20% of workers’ wage bills at the depths of the crisis to keep them employed. And the unions have board seats in most major employers, as often does the state. Stiglitz knows all this (and it bothers him when it comes to German companies buying Greek state assets, for example) but is selective about when he remembers it.Also, the book sets the ambitious goal of explaining that Europe is suffering from poor policy design rather than from having muddled through too long without engaging in structural reform. This the author fails to do, entirely. The treatment of structural reforms is not worthy of a high-school essay.I won’t even bother going into the arguments, just count the number of pages dedicated to looking at structural reforms and draw your conclusions.But I’ll cite two examples where the author’s judgement on specifics is almost as awful as his judgement on macroeconomics is brilliant:1. The author sides with the pharmacists in my country (full disclosure, my mom’s a Greek pharmacist) who are plainly one of many extractive agents in an economy that is full of extractive agents. Suffice it to say Greek pharmacists went on strike, citing the Hipporcratic oath, when the troika threatened to break their stranglehold on baby formula. You heard that right, it was (and may still be, I’ve stopped following) illegal for a supermarket in Greece to sell baby formula. You’ve got to pay up and buy it at the pharmacist. Just an example.2. The author mentions more than once that George Papandreou was crusading against the press-owning oligarchs. Point of information: George Papandreou was a third-generation prime minister. Both his grandfather George and his father Andreas have served as prime minister, multiple times. Look it up on Wikipedia, some crazy percentage of the time since WWII the prime minister or the head of the opposition in my country was called Papandreou. If you think a political clan can maintain that position and not be in cahoots with the oligarchs you know nothing about Greece. You probably know nothing about planet earth. Or you are blinded a bit by your views, perhaps…So this book is not without its foibles. Overall, however, it does a tremendous job of laying out a view and it is the only book currently in print that covers so many facets. And it is not afraid to shout from the rooftops that the emperor has no clothes.It makes excellent background reading for my favorite book on the Euro, the one by the FT’s Martin Sandbu. Sandbu goes deep, and if you want the skinny on his “straw man” you’ve got it right here!

Rarely do I ever leave a book unfinished. This was one of those rare occurrences.There are obvious problems with lack of cohesion and structure around the Euro. Those are addressed, but frankly, it doesn’t take a Nobel laureate to identify them.The majority of the book is a one-sided ideological rant utilizing a lot of opinion stated as fact. Further, the book is rife with glaring omissions and contradictions. These are dismissed with a quick “yeah, but” (i.e. quickly shifting blame from Greece’s profligacy to pretty much anyone ideologically different from Stiglitz). And, not for nothing, it is written in a remarkably self-assured tone for someone who once predicted Fannie Mae was incapable of default. Stiglitz sounds like he still hasn’t gained an appreciation for variables unseen or not yet considered.I’m no “neoliberal” (as Stiglitz derisively calls anyone he disagrees with), but I do appreciate a fair, objective assessment of the facts, the knowns and the unknowns, when I read books on science and economics. In that regard, this book fails miserably.

I've read this book twice. It has a lot of good information, especially about the crack-pot policies pursued in the eurozone during its period of crisis around 2010. The author is pretty critical of the economic decisions made to deal with Greece and the other countries that struggled. Overall, this is a good, informative discussion. For example, he lays out the very obvious problem with the lack of exchange rate flexibility that plagued countries desperate to improve their trade balances. He explains how the policies pursued (austerity, internal devaluation) were disastrous. I came away with heavy suspicions on whether the eurozone is truly an economic partnership or just an opportunity for stronger members to take advantage of the weaker.The author does take some liberties in his assessment of the underlying cause of the eurozone's problems. He blames neoliberal ideology but doesn't spend any time wrestling with the ideas or explaining how they might have been implemented differently to help them work. The free market is a great asset to an economy; unfortunately the orchestrated approach set into place by the eurozone's powers is what made this experiment suffer as it has. With that said, the book discussed a very trying time in our world's economy being the aftermath of the Financial Crisis; I think a little more caution is in order before making the conclusion that free market capitalism was the cause of the crisis (pg 247) and therefore shouldn't be trusted.The real value of this book is in the early sections on pointing out what the eurozone's current problems are and walking through the poor policy making done to remedy the situation. The latter part of the book is what the author thinks ought to be done to make things better. His system of import/export chits is interesting, but almost sounds too simplistic and a means of government trying to manipulate trade levels in order to fine tune economic health. Centrally planned options like this almost never succeed. Country or region specific euros? How is this much different than going back to separate currencies? I found entire chapters (e.g. Ch 10) unhelpful as the author attempts to explain, for example, how Greece can reestablish its own credit market despite not having any savings to jumpstart the system. His answer is that credit nowadays is just often created out of thin air so...it'll be alright. He builds a lot of suggestions off of shaky assumptions throughout the last third of the book.With all this said, it is overall a decent book and will sit on my shelf for some time. It's an interesting read and will help you hold your own should someone bring up the pretentious question of "will the eurozone survive?" at a cocktail party. Just look at them stupefied and say "not if the Troika thinks internal devaluations will ever truly replace the benefits of exchange rate flexibility!"

Anyone who cares to be informed when voting, needs to get a grounding in economic concepts. While this book is about how the Euro is a muddle that needs to be reformed or abandoned, such arguments need to be made against a background of economics.One thing is clear from the author who is a Nobel Laureate, ex chief economist at the World Bank but nevertheless a strong opponent of neoliberalism, is that what we have been doing since Reagan and Thatcher's changes have been disastrous for most people. Clearly this does not mean that people accept the evidence. Both Tory and New Labour were exactly the same in this as was and is the ECB. And there is the heart of the problem. A successful economy needs to be more than one in which GDP increases.The majority have gone backwards which has lead to poor economic growth and the rise of the popular right.As mentioned in my headline, the Chapter on Brexit is worth the cost of the book. It is frankly the best piece I have read on it. Not least because is calmly points out the problems for the angry people who did not (and still will not) accept the result of the referendum. Europe cannot stay still. It is not a panacea and political structures that it needs to make it a success are missing and there is no appetite to deal with them.Highly recommended. It is not dry or academic. It is actually tragic that our media do not get people like the author on TV instead of opinionated journalists and MPs who clearly have no experience in economics or have a clue about how an economy works. We would all be better informed.

I am an engineer not an economist but I have always read widely about Europe. How is it that the Euro fiasco was allowed to proceed when almost all economists said at the time that it couldn't work. Why were their voices not publicised by the media in the 90s?This book is one of many saying "I told you so!" eg "the Rotten heart of Europe" by Bernard Connolly.

Every Europhile / EU supporter should read this book.Joseph Stiglitz is a Europhile and so, cannot be dismissed as some EU hating lunatic (the kind of response that some Remainers indulge in when confronted with criticism of the EU).The accounts of the damage that the euro has done to many EU member countries makes devastating reading. The further damage done to those countries by the so called "rescue packages" and "bailouts", is horrifying.Well read Euroskeptics will already know much of this. Europhiles should read and learn the true nature of the organisation which they support - the potential future government of Europe.

This should be compulsory reading for young people as they will see that the EU is far from democratic.

How anyone came up with the idea of having a common currency without first having political union is beyond me - it was just one big bad experiment which is turning out badly for countries who desperately need to devalue but can't. It won't end well for anyone because one it starts to falter it'll be a house of cards with Germany and The Netherlands last to go, but go they certainly will. The EU zone has one fate: downturn.