The Euro And The Dollar

Two economies at the top of the world; populous, productive, and wealthy almost beyond belief. And two currencies, each used and accepted across the globe. One will fall and one will stand. Why? This post at VodkaPundit puts it in terms of labor mobility and Southern Man paraphrases that argument here.

In the USA regional differences have endured to a surprising degree given our remarkable mobility; the very name of this blog is a nod to regional affiliation. And mobile we are: a Californian out of work has no problem moving to Texas and becoming a Texan (or taking the more humorous road and holding out as a California ex-pat; Southern Man knows many California Girls-in-exile). But these regional and cultural differences and our division into fifty states are, in the big picture, relatively unimportant; in the big picture, we are all Americans and our current region of necessity or choice is secondary to that essential national identity.

The seventeen nations of the European Union share a common currency but not a common identity. There is really no such thing as a European. Nationality really matters in Europe, in ways far deeper than Americans can really understand. And this means that even if there are no jobs in France and employers are begging for workers across the river in Germany, few French will cross the Rhine and become Germans.

And thus the argument that a common currency can extend only so far as labor is mobile. In spite of their best efforts and intentions, labor is not mobile across Europe because the denizens of Europe are not Europeans; they are French and German and British and they choose to adhere to those identities and those boundaries. And this will ultimately mean an end to their common currency and a return to francs and deutchmarks and pounds.

And dollars.