Monday 12 August 2002

An "assorted nutter" responds

In today's Monday Diary in Business AM, Dominic Prince explains why the Euro is no big deal.

As he says:

It's a very simple system, too. You go into a shop, order your goods and pay for them in euros - not Lira.... and it seems to work very well. The assorted nutters of the eurosceptic persuasion should go and see the euro in action.
Ah, so that's all there is to it. The fact that the euro is a political project doesn't matter. A single European interest rate would have no negative consequencies for the UK. Having a currency which fluctuated more than now against the dollar is irrelevant. Bailing out the bankrupt continental state pension schemes will be wonderful.

But there is a catch, it seems:

Last year, we were spending an average of £30 for lunch for four. The same lunch for the same four people has inexplicably risen to £50. But this has nothing to do with the euro and everything to do with opportunism, or capitalism, as we economists like to call it.
It's at times like this that I appreciate postings such as this one from Vangel Vesovski. Note point 4: "Most economists should be working in McDonalds. The only ones who are close to describing reality are the Austrian school. If you want to understand, read Mises or Rothbard."

Exactly. The EU is not a capitalist project. The euro is not a capitalist currency. Under a true capitalist monetary regime - based on gold and silver - Italian dinners would not suddenly increase from £30 to £50 but would actually decline gradually in price year after year. Mr. Prince has some serious thinking to do if he wants to understand both the euro and capitalism.