Like the Brits later, the Swedes had the courage to oppose the neo-liberal dictate of the EU.
Lars P. Syll is an economist at the Faculty of Education and Society at Malmö, Sweden, not to mention a prolific blogger on his own website.
Cross-posted from Syll’s blog
Sixteen years ago, Swedish citizens were asked if they wanted to join the eurozone. Of the 83 % registered voters who participated in the referendum close to 57 % cast their ballot for the ‘no’ side. The result of the referendum came as a total shock to the Swedish establishment. All major parties and business organizations were for the euro. But although the ‘yes’ side outspent the ‘no’ side ten to one, the ‘no’ side won. Yours truly — unlike the ‘usual suspects’ among establishment economists — participated actively in the fight against the euro. It still makes me immensely proud.
The Swedish people got it right. The political and economic establishment got it wrong. The monetary union has not been able to show any noteworthy productivity jumps since it was launched 20 years ago. The economic problems have been growing and at times almost led to national catastrophes. The EMU is not an optimal currency union, and as history has told us, countries like Germany, Greece, Italy, Portugal and Spain do not fall into step when marching.
The problems with the euro should not come as a surprise. If a country gives up its own currency, it does not only give up the possibility of having its own over monetary policy. Membership in the European monetary union means less accommodation and flexibility when it comes to country-specific asymmetric shocks and fewer possibilities for freely using financial policies to guarantee low unemployment and high welfare levels.
The unfolding of the repeated economic crises in euroland during the last decade has shown beyond any doubts that the euro is not only an economic project but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now force on us.
One size does not fit all. The overall performance of the eurozone looks bleak. The establishment’s euro project has never been democratic. That is also one of the reasons for its low legitimacy among ordinary people. When the people were asked — as in Sweden — we said no. We understood that a single currency would lead to higher unemployment -– with a central bank that mainly focuses on inflation and pays little attention to financial stability would be to expect. The euro model is and has always been footed on an economic model that increases inequality and is to the disadvantage of the working classes.
Sweden has since the financial crisis hit Europe managed its economy far better than the eurozone countries. There is still nothing that speaks for Sweden to abandon the krona for the euro. With our own currency, we can pursue a much better macroeconomic stabilization policy.
How much whipping can economy and democracy take? How many have to be hurt and ruined before we end the euro madness? Instead of just go on mending the project it would be better to just admit that we have reached way’s end and that it is time to take another road. A road forward. A road without the euro.