# Paul Krugman on initial American reactions to the Euro **URL:** \ **Category:** Factual Questions\ **Created:** [November 12, 2011, 2:56pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689 "2011-11-12T14:56:51Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Rodgers01](https://avatars.discourse-cdn.com/v4/letter/r/b19c9b/32.png) [@Rodgers01](https://boards.straightdope.com/u/Rodgers01)\ **Post date:** [November 12, 2011, 2:56pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/1 "2011-11-12T14:56:51Z")
In [this](http://www.nytimes.com/2011/11/11/opinion/legends-of-the-fail.html?src=me&ref=general) article about the failure of the Euro, Paul Krugman claims that the creation of the currency “was cheered on by American right-wingers, who saw it as the next best thing to a revived gold standard” and “was questioned by American liberals, who worried…about what would happen if countries couldn’t use monetary and fiscal policy to fight recessions.” Is there any truth in that? It sounds suspect to me because American conservatives strike me as typically Euro-skeptic and liberals as typically Euro-phile, and I’d have thought they’d come down on the same side of the issue as their European counterparts. What’s the straight dope? ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [November 12, 2011, 4:09pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/2 "2011-11-12T16:09:28Z")
I imagine most people didn’t care either way. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 4:35pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/3 "2011-11-12T16:35:26Z")
> [@sh1bu1](#): > > I imagine most people didn’t care either way. That has nothing to do with what the OP is asking. Krugman is clearly talking about right wing pundits, not Joe Sixpack. Good question, btw. I don’t recall the situation Krugman describes, but I could have not noticed. This all happened prior to the great internet explosion, so researching this might be a bit difficult. ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [November 12, 2011, 4:35pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/4 "2011-11-12T16:35:47Z")
I can’t answer the question, but it strikes me that conservatives and liberals in the US would rarely if ever be on the same side of any questions regarding fiscal policy. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [November 12, 2011, 4:37pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/5 "2011-11-12T16:37:23Z")
I suspect “liberal” and “conservative” here means “liberal economists” and “conservative economists”. I don’t remember the introduction of the Euro being a particularly widely debated issue in the States amongst the general population, but I imagine it was discussed a lot amongst economists. [Krugman](http://web.mit.edu/krugman/www/euronote.html) himself is a liberal economist who was skeptical of the Euro during the run-up to its introduction. At the same time, the WSJ was publishing a three part series [“The Case for the Euro”](http://myweb.liu.edu/~uroy/eco41/articles/mundell/mundell6a.htm), so to the extent that we can generalize from the WSJ editorial board to Conservative economists and from Krugman to liberal economists, I’d say he’s correct. ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [November 12, 2011, 4:38pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/6 "2011-11-12T16:38:01Z")
> [@Rodgers01](#): > > It sounds suspect to me because American conservatives strike me as typically Euro-skeptic and liberals as typically Euro-phile… These are really thought-terminating cliches. American liberals like the way some things are done in (western) Europe and cite European successes with those concepts in defense of their opinion. American conservatives don’t like the way some things are done in Europe and cite European failures in defense of their opinion. No serious political organization says, “let’s do/not do X because that’s how they do it in Europe and they are teh awesum/suxxorz”. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 4:40pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/7 "2011-11-12T16:40:33Z")
My first thought was to look for what Milton Friedman thought-- he was pessimistic. [Link.](http://www.forbes.com/sites/timworstall/2011/11/10/friedman-and-roubini-on-the-euro-breakup/). ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 4:47pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/8 "2011-11-12T16:47:07Z")
From Marty Feldstein’s wikipedia page: > [@](#): > > In 1997, writing about the upcoming European monetary union and the euro, Feldstein warned that the “adverse economic effects of a single currency on unemployment and inflation would outweigh any gains from facilitating trade and capital flows” and that, while “conceived of as a way of reducing the risk of another intra-European war”, it was “more likely to have the opposite effect” and “lead to increased conflicts within Europe and between Europe and the United States”.[2] It would appear that the good professor has a selective memory. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [November 12, 2011, 4:54pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/9 "2011-11-12T16:54:35Z")
Milton Friedman wrote a classic essay arguing for flexible exchange rates so it’s not surprising he was skeptical about the euro. Exchange rates aren’t a standard partisan or ideological issue and it is possible to find conservative economists on both sides of the issue. It’s quite likely that hard money conservatives of the kind who argue for the gold standard might have been supportive of the euro. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 5:00pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/10 "2011-11-12T17:00:09Z")
> [@Lantern](#): > > Milton Friedman wrote a classic essay arguing for flexible exchange rates so it’s not surprising he was skeptical about the euro. Exchange rates aren’t a standard partisan or ideological issue and it is possible to find conservative economists on both sides of the issue. It’s quite likely that hard money conservatives of the kind who argue for the gold standard might have been supportive of the euro. You mean proponents of the gold standard like… Milton Friedman? ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [November 12, 2011, 5:31pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/11 "2011-11-12T17:31:26Z")
> [@John\_Mace](#): > > You mean proponents of the gold standard like… Milton Friedman? Friedman claimed the gold standard caused the Great Depression, so that’s pretty strange advocacy on his part. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 5:49pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/12 "2011-11-12T17:49:58Z")
> [@Captain\_Amazing](#): > > Friedman claimed the gold standard caused the Great Depression, so that’s pretty strange advocacy on his part. He didn’t advocate a return to the gold standard as a stand-alone action, but only as a part of an comprehensive overhaul of the tax and regulatory system. He was no fan of the Fed. ---
**Author:** ![SanDiegoTim](https://avatars.discourse-cdn.com/v4/letter/s/85e7bf/32.png) [@SanDiegoTim](https://boards.straightdope.com/u/SanDiegoTim)\ **Post date:** [November 12, 2011, 6:01pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/13 "2011-11-12T18:01:35Z")
While I am considerably right of center, I truly ignore the extreme right. It’s a waste of my time listening to/reading their musings. Agree with me or not, I consider Paul Krugman so blinded by his ideology, that whatever he has to say falls on my deaf ears. ---
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [November 12, 2011, 6:31pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/14 "2011-11-12T18:31:13Z")
> [@SanDiegoTim](#): > > While I am considerably right of center, I truly ignore the extreme right. It’s a waste of my time listening to/reading their musings. Agree with me or not, I consider Paul Krugman so blinded by his ideology, that whatever he has to say falls on my deaf ears. You must be thinking of someone else. Krugman is a liberal who also happens to be a distinguished economist, but lately he seems to be having trouble separating economics from politics. He’s by no means right-of-center. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [November 12, 2011, 6:44pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/15 "2011-11-12T18:44:40Z")
As I recall the news debates around the founding of the Euro - the main debate was precisely over how to control a country’s deficit; the usual escape for a country that overspent was devaluation of their currency, thus imposing austerity on imports as a self-correcting process. For any of the “questionable” economies to join the euro they had to show they had met spending targets (Deficit as percent of GDP?), and then continued to meet them. Even during the run-up to entering the euro, a lot of the now-problem economies had to do much fudging and redefinition to hide the reality that they did not meet the euro admission targets. What the euro apparently failed to address was (a) what if the government lies? and (b) so they violate your constraints… what are you going to do now? Like a spendthrift family member, your choices are pay their debts or cut them loose - basically, the economic death penalty. I suspect the debate with economists was less about right or left - Europe was a hopelessly lost cause socialist paradise. The debate was more about moral bravery - how much you trusted politicians to make tough decisions versus dithering and postponing the difficult choices. On neither side of the Atlantic have we seen any mass determination to face reality. The pessemists fears have come true. ---
**Author:** ![John\_DiFool](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_difool/32/19543_2.png) [@John\_DiFool](https://boards.straightdope.com/u/John_DiFool)\ **Post date:** [November 12, 2011, 6:44pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/16 "2011-11-12T18:44:48Z")
Nor do I consider him blinded by his idealogy. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [November 12, 2011, 6:56pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/17 "2011-11-12T18:56:39Z")
The throwaway comments make 2 points - “the euro is equivalent to the gold standard” - I.e. the european states become like the states in the USA, unable to “print money” when there is a shortfall. So when they overspend, their choices are bankruptcy and severe austerity cost cutting. Conservatives like these simple (simplistic?) ideas on the limits of government. “no control of monetary policy” - Since they don’t control the central bank, they can’t change the money supply(print money), the interest rates, or other “stimulus” means to kickstart the economy. Liberals like the interventionist capability of the government, and putting these limits on it will reduce the ability of the government to adjust the economy in response to problems. Of couse, like the US feds versus the state governments, there needs to be a central power to control and regulate the actions - money supply, stimulus, interest rates, etc. - on behalf of members. However, in Europe unlike the USA the central government is relatively powerless and inert; plus they are less likely to respond and affect the whole of Europe to help a few marginal economies if France, Germany and several others are still doing fine. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [November 12, 2011, 6:59pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/18 "2011-11-12T18:59:06Z")
> [@John\_Mace](#): > > You mean proponents of the gold standard like… Milton Friedman? Friedman was definitely not an advocate of the gold standard. I think he basically believed in fiat money where the central bank was constrained to strictly follow some money growth rule. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 7:18pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/19 "2011-11-12T19:18:27Z")
From MF’s wikipedia page: > [@](#): > > Friedman believed that if the money supply was to be centrally controlled (as by the Federal Reserve) that the preferable way to do it would be with a mechanical system that would keep the quantity of money increasing at a steady rate. However, instead of government involvement at all, he was open to a “real,” non-government, gold standard where money is produced by the private market: “A real gold standard is thoroughly consistent with [classical] liberal principles and I, for one, am entirely in favor of measures promoting its development.” He did however add this caveat, “Let me emphasize that this note is not a plea for a return to a gold standard… I regard a return to a gold standard as neither desirable nor feasible—with the one exception that it might become feasible if the doomsday predictions of hyperinflation under our present system should prove correct.”[36] He said the reason that it was not feasible was because “there is essentially no government in the world that is willing to surrender control over its domestic monetary policy,” however it could be done if “you could re-establish a world in which government’s budget accounted for 10 percent of the national income, in which laissez-faire reigned, in which governments did not interfere with economic activities and in which full employment policies had been relegated to the dustbin…”[36] ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [November 12, 2011, 7:29pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/20 "2011-11-12T19:29:32Z")
> [@John\_Mace](#): > > From MF’s wikipedia page: Jesus Christ, how did that guy ever get put in charge of anything more important than a kindergarten class? Actually, I take that back. Children’s minds are too fragile. [Next page](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689.md?page=2)