07 May 2010

"Does a Common Currency Area Need a Centralized Fiscal Authority?"

Greg Mankiw's Blog | Does a Common Currency Area Need a Centralized Fiscal Authority?

A final possibility is that the key difference is labor mobility: Americans were willing to move among the states, whereas Greeks have to stay in Greece because they don't speak German.
Assuming, arguendo, this is true (and I think it's more true than not) it requires us to ask why the Greeks don't speak German. Have you seen how many Poles are working in the UK? Why will they learn another language when the Greeks won't?  Obviously this is harder than moving between states, but plenty of others move between language areas.

This is as good a chance as any to post Mark Knopfler's "Why Aye Man," about (English-speaking) Geordies moving to Germany to find work in the 1980s recession.

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