North America’s sharpest minds insist that the European currency zone can—and must—survive. Our best (Lawrence Summers and Timothy Geithner, for instance) still argue that Germans and Spaniards, Portuguese, Greeks and Italians can overcome their differences and sufficiently discipline their individual actions to maintain a strong common currency.
While differences between Canada and the United States are no greater than those within the German or Italian republics, the same expansive intellects in North America are silent on our own disunion.
European unity must persist not because Europeans are naturally better at governing but because of the wealth they’ve created by pooling their economic resources. Silence about the very idea of a full-fledged North American union reveals how few accomplishments we have in common.
We are liberal continentalists abroad—and liberal nationalists at home.
Mark Carney, Governor of the Bank of Canada, elegantly asserts, “The European situation is fragile but fixable; manageable if it is managed.”
He goes on:
“Thus, European authorities must create time to re-found their monetary union based on credible fiscal arrangements and more flexible economies that can adjust quickly to inevitable shifts in internal European competitiveness. In our opinion, the existing European resources, including the European Financial Stability Facility and the European Central Bank facilities, can be used much more efficiently to create a multi-year window for these adjustments.”
Despite the differences between the relatively poor economies in the south and the spectacularly sophisticated economic engines in the north, Europeans, Carney insists, should keep building one united European economy, one that is regulated and stabilized by continent-wide institutions and is fuelled by a common currency and flexible capital and labor markets. Yet, with a fraction of Europe’s bad blood and tribal differences, Canada and the US can’t go any further than doing away with tariffs and running a smooth border?
Of course, the governor of the Bank of Canada can’t think out loud about the future of the Bank of Canada. He’s an officer of the status quo. He’d be eligible for a big promotion or another illustrious career in business if the US Federal Reserve and the Bank of Canada were merged. The fate of his office, however, should be up for serious discussion by those who recommend big solutions for Europe, and who tell us that radical change awaits all Western economies.
No one is suggesting seriously that the US monetary union can’t work any longer because California’s finances are a mess, or that Ontario manufacturing shouldn’t be included in the same currency zone as oil-exporting Alberta. No one is suggesting that breaking up our two national currencies in order to make monetary policy more sensitive to the economic features of each region wouldn’t profoundly harm the common economy.
On the other hand, why not take up the logic of two continent-wide North American dollars and decide to make one?
Canadian monetary experts wouldn’t have their own currency to manage, of course. Yet Germans don’t now, and they certainly thought they were pretty good at it too.
With one currency, barriers to and arguments against full Canada-US economic integration of labor forces and capital markets would shrink. However, a true economic union would be more competitive globally and could accommodate real trade diversification as well.
It’s noteworthy that Germany, the European Union’s staunchest guardian, is also a great global trader.
“Germany’s exports to non-EU countries,” during the first half of 2011, “have gone through the roof. Exports to Brazil skyrocketed, increasing by 61.4 percent over last year, to China by 55.5 percent and to Turkey by 38.8 percent. And it wasn’t just exports; Germany has increased its imports from developing nations as well, especially China. In fact, demand for lower-priced goods has grown so much that China has replaced the Netherlands as Germany’s largest supplier of goods.”
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