A solution to the European economic problem.
November 25, 2011 2 Comments
I keep reading about the woes of Europe. Tyler Cowen for instance says in: Is the end near?: “The motto “no monetary union without a fiscal union” isn’t wrong, but more to the point is “no fiscal union without a common electorate.”
The problem is supposedly sticky wages, and the solution for sticky wages is apparently destroying the monetary system. Clearly there is a simpler solution. Money is just a measure of value. Similarly, the hour is just a measure of time, the meter is a measure of length, and so on. Instead of changing their monetary system, Greece and Italy should just revalue their units of measure, keep the Euro, and drop out of the metric system. The Greek Hour could be made longer, so that Greek workers would be more productive for an “8-hour” day. And if they didn’t want to work on the time scale of “the new hour”, they could worker fewer new-hours and just as much real-time as old-hours, but be paid for fewer hours of work. But see, their Euro-denominated wages on an “hourly-basis” would not be cut, everyone can save face, and the Euro preserved. We do something similar every year for daylight savings time.
For solving the problem in Europe, I will be accepting my Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel next fall, see you somewhere in Scandinavia.