Giandomenico Majone

“One of the standard arguments used in the 1990s to justify the introduction of a common European currency was that exchange-rate instability would disrupt trade in the common market. A monetary union between Canada and the US, however, has never been seriously considered even though the trading relationship between these two countries is the largest bilateral trading relationship in the world, see the preceding section. The fact that Canadian and US traders continue to operate, apparently with success, using their own currencies shows that the argument about currency swings dampening inter-state trade is far from convincing. Trade is also booming between Canada, Mexico and the US, the three members of NAFTA, in spite of the coexistence of three national currencies (Vega Cànovas 2010).”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Germany exported its problem of a lack of competitiveness to other member states. Since 1999 this country has followed a tight policy of wage moderation while the rest of the euro zone maintained more or less constant wage increases of around 3 per cent per year. Thus, each year Germany tended to improve its competitive position vis-à-vis the rest of the euro zone – a trend partly explained by the fact that the power of German labour unions has declined significantly, more so than in other euro zone countries. Other countries with particularly close economic ties to Germany are forced to intensify their policies of wage moderation, inducing the leading country again to restrict wage increases. A vicious circle may result when everybody attempts to improve its competitiveness at the expense of the others. As in the case of the so-called race to the bottom in environmental policy, the final outcome is that these countries will not have improved their relative position, but will have adopted wage policies that do not correspond to the preferences of their citizens. At the same time, the distance between the leading group and the other member states keeps growing.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?