‘Tooth Fairy’ Economics

Of the fictions that exist in our daily lives, there are several categories: childhood (e.g., Santa Claus), harmlessly supportive (e.g., you don’t look fat in that jacket), ignorant (e.g., natural selection and evolution are theories), and downright dangerous (e.g., Europe can hold together a single, viable financial system).

Threats and ultimatums aside, the Eurozone cannot be saved as it currently exists. All honest and clear-eyed observers agree. People in the continent’s most troubled economies no longer support it; that much is clearly evident. The real street-level individual human sacrifices necessary to right the currency are politically unthinkable in those countries. That is the message of recent elections in Greece and France.

Looking back, it was pure fantasy to begin with, sold to people by leaders who were either corrupt and self-motivated, ignorant, or selectively attentive. The Eurozone economies were fundamentally very different animals, not merely in terms of composition, but also of basic approach, social infrastructure, aims and purposes. In flush times, these differences were minimized by robust growth and super-normal returns to capital. Now? Not so much.

Turns out that when push comes to shove, Greeks don’t particularly want to change who they are, how their economy and society behave, or how their jobs, pensions and social security schemes operate. The French either, it now seems. Other members are teetering close to the same place.

So, let’s not pretend about this anymore, alright?

The Eurozone will either change radically (i.e., lose members) or die outright. Forcing the execution of existing agreements will cause real pain to real people, for little good in return. Let’s stick to harmless fictions.

That jacket doesn’t make you look fat.