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I don't see how 'flexible wages' are necessary to a monetary union.  Germany, with its combination of government policy and collective bargaining holding down working class wages while over the past dozen years while allowing significant income growth for the top twenty percent certainly doesn't. Mobility yes.  You do need people to be able to move from areas with long term problems to ones doing well.  Plus, to the extent that the Euro is part of a greater political project, free movement within the Union is pretty important. And as afew says, the Euro was conceived as an intermediate step on the long road to the creation of a European state.

On Smith, I haven't read him, but I'm wondering to what extent he conceived of the concept of long term system wide per capita economic growth.  Or in other words, did he buy into the just emerging belief in Progress and if so, how did he understand it?  Because at first glance what he's describing is the way things had worked for the vast majority of the population in pretty much every civilization before the combined impacts of rapidly rising agricultural and manufacturing productivity outstripping population growth that only became fully apparent a couple generations after his death.  If you need eighty percent of the population working full time just to produce enough calories for themselves and everybody else, then there's not much room for the population as a whole to have well above subsistence standard of living.

I know several people here have read Smith, care to enlighten us?

by MarekNYC on Tue Dec 14th, 2010 at 02:30:41 AM EST

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