These two books are the best on the euro crisis to have appeared in recent years. Both books cover the subject in admirable detail and with much insight. Yet both are also flawed in ways that illustrate precisely why the euro is stuck in a dead end.
Marsh is a consummate insider journalist, and his book reads like a collection of op-eds. Pisani-Ferry is the former head of Europe’s top economic think tank and now advises French Prime Minister Jean-Marc Ayrault; his book reads like a collection of policy briefs. Both perfectly capture the current conventional wisdom among European technocrats, who seem unable to chart an attractive way forward. It goes like this: The euro system is basically good for Europeans, but specific institutional design flaws triggered a crisis. The logical solution is for governments that maintain a budget surplus, such as Germany, to accept more risk and liability, while countries with deficits, such as Greece and Spain, must impose controls on their government spending. But politicians lack the requisite political will to implement this solution. So Europeans should muddle through with the current, second-best arrangement.
Every step of that analysis is not only empirically questionable but also strikingly apolitical. By neglecting the question of who gains and who loses within and between countries, and who wields influence, these authors overlook more radical alternatives and ignore the political forces that will ultimately decide whether Europe sustains or abandons the euro.