罗汉国际经贸高级英语精读4-Text

United We Stand? —S. Eric WangIN DECEMBER 1991, 12 EUROPEAN nations signed the historic Maastricht Treaty and, in so doing, created the single currency trading region now known as the European Monetary Union (EMU). The Maastricht Treaty outlines the process by which the EMU nations will replace their individual currencies with a single currency, the euro, that will be controlled by a single European central bank. In January of 1999, exchange rates between national currencies and the euro are supposed to be irrevocably fixed, and by January 2002, national currencies are supposed to be phased out entirely. However, while Germany, France, and a few other EMU nations are in position to meet this timeline, many other nations have been delayed by difficulties concerning Maastricht Treaty requirements and may not be able to fix exchange rates on time.Though the majority of European government officials are currently optimistic, the difficulties that have been experienced do not bode well for the future of the EMU in its present form. While current problems center on controlling government deficits to meet Maastricht conditions, the exchange rate crises of the recent past call into question the basic desirability of the project. Until these issues are addressed, national economies should not be forced to fit Maastricht conditions and arbitrary deadlines, as such action will only create unnecessary economic turmoil. The current delays in monetary unification are necessary; more caution would be in the best interest of the people of Europe.Why Monetary UnionIn order to properly evaluate the dilemmas facing the EMU, the current system must be carefully analyzed with particular attention to its economic costs and benefits. Presently each nation has a different currency, and relative currency values tend to fluctuate unless constrained by artificial international agreements. Currency fluctuations occur for a number of reasons, the most important being that nations often expand or reduce the amount of currency in circulation. An increase in the money supply forces a devaluation of the currency, and the lower exchange rate increases exports, raising the economy’s total output. A monetary reduction would result in an opposite effect that also tends to lower inflation. Therefore, the central banks of Europe currently use control of the money supply to keep national inflation rates low and to expand national economies in recession.The benefits of EMU come from eliminating the economic costs associated with having multiple currencies. The most apparent cost of different currencies involves the resources that must be spent converting from one currency to another. For example, if a German firm’s earnings are in French francs, it must exchange the francs for German marks in order to pay its employees. Employee time, and therefore the firm’s money, must be spent making this exchange. However, the EuropeanCommission estimates currency exchange costs to be, on average, only 0.4 percent of the GDP of the European Union.A second cost of numerous currencies comes about when nations allow the relative values of their currencies to fluctuate freely. The uncertainty created by varying exchange rates creates a barrier to trade because the value of the money that people will receive changes when exchange rates change. For instance, a German company expecting payment in French francs will see the value of that payment fall if the franc depreciates against the German mark. The volatility of exchange rates is, in effect, a cost that international firms must take into account when estimating profits.However, under the system in place before the beginning of the present monetary unification process, this cost was also quite small. Under that system, nations set the exchange rates that their central banks used for conversion between currencies. Then, whenever a nation increased the money supply, the market exchange rate would fall a bit, but the banks’ exchange rate would remain stable. Arbitrageurs would not take advantage of small differences betw een the central bank’s pegged rates and market rates because regulations on capital flow made such moves very costly. Only when the difference became very large did arbitrage activity become significant, forcing the central bank to revise its exchange rate. With small exchange rate fluctuations and only occasional exchange rate realignments, firms were able to use futures and swaps, among other financial instruments, to hedge against the risk.This system, however, also created an economic cost because regulations on capital flow made capital markets inefficient. However, removal of regulations would have resulted in intolerably volatile exchange rates. The best solution to this dilemma appeared to be the adoption of a single European currency.Maastricht and ModificationsThe Maastricht Treaty, in detailing the path towards monetary unification, included an important exchange rate condition which takes advantage of the European Exchange Rate Mechanism (ERM). This mechanism stated that exchange rates between participating currencies would not be allowed to fluctuate beyond plus or minus 2.25 percent of certain set rates. The Maastricht Treaty nations agreed to stay within this band without utilizing devaluations for the two years before joining the EMU. However, a number of crises soon forced the ERM to change.In 1992, Germany was in an economic boom with an inflation rate of four percent. Accordingly, Germany was very cautious about increasing its money supply, and the other EMU nations, which were in recession, were forced to follow with stringent monetary policies of their own. According to a study by Paul De Grauwe, the other nations of the EMU, on average, should have increased their money supply by five percent more than they actually did. However, these tight monetary policies were apparently not tight enough; the British pound and the Italian lira both plummeted against the German mark. In September 1992, pressure from speculatorsforced both the United Kingdom and Italy to devalue their currencies, and the two nations temporarily left the EMU.In August of 1993, the ERM of the Maastricht Treaty had to be changed as another currency crisis hit. A number of currencies, most notably the French franc, were severely overvalued, and speculators were putting tremendous pressure on the exchange rate. Germany attempted to alleviate the pressure by buying several billion dollars worth of francs, but the effort was not enough. Instead of forcing France out of the ERM, the ERM itself was revised. The band was widened from 2.25 percent to 15 percent. The French franc devalued immediately, and the pressure from speculators was alleviated. However, these crises raise questions as to how a monetarily integrated Europe would function. Clearly, nations currently rely tremendously on monetary flexibility to reign in inflation and to boost sagging economies. Unification and the United StatesThe troubles that the EMU has experienced up to now are perhaps merely a glimpse of what lies in the future of a single currency Europe. A single European currency means a single European central bank, carrying out a centralized European monetary policy. Individual nations will no longer be able to use monetary policy for their own national economic needs.Furthermore, government spending will be similarly constrained. Maastricht rules limit a nation’s budget deficit to three percent of its GDP. With limited fiscal freedom, the lack of national monetary policy will create enormous dissent and controversy within the Union at times of asymmetric recession. For example, the United Kingdom could go into a recession and want to expand its money supply at a time when the rest of Europe is in an economic boom, which requires a decrease in the money supply to keep inflation down. If the European central bank were to decrease the money supply, then the United Kingdom would plunge into an even deeper recession. However, if the central bank were to cater to the United Kingdom’s needs, the rest of Europe would experience high inflation. The economic consequences of such a situation have already been demonstrated in the crises of 1992 and 1993. The political ramifications of such a situation after unification are clearly disturbing.To add to the potential for trouble, Europe may see an increase in economic specialization along geographic and political boundaries, a phenomenon that would make Europe even more at risk for asymmetric recessions. Single currency states tend to become much more economically specialized due to the reduced costs of transportation and communication that a single currency brings. The United States, for example, is more specialized by region than the nations of Europe currently are; there are clusters of high technology firms in the Boston area and in Silicon Valley, but very few such firms settle anywhere in between.Similar specialization can occur in Europe as well. It may be, for example, that the biggest automotive manufacturers will congregate in a region of Germany, whilemost gas companies flock to the United Kingdom. In such a situation, if oil prices skyrocket, then the United Kingdom would enter into an economic boom while Germany goes into a severe recession. To prevent such harmful specialization, European nations may choose to erect artificial barriers through tariffs and regulations. However, such a move would be in direct contradiction to the goals of monetary unification.The full effects of an asymmetric recession on a specialized Europe would be quite complicated. A rough estimate of the economic ramifications can be done, though, using the United States economy as an example. When a recession hits a region in the United States, the afflicted states cannot exercise monetary policy, and therefore the effects of recessions on specific regions in the United States should be very similar to the effects of recessions on nations in Europe after monetary integration.According to economist Paul Krugman, US regions in recession tend to lose labor population; wages tend not to fall and few new industries are attracted to the depressed area. This means that a post-recession region in the United States may have lower total output than it did before it went into recession, even though the unemployment rate of the region may be back at the natural rate. This boosts the case against deficit spending as a way to end recessions because, at the end of the recession, many of the people who took unemployment benefits will have found work and be paying taxes in a different region. The debt from their unemployment benefits will either accumulate or be paid off by a smaller population at higher tax rates.For Europe, this implies that once a nation goes into a recession, it should refrain from deficit spending because its GDP may stay low even after its unemployment rate is back to its natural level. However, the population loss problem is mitigated by the fact that European labor mobility is much lower than US labor mobility. Therefore, European nations in a regional recession will be able to regain higher levels of output at the end of the recession than similar United States regions. This maintenance of output means a higher level of deficit spending can be used, raising severe questions of fiscal discipline within the EMU that have yet to be resolved. Unfortunately, low labor mobility also means that the amount of time nations will spend at recessionary levels of unemployment will also be longer than the time spent by a similar US region.There is another crucial difference between the United States single currency area and the EMU. Though individual states cannot exercise much fiscal policy, the United States federal government can and does do so in the form of social insurance and national taxes. At the federal level, the government can pay out unemployment benefits and then get the money back in the form of taxes when people find work in another part of the nation. However, Europe does not have a continental fiscal policy, and therefore costs of a national recession will have to be borne by the individual nation. National governments, facing longer recessions than the United States, may not be able to recoup [L.P. 16] all the unemployment benefits paid out because the unemployed may eventually find work in another part of Europe and emigrate.The Need for CautionThe experience of large, monetarily unified economies, such as that of the United States, and the obstacles that have intervened in Europe’s monetary unification process to date present a strong argument for caution. The goal of the European Union should be that of bettering the lives of Europeans. A single currency Europe may not be in the best interests of the people of Europe. Certainly, capital flow would be less restricted, allowing the economy to become more efficient. Total economic output should rise, and Europe should become more prosperous. However, with limited labor mobility and an increasing degree of specialization, certain regions may be left behind. Capital may pour into economically expanding regions with specialized labor and technologies as investors see the potential for profit. Other regions, though, would be left in poverty until the wage differential was great enough to warrant expensive relocations on the part of firms and investors. The current disputes over fiscal discipline merely serve to emphasize the differences in the economic needs of different European nations.This does not mean that Europe should not eventually have a single currency. It is merely an indication that the process towards unification, and indeed the characteristics of the unified Europe, need to be revised. The United States has successfully utilized a single currency, so it is clear that large regions can share a currency system; the solutions to Europe’s dilemmas just need time to be found. Without these solutions, though, the current move towards unification appears to be unnecessarily rushed and could potentially harm the European economy and people.(from Harvard International Review, Winter 1996/1997)。