In a recent conference, the distinguished economist Paul Krugman repeated the oft-heard critique that the eurozone is not an optimal currency area. Waltraud Schelkle disagrees with this characterisation, and argues that no country or group of countries represents an optimal currency area – one region or country always loses out from a single monetary policy. But countries can use fiscal, social and regulatory policies to overcome these difficulties. When Americans criticise the eurozone’s currency policies, she writes, they are forgetting the US dollar’s shaky start and the adjustments which had to be made to the financial system in the 19th century.Why mention the optimal currency area debate in reference to this health crisis? This morning I heard statements like this one:
By contrast, the coronavirus crisis has started to look more like the European migration and financial crises: a symptom of globalization that can’t be held back where it started. The exploding outbreak around the Continent — officially declared a pandemic by the World Health Organization on Wednesday — highlights both the promises and limitations of the European Union: a single, largely borderless market made up of 27 countries, each with their own governments, electorates, bureaucracies, health care systems and, as has become painfully obvious, national interests. For weeks, officials in Brussels and national capitals have called for pan-European coordination. Yet even as Italy, the bloc’s third largest economy, embraces a made-in-China solution — putting the entire country under preventative lockdown — the modus operandi across the EU remains fragmented and reactive.The United State of America like the European Union as we are a single borderless market made up of 50 states. One would hope we would have pursued for a pan-America coordinated response but until yesterday we saw leadership at the state level but not much from the Administration:
States are scrambling to prepare and respond to the coronavirus outbreak, petitioning Washington for changes to federal health insurance programs that could help them save lives ... With thousands of Americans infected and dozens dead, the Trump administration has yet to find a way to effectively test for the presence of the novel coronavirus. But it’s the President’s ongoing refusal to declare an emergency over the disaster — which would unleash aid, funds, and FEMA — which continues to hamper state-level planning… Medicaid Health Plans of America, the program’s trade association, issued a statement on Wednesday demanding that CMS set consistent guidance for state departments of health that would include waiving cost sharing for people who are testing for or have been diagnosed with COVID-19 … Different states have addressed the crisis differently.We should applaud our local governments as well as the prudent responses of private sector agents like the professional sports team. We should also be glad that this White House decided to finally shown a wee bit of belated leadership. But the delay in declaring a national emergency has been incredibly costly to both the economy as well as the health of many of our citizens. But this is what we get when we elect a President who does not like agencies like FEMA or the Pandemic Task Force.