There is very little reason for Greece, Spain, and Portugal to share a single monetary policy with Germany and France — their public finances, labor conditions, balance of trade, and other economic fundamentals are radically different, and cannot be brought into harmony without something approaching a soft dictatorship. The business cycles of the members of the European Union are not coordinated, and neither are their economic interests. Less competitive nations such as Greece suffer particularly from sharing a currency with highly productive nations such as Germany, because it takes away the option of using currency depreciation to make one’s exports more attractive on world markets. (Germany, a strong exporter, has benefited from this arrangement.) There is some wisdom in human traditions, and it turns out that the Germans and the Greek have separate countries for a reason — one of them being that they are separate peoples.
The theory of Europe’s Economic and Monetary Union (EMU) is that a borderless environment with a single currency would minimize economic friction and produce vast economies of scale, making Europe’s economy more competitive. Europe had an example in the United States, roughly comparable in size and population but with a much more dynamic economy, especially when it comes to the work force. There are gains to be had, unquestionably, but there are always tradeoffs, and in this case they produce a net loss for much of Europe. This was a gross miscalculation on the part of the European centralizers, who neglected to account for the fact that important, fundamental cultural differences — including language, family habits, and religion — mean that a Bulgarian factory worker or a Latvian financial manager cannot simply relocate to London or Paris the way an American worker can move from anywhere in the country to Houston or New York with relative ease. The formal, legal barriers to European integration are not the only barriers, nor even the most important. As it turns out, there are not many Europeans in Europe, which is mostly populated by French, Germans, Swiss, Italians, Greeks, Poles, etc. Wishful thinking will not make it otherwise.
Such realities can only be ignored for so long. The appetite of the Greek people for further austerity measures is limited, as is the appetite of the German people for expending their own hard-earned capital to prop up their careless, spendthrift neighbors. Nobody in Europe has much appetite for continued economic chaos. The best outcome and less likely outcome would be to have the economically stable northern European countries break away to form their own union. The second-best and more likely outcome is for Greece to leave the eurozone, voluntarily or involuntarily. Either scenario would probably entail a default and would bring about massive economic disruption, and not just for the Europeans. But the alternative is a prolonged, slow-motion crisis and the entrenching of the one-size-fits-all, central-planning approach from Brussels that is a very large part of the present problem and no part of its solution.