Extract from an interview with William A. Niskanen, Chairman of the Cato Institute (USA), who was a guest speaker at the CEQLS winter lecture held by the Conservative Institute in Bratislava on December 8, 2005.
Q: Why will problems with pension systems lead to the collapse of the European monetary union?
Q: But the USA gradually became a functioning monetary union. Why can't this work in Europe too?
A: For some time we used to have three currencies. But the union did not work well even after one currency had been introduced. Adequate labour force mobility was still missing. It worked in the west-east direction, but not from north to south. And this situation remained until World War II. The introduction of federal unemployment insurance in the thirties was one of the factors that contributed to the fact that the currency has been doing well over the last 70 years. Europe has very poor labour mobility. I used to work for the Ford car company. We wanted to increase the number of employees at the biggest British car plant in Dagenham, London. There was high unemployment in Coventry, a town only about an hour's drive away, but we could not persuade people to move just because of a well-paid job. And partially this was because they did not want to give up their cheap housing subsidized by the state which they had in Coventry. In Dagenham such housing opportunities were not available.
Extract from an interview published in the Slovakia`s leading economic weekly TREND.