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'Why Nations Fail': Can the eurozone hang together?

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(Read caption) European Commissioner for International Cooperation, Humanitarian Aid and Crisis Response Kristalina Georgieva (l.) speaks with Austrian Foreign Minister Michael Spindelegger, before an EU foreign affairs meeting.

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Monitor managing editor Marshall Ingwerson chats with 'Why Nations Fail' co-author Daron Acemoglu.

The troubles of the eurozone today have a strong historical echo. The world has seen this situation before – in the young United States after independence but before the Constitution was enacted.

“Fundamentally, the problems are not that formidable,” says MIT economist Daron Acemoglu, author of “Why Nations Fail” with Harvard political scientist James Robinson. “But there is a Catch-22.”

That catch means that while creating a strong eurozone would be better for all players, in Dr. Acemoglu’s view, it’s unlikely to happen. Europe is unlikely to follow the US pattern anytime soon. The integration of Europe has been a tremendous success story, he argues.

“The European Union as a political project has been hugely successful. If you think of Europe in 1945, it was a wasteland. It was not only economically, politically, socially destroyed, but it was demoralized. And on top of this, you have another 65 years of complete stabilization, very rapid democratization, institution-building, very, very rapid economic growth. And I think few people would argue that this was unrelated to the stability that the European Union brought to the continent.”

But the current crisis has brought out some flaws in European integration to the surface.

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