Other member states of the eurozone have responded less successfully than has Germany to the challenges of the euro system. It is now more widely recognized that increasing debt in order to finance unproductive government operating expenditure is a dead end that undermines sustainable growth. But it is very difficult indeed to believe that these countries would have fared significantly better outside the eurozone.
The case of Italy is a particularly instructive one. Mario Monti, supported by an overwhelming majority in the Italian parliament, is carrying out those economic and financial reforms in Italy which it is now widely recognized earlier Italian governments culpably failed to implement. Without such reforms, the Italian economy could not possibly prosper, inside or outside the eurozone. I find it ironic that many of those commentators who are loudest in calling for wholesale reform of the traditional European economic model give such a grudging welcome to this reform when it arises from the workings of the eurozone.
Germany’s role in confronting the sovereign debt crisis of the eurozone over the past two years has attracted considerable criticism, much of it unfair. Accusations of German dictatorship and inflexibility are well wide of the mark. If there is a criticism to be made of German Chancellor Angela Merkel, it is that she has often seemed to lack a strategic vision for the governance of the eurozone. But maybe she has one that for political reasons she may be slow to articulate.