Renowned academics, businessmen, journalists and politicians from around the world gathered on campus yesterday to exchange ideas, concerns and analyses of the euro crisis in a conference entitled “The Failure of the Euro? Causes and Consequences for Europe and Beyond.” Co-sponsored by the Watson Institute for International Studies and the William R. Rhodes Center for International Economics and Finance, the conference consisted of five panels and a keynote speaker.
Professor of Political Science Mark Blyth, who organized the conference, emphasized that its unusual structure and departure from pure academia set it apart from most academic conferences. “Very few academics get on board with people who do policy or people who do financial markets to talk about an issue that is very contemporary,” he told The Herald.
“It’s what the Watson Institute is for,” Blyth added. “It’s a place that has a policy relevance angle but is based in the University.”
Professor of Economics Ross Levine, who assisted Blyth in organizing the conference, said the conversation is vital because the crisis affects the global economy, not just Europe. “While many of the U.S. newspapers are focused on the presidential elections right now, developments in Europe are a big deal for the U.S. and other countries around the world,” Levine told The Herald. “There are disagreements among the European powers about how to proceed and fears that what’s going on will cause a depression in Europe with reverberations in the U.S. and elsewhere.”
“We have to wonder – why did this happen and what can be done,” Levine added.
After a morning dominated by three distinct interdisciplinary panels, Martin Wolf, associate editor and chief economic commentator for the Financial Times, gave the keynote address to a crowded auditorium of conference attendees and students.
“We’re very lucky to have him,” Blyth told The Herald of Wolf. “Right from the start, when the financial crisis kicked off, he’s been a voice of reason emanating from the Financial Times.”
“Even if you disagree with some of his conclusions or some of his analysis, he’s always someone to contend with,” Blyth added.
In his speech, Wolf outlined seven points to summarize his view on the potential for the euro to survive. Calling himself a “euro”-skeptic, he began by saying that the creation of the euro was a “bad idea” in the first place. He warned conference participants against the dangers of being “too brave,” advising that it is “far better not to be heroic in economic policy.” That said, he went on to advocate against dismantling the euro system. Foreseeing serious problems in any attempt to do so, he likened the euro to an “economic omelet.”
“Unmaking omelets is really quite hard to do,” he added.
Wolf spent the bulk of his speech giving technical explanations of what he believes the Euro Zone needs to achieve, why understanding the crisis will be the basis for success and what the crisis actually entails. He offered a brief blueprint of “how the Euro Zone needs to be reformed,” expressing concerns about “ideological, political and economic obstacles.”
“Will it survive? I’d give it 50-50,” Wolf concluded.
Wolf added that he might be “shot from all sides” after giving his opinion, a reference to the wide range of diverging and conflicting perspectives presented in various panels throughout the day – including Professor-at-Large Romano Prodi, the former prime minister of Italy who was one of the key architects of the euro.
During the first panel, three prominent economists – Stephen Kinsella, economics lecturer at University of Limerick, Simon Tilford, chief economist at the Center for European Reform, and Amar Bhide, professor at the Fletcher School of Law and Diplomacy at Tufts University – explained the origins of the crisis from three different angles.
The day’s second panel juxtaposed the opinions and experiences of members of the private sector, politicians and representatives of the media. Douglas Borthwick, managing director and head of trading at Faros Trading, James Kiernan ’74 from Cornerstone Capital, Alfred Gusenbauer, former chancellor of Austria and professor emeritus, David Brancaccio from American Public Media and Bethany McLean, a contributing editor at Vanity Fair, discussed reactions to the crisis in the media and in the markets.
Borthwick, a trader, broke the mold by offering an optimistic take on a crisis seen by many as unsolvable.
“He’s by far the most positive person (in his analysis of) the euro,” Blyth told The Herald. “Everyone is saying, ‘The sky is falling,’ and he’s saying, ‘I’ll sell you an umbrella.’”
Borthwick attributed the varying opinions among panelists to the different sectors from which participants hailed, specifically pointing to economists’ desire for media attention.
“Fear sells. … An economist out there who just wrote a book wants press,” Borthwick told The Herald. They’re “so wrapped up in ‘fear sells’ that no one is learning about solutions.”
Discussing his unorthodox vantage point, he explained that “empathy isn’t taught in a trading course.” A trader “sees an opportunity and sees the way to take it,” he said.
An afternoon panel tackling the complex question of “what else could have been done” included Prodi and Gusenbauer, as well as Morgan Despres from Banque de France and several academics.
Blyth told The Herald Prodi and Gusenbauer were part of the original inspirational for the conference.
“Here’s a guy who used to run Italy, and here’s a guy who used to run Austria,” Blyth said. “Maybe we should talk to them about what’s going on in Europe.”
Experts on another panel compared the current crisis to previous ones to give it historical context and perspective, and during the final panel of the day respected scholars questioned whether Europe will be able to “survive the euro.”
Though the lack of consensus was often evident, panelists and respondents agreed that the format and structure of the conference were effective.
Borthwick said he appreciated the uncommon decision to include members of the media in the conference. “For the media, it’s a great event because they get more than they do from a headline from the (Wall Street) Journal,” he told The Herald.
Wolf said he was impressed by the “imaginative structure” of the conference. “It’s been a wide range of opinions, lots of expertise. I’ve enjoyed it,” he added.
Wolf also commented on the conferences’ limitations. “You can learn from different people and that shapes your thinking, helps future writing,” Wolf said. “It may very slowly influence things, but no one conference really changes things in a profound way. Certainly not one on the euro in the United States.”