In the 1930’s, countries could not act together because they could not agree on a diagnosis of the problem. Each attributed the Great Depression to different causes, leading them to prescribe different remedies, which they administered unilaterally.
Agreement today on the diagnosis facilitates mounting a common response. Unfortunately, there is growing evidence that the medicine on which European countries have agreed – austerity – is killing the patient. There is now talk of adjusting the dosage, but talk has not yet given way to action.
Will things turn out differently this time? There is no question that the greater scope for cooperation that exists today bodes well for the euro. But it is the precise policies on which European governments cooperate that will tell the tale.