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I'm Okay, Euro-trash

It’s the euro’s tenth birthday, and the Wall Street Journal editorial page wishes it well. But the paper’s enthusiasm for the increasingly linked European economies drives it to an unpredictable ecstasy: While considering, then rejecting as implausible the idea of a global currency, it calls for the world’s leading economies to pursue much tighter exchange rate coordination, a la the eurozone:

The decade of the euro has demonstrated that there is an alternative to the instability and volatility of the era of floating exchange rates that began with the collapse of Bretton Woods in 1971. It's time to build on that lesson for the good of free markets and global prosperity.

Hear, hear. But isn’t it a little odd for an editorial page known for bashing pretty much every multilateral organization, and often the very idea of multilateralism, to be calling for, in effect, a global eurozone? Obviously, military policy and monetary policy are two very separate kettles. But underlying the eurozone’s success is the political and military interdependence of its major players. Confidence in the euro is built on the assumption that the participating countries will operate more and more like one nation, and that their disagreements on the spectrum of policy issues will span a smaller and smaller bandwidth. Would the Journal endorse coordination beyond exchange rates? I doubt it.

The page rightly criticizes the Bush administration for being

clueless on monetary issues, with all three of its Treasury Secretaries repeating that the price of currencies should be set like the price of any other commodity. But the supply of corn, say, isn't set by a cartel of central banks and copper isn't a medium of global commerce.

Again, true dat. But the Journal’s implicit alternative--an administration atavistically bound to a radical unilateralism in all things but monetary policy, where it is nothing but multilateral--is beyond wishful thinking. Not only would no administration act so disparately, but if it did, its on-our-own (say) military and environmental policies would undermine the public confidence necessary to make a common exchange-rate policy work.

--Clay Risen