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"All the conceivable stones on the road have been there," said Danish Prime Minister Poul Nyrup Rasmussen ruefully two weeks ago, as the opinion polls swung strongly against the referendum on joining the euro zone that he has called for September 28. Only six months ago, after all, he had the support of big business, the entire trade union movement, most newspapers, and 80 percent of the members of Denmark's parliament.
Then it all fell apart. A bizarre temporary alliance between the far-right Danish People's Party and the hard-left Socialist People's Party was forged to spearhead the campaign against the euro, and it started winning support right across the political spectrum. But why are so many Danes hostile to the euro?
For some, it's a simple matter of suspicion of their giant German neighbor, whom they see as dominating the European Union. "Shall we send Denmark's gold to Frankfurt?" scream the leaflets handed out by Pia Kjaersgaard's Danish People's Party. (Frankfurt is the headquarters of the European Central Bank.) But a far-right party that favors forcibly repatriating refugees and castrating sex offenders could not mobilize Danish public opinion all by itself.
Other Danes have been frightened by the falling euro, which has lost about a quarter of its value against the dollar since it was launched twenty months ago. Still others are put off by what they see as an undemocratic European super-state that is starting to meddle in the internal affairs of its members. Women predominate in the largest group of anti-euro voters, those who fear that member countries will be forced to observe tight controls over government spending, thus undermining the European welfare states. As pro-euro campaigner Helle Thorning-Schmidt of the governing Social Democratic Party puts it, "The antis have argued that more Europe means less welfare state - and it's women who are more dependent on benefits like child care and day care for the elderly."
Is this true? Yes, and it is no accident, either. The single European currency was originally the idea of a Canadian-born economist called Robert Mundell, who now teaches at Columbia University in New York. He first floated the idea in 1970. Last year, he got the Nobel Prize in economics for his lifetime's work in the field, which certainly gives him the right to the title 'father of the euro' - but also gives him the right to call himself 'the father of Reaganomics.'
Mundell is an extreme free marketeer who believes that governments should almost never intervene in the economic lives of their citizens either to restrain individuals or to help them. His supply-side economics platform was the ideological basis for Reagan's assault on what passed for a welfare system in the United States, and his proposed "solution" for Europe's far more extensive systems was to invent the "europa," as he first named it - a single currency that would, in his own words, "Put monetary policy beyond the reach of politicians."
To unify the currencies of a dozen countries and persuade the world to trust the result, you must create controls that politicians cannot tamper with, because some of these countries have a long history of letting inflation rip in order to pay for welfare spending. So countries adopting the euro must observe strict rules - budget deficits cannot exceed 3 percent of gross domestic product, and total national debt must not rise above 60 percent of annual GDP. Moreover, the European Central Bank sets interest rates with the target of keeping inflation below 2 percent.
Governments that accept this package effectively surrender their freedom to run their own economies in accord with their political priorities. Therefore, economic policy is automatically derived from a rigid set of rules first laid down by the 1992 Maastricht treaty that led to the euro. It's a kind of black box where no human being, least of all any politician, is in charge - which is precisely what Mundell intended.
His fundamental purpose, after all, is to smash the state in order to set capitalism truly free.
Mundell is still active in the campaign to persuade Britain to join the euro, and even advocates a single world currency (to destroy the power of the state everywhere). But as befits a true revolutionary, he is content not to reveal his ultimate purpose. If it works to present the euro as just a harmless symbol of European unification, or a means of equalizing growth rates across Europe, he'll go along with that.
Danish voters, particularly Danish women, seem to have examined this Trojan horse and decided that they don't want it. The Danish economy may be punished severely by the markets, but the only other immediate effect of their actions will probably be to persuade the other two euro hold-outs, Britain and Sweden, that this is not a good time to hold their promised referendums on joining.
Nevertheless, the Danes are doing something important by calling the euro bluff. The currency may survive (though it will almost need a coordinated rescue effort by central banks in the coming months). But its virtues and defects will, after the Danish referendum, have to be debated in a more honest way.