Thinking about the the mess in Greece (and apparently now Portugal) and how the typical answers proposed involve some action by the EU (bail out, currency inflation, etc.) got me thinking about Jane Jacobs.  Since I first read about her work on your site, I thought I would toss the question to you.  What would Jane Jacobs do (WWJJD??!!) to fix Greece?

—Dave Dunn

I think her first thought would be to agree with Paul Krugman: the Greek crisis, and to a lesser extent that of Spain and Portugal, shows the failure of the euro.  The euro may be fine for the central zone (France + Benelux + Germany), but it removes a key tool— currency devaluation— from the weaker peripheral economies.  That leaves only austerity and huge bailouts as policy options; the EU is choosing both at once, which is likely to maximize resentment in both halves of the EU.

Parts of the US can suffer from the same problem— if only Detroit could value the Michigan Dollar to make its wages and products more competitive!  But the US can get away with a single currency because it has a strong central government (so weak states can be supported by the rest) and because of social mobility: people can and do move out of depressed states in a way that just isn’t available in Europe: you’re not going to see millions of Greeks or Portuguese moving to Germany.

Jacobs was a bit more conservative than me or Krugman, though; I expect she’d disapprove of the huge transfer of funds to Greece; she called such things “transactions of decline”.  She’d also want to analyze the crisis at the city level.  It’d be interesting to know how well Athens works as a city region.

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