Nobel economics prize winner: ‘The euro was a mistake’

Nobel Memorial Prize winner Oliver Hart said that it is a mistake by Brussels to try and turn the member states into one "homogeneous unit". [Adam Baker/ Flickr]

The European Union should embark on a process of decentralisation and return certain areas of decision making to the member states if it wants to survive and thrive, according to Nobel Memorial Prize in Economic Sciences winner Oliver Hart. EURACTIV Spain reports.

Today (9 December), Hart and his colleague, Bengt Holmström, will receive the top prize for their work on contract theory, which covers everything from how CEOs are paid to privatisation.

Hart told EFE that he believes the keyword in EU politics is now “decentralisation” and that Brussels has “gone too far in centralising power”. The British-born economist said that “if it abandons this trend, the EU could survive and flourish, otherwise, it could fail”.

The Harvard University professor insisted that the EU member states are not “sufficiently homogeneous” to be considered one single entity, adding that trying to make the EU-28 into one was an “error”.

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Hart said that the concerns felt by the member states about decision making and centralisation of power in Brussels should be addressed by returning competences to the EU capitals.

The Nobel winner conceded that the EU should retain control of “some important areas”, like free trade and free movement of workers, the latter of which he admitted is “ultimately, an idea that I personally like, although I understand that there are political worries”.

His prize-winning colleague, Holmström, also told EFE that the EU needs to “redefine its priorities, limiting its activities and its regulatory arm, in order to focus on what can be done on the essential things”.

The Finnish economist, who also teaches at the Massachusetts Institute of Technology (MIT), said that Brussels needs to rejig its system of governance and its basic rules in order to make them “clearer and simpler”.

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Hart argued that “the euro was an mistake” and said that it’s an opinion that he has maintained ever since the monetary union was first introduced.

The economist added that it “wouldn’t be a sad thing at all” if in the future Europe abandoned the single currency and that the British were “very clever” to stay out of it.

Hart, who also holds US citizenship, is a critic of the country’s president-elect, Donald Trump and has expressed his concern about some of the business tycoon’s proposed policies, particularly financial deregulation.

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