We knew the euro was a bad idea in 1961. What went wrong?

The eurozone is emphatically not an optimal currency area.

Everyone knows this action-movie story: a heroic, war-scarred veteran is promoted to a prestigious desk job, reluctantly hanging up his rifle in the process. But then the state finds itself under threat and his superiors in the bureaucracy turn out to be grossly inept. Eventually, our hero, fearing for the lives of his men and the good of the country, tells them where they can stuff their desk job, picks up his rifle and leads the troops to an epic victory.

The start of this tale is similar to what has been playing out in the Eurozone over the past decade. Countries, hoping to join the safety, prosperity and exclusivity of the Eurozone, readily hung up their weapons of monetary policy, fiscal flexibility and money-printing. But now they need them again, and they're nowhere to be found.

The dangers of currency unions are not only now emerging: they have been a central part of international macroeconomics literature for over half a century, since Robert Mundell’s seminal paper (£) on "Optimal Currency Areas" (OCAs) in 1961.

What seems to have shocked the Eurogenitors is that this longstanding theory was actually right.

OCA theory highlights the costs and benefits of common currency zones and suggests criteria that all states should satisfy before considering their formation. Benefits include increased intra-zone trade, lowered transaction/conversion costs and increased competition through price transparency, while Costs are mainly concerned with lost flexibility. Countries in the zone no longer have the ability to adjust to asymmetric shocks, whether by externally devaluing via currency pr internally devaluing via inflation.

So, could we use OCA theory to retrospectively solve the Eurozone’s problems?

Sadly not. First, many of the criteria which Europe does not meet – hence the original incompatibility – can never be met by it. And second, the Eurozone has created new problems that OCA theory never envisaged. What started as asymmetric shocks – a banking crisis and property bubble bust – have become a massive symmetric attack across the whole region as unarmed sovereigns are left with no policies to defend themselves whilst their very solvency is called into question.

A good example of the Eurozone’s economic incompatibility can be found in Mundell’s first classic OCA criterion: labour mobility. This represents one of the most marked differences between US states and Eurozone countries. If unemployment rises in Detroit – say, because demand for cars falls – workers can move to a state where there is more demand for work, easing Detroit’s unemployment. And Americans do move, frequently. The same is not true of Europe, partly because of the heterogeneity of labour markets but mainly due to culture and, most importantly, language.

So, would a solution to the Euro crisis be to teach everyone, say, German? Despite the obvious historical faux pas of imposing Deutsche Uber Alles, this would raise employment in the short run for Germans (as teachers) – the opposite of what is needed. Teaching English is out for the same reason, and besides, anything that promotes the meddling Brits would be shot down by the Europeans at the helm.

So, how about Spanish? Great idea. Youth unemployment in Spain is a whopping 52 per cent, and teaching your native language requires only a short course that the indignados could pick up in a few weeks. Eurozone-backed free Spanish lessons would ease unemployment (and the associated social benefits) in Spain, whilst the increased skills would further knowledge transfer across the continent and allow for better trade and business links with the fast-growing economies of South America as well as the US (over 10 per cent of the population are Hispanophones).

But of course this is folly. The Italians/Greek/Portuguese would ask, "why not us"? The French would be furieux; to many French diplomats, the very raison d’être of the European project was to spread the French language in defiance of English. They are not about to sponsor an attack on their langue maternelle from over the Pyrenees or anywhere else.

In fact, try though we might to come up with ingenious solutions, microeconomic reforms will not save the Eurozone. No matter what language you put it in, investors can see the current crisis for what it really is: a vote of no confidence in the currency itself.

But OCA theory may have one last bullet in the chamber. Another founding father of OCA theory, Peter Kenen, highlighted in a 1969 paper the need for fiscal integration.

For example, a demand shock in Detroit would not cause a fundamental questioning of the dollar. Instead, Washington would increase transfers to Motor City to allow it to rebalance without cutting state-level consumption and the Treasury would continue to borrow at low rates reflecting the might of the US economy as a whole.

Joining the Euro for many countries has meant surrendering their economic self-determination even while the bazooka-holding Germans have ignored the pressing need for action in the on-going war of attrition against their shared currency.

The Banking Union agreed to on June 27th may sever the link between insolvent banks and insolvent governments but the risk to the currency remains, and thus the unsustainable borrowing costs for peripheral countries will continue.

Everyone can see what Germany’s role in this tale is: either agree to fiscal integration, debt mutualisation and a genuine guarantee of the currency (the markets will know otherwise) or unlock the arsenal, give the Eurozone countries back their self-determination and bring the project to its conclusion.

The story of the European project has been one of peace, prosperity and co-operation for decades, but it is time the next chapter was written.

Robert Mundell, who knew the euro was a bad idea fifty years ago. Photograph: Getty Images

Dom Boyle is a British economist.

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The Women's March against Trump matters – but only if we keep fighting

We won’t win the battle for progressive ideas if we don’t battle in the first place.

Arron Banks, UKIP-funder, Brexit cheerleader and Gibraltar-based insurance salesman, took time out from Trump's inauguration to tweet me about my role in tomorrow's Women’s March Conservative values are in the ascendancy worldwide. Thankfully your values are finished. . . good”.

Just what about the idea of women and men marching for human rights causes such ill will? The sense it is somehow cheeky to say we will champion equality whoever is in office in America or around the world. After all, if progressives like me have lost the battle of ideas, what difference does it make whether we are marching, holding meetings or just moaning on the internet?

The only anti-democratic perspective is to argue that when someone has lost the argument they have to stop making one. When political parties lose elections they reflect, they listen, they learn but if they stand for something, they don’t disband. The same is true, now, for the broader context. We should not dismiss the necessity to learn, to listen, to reflect on the rise of Trump – or indeed reflect on the rise of the right in the UK  but reject the idea that we have to take a vow of silence if we want to win power again.

To march is not to ignore the challenges progressives face. It is to start to ask what are we prepared to do about it.

Historically, conservatives have had no such qualms about regrouping and remaining steadfast in the confidence they have something worth saying. In contrast, the left has always been good at absolving itself of the need to renew.

We spend our time seeking the perfect candidates, the perfect policy, the perfect campaign, as a precondition for action. It justifies doing nothing except sitting on the sidelines bemoaning the state of society.

We also seem to think that changing the world should be easier than reality suggests. The backlash we are now seeing against progressive policies was inevitable once we appeared to take these gains for granted and became arrogant and exclusive about the inevitability of our worldview. Our values demand the rebalancing of power, whether economic, social or cultural, and that means challenging those who currently have it. We may believe that a more equal world is one in which more will thrive, but that doesn’t mean those with entrenched privilege will give up their favoured status without a fight or that the public should express perpetual gratitude for our efforts via the ballot box either.  

Amongst the conferences, tweets and general rumblings there seem three schools of thought about what to do next. The first is Marxist  as in Groucho revisionism: to rise again we must water down our principles to accommodate where we believe the centre ground of politics to now be. Tone down our ideals in the hope that by such acquiescence we can eventually win back public support for our brand – if not our purpose. The very essence of a hollow victory.

The second is to stick to our guns and stick our heads in the sand, believing that eventually, when World War Three breaks out, the public will come grovelling back to us. To luxuriate in an unwillingness to see we are losing not just elected offices but the fight for our shared future.

But what if there really was a third way? It's not going to be easy, and it requires more than a hashtag or funny t-shirt. It’s about picking ourselves up, dusting ourselves down and starting to renew our call to arms in a way that makes sense for the modern world.

For the avoidance of doubt, if we march tomorrow and then go home satisfied we have made our point then we may as well not have marched at all. But if we march and continue to organise out of the networks we make, well, then that’s worth a Saturday in the cold. After all, we won’t win the battle of ideas, if we don’t battle.

We do have to change the way we work. We do have to have the courage not to live in our echo chambers alone. To go with respect and humility to debate and discuss the future of our communities and of our country.

And we have to come together to show there is a willingness not to ask a few brave souls to do that on their own. Not just at election times, but every day and in every corner of Britain, no matter how difficult it may feel.

Saturday is one part of that process of finding others willing not just to walk a mile with a placard, but to put in the hard yards to win the argument again for progressive values and vision. Maybe no one will show up. Maybe not many will keep going. But whilst there are folk with faith in each other, and in that alternative future, they’ll find a friend in me ready to work with them and will them on  and then Mr Banks really should be worried.