Saturday, March 16, 2002
Euro-kryptonite?Megan McArdle analyzes the European Union as a corporate merger, pondering the question, what makes a merger successful?
So let's look at the EU "merger". Is there redundancy? Absolutely. Tons of it. But over half the French population is employed by the government -- think they're going to initiate massive cutbacks? The "merger" is introducing another layer of redundancy, not removing it.
How about transaction costs? Well, here we hit the mother load, in the form of national differences that restrict the flow of capital and labor between countries.
There's a third reason to merge, of course, and that's the hope that you can get rid of competition.Read the whole piece; it cuts through the consultant-buzzwordization like "synergy" to conclude that
European dreams of becoming a superpower to rival or replace the US remain, for now, castles in the air.
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