Socialism collapsed because the next generation didn't learn to work - they had nothing to fight for. You may argue that this would happen already in the first generation - but that's actually what happened. Most of russian was very rural and didn't change for many years, the problem is, that when people got sucked seriously into socialism, their children got a serious problem. That's also why some socialist reforms were reverted - like when people were given a piece of land to grow vegetables. This boosted productivity and ingenuity. So even if the short-term result of socialism was an improvement for many poor people, the long term result was loss of productivity, loss of quality, loss of freedom and return to market economy at the cost of many, many lives.
If you had every lived in a multi-currency Europe, you would also have dreamt about one single currency. Try to imagine that New Jersey, New York, Massachussets, Connecticut and Rhode Island each had their own currency. I live in west Europe, and I still have 4 different currencies within 240km (150 miles) from my home... (Euro, DKK, SEK, PLN) - it's awful. And yes, there are 4 languages, too, and if I increase the distance, the number of languages and currencies goes up. Within 680km (425 miles, like from New York city to Cleveland), we have 12 languages and 8 currencies, and at 1000km it's even more. There is no doubt that the Euro has given a boom to Europe, like many other new things that make it easier to trade across borders, but the Euro was introduced because people wanted to get rid of the old mess. The Euro means loss of sovereignty to the countries involved, so it really required a good reason to be politically acceptable, and earning money is not such one.
However, I'm not sure that a reserve currency cannot survive more than one generation. You didn't define "reserve currency" in your post, but the dollar is an easy thing to understand, the Euro isn't - yet. Since the connection to gold was lost, perception is very important.
I strongly assume that USA will start to pay back debt 1-3 years after the next presidential election, and this will mean more american products on the world market. This will improve the world's perception of USA as a supplier of high quality products, and make the dollar a more obvious choice. |
