Global currency would link 'generations and centuries'
Chris Cobb
STOCKHOLM -- As far as anyone can remember, it was the first time a Nobel prize winner has been upstaged by his young son, but Nicholas Mundell, aged two, seemed quite unimpressed yesterday by his father's pronouncements on international monetary policy.
Minutes after Canadian economist Robert Mundell, 67, delivered the prestigious Nobel Prize Lecture in Economics to a packed house at Stockholm University, young Nicholas made his way down to the stage shouting: "Daddy! Daddy! Daddy!"
The Nobel laureate, clearly delighted at the intrusion, swept Nicholas into his arms and the two mugged for the cameras at the podium from which Mr. Mundell had delivered his hour-long lecture titled "A Reconsideration of the 20th Century."
As Nicholas began joyously dismantling the two microphones his father had used, the group of Swedish intellectuals and autograph-seekers vying for the economist's attention smiled fondly.
When a beaming Mr. Mundell eventually handed Nicholas to a nanny and returned to business, a group of Japanese tourists descended on the boy and took turns having their photographs taken with him.
The nanny, looking pleased at the distraction because it halted the boy's running around the auditorium, took the photographs.
It was all in stark contrast to the lecture, during which Kingston-born Mr. Mundell gave a seamless history lesson on fiscal matters such as the international gold standard, the rise and fall of the dollar standard and systems of currency areas.
Mr. Mundell, a professor at Columbia University in New York, was awarded this year's Nobel Prize for Economics in October for work he began more than 30 years ago on exchange rates and how they affect monetary policy. He will officially be presented the award tomorrow.
"His work on monetary dynamics and optimum currency areas has inspired generations of researchers," said his Nobel citation.
"Although dating back several generations, Mr. Mundell's contributions remain outstanding and constitute the core of teaching in international macroeconomics."
Known as something of an eccentric, Mr. Mundell says he intends to spend the $976,000 Nobel Prize money fixing up his castle, the Palazzo Santa Colomba in Italy -- a 65-room villa he picked up for $10,000 in 1969. But friends of the laid-back laureate say his work has already made him a rich man, so the cash likely won't mean a radical change in lifestyle for Mr. Mundell and his young wife, Valerie Sophia Natsios.
Mr. Mundell, often called the godfather of Europe's common currency, the euro, is a keen advocate of one currency shared by all countries.
In the past he has come out in favour of a common currency for Canada, the U.S. and Mexico.
But in his speech yesterday he said the idea is a variation on an old, well-tested theme.
"Two millennia ago, in the Age of Augustus" he said, "the Romans produced a universal standard of value, the aureus. At first, this gold coin weighed about 8.4 grams, later it became standardized at about five grams.
"Everyone in the Roman Empire knew what the aureus was worth and people outside it could also measure their values by it. Equally important, it provided a link between values in one generation and century to those in others."
Mr. Mundell, sliding a reference to his son into the lecture, said the same gold standard applied into the next millennium although its name was changed from the aureus as empirical powers shifted.
Without that standard today, most national currencies have lost purchasing power in a swirl of international monetary chaos.
"A hundred years or so ago, when Nicholas's grandfather was born, there was still universal money," he said. "It wouldn't have mattered much whether you used the Swedish crown or Roman aureus to measure values because currencies were just names for particular weights of gold."
Gradually, said Mr. Mundell, most countries are rediscovering the policies that made the gold standard work and by using them have brought inflation under control. But they need to do more.
"The absence of gold as an intrinsic part of our monetary system today," he added, "makes our century unique in several thousand years."
Three islands of monetary stability, said Mr. Mundell, are the U.S. dollar, the Japanese yen and the euro. But he predicted that political power shifts and possible economic repercussions will not allow the three to function independently.
"Exchange rates between them will be the source of great disturbances to the international monetary system," he concluded.
"It remains for the next century to see whether a restoration of the international monetary system is compatible with the power configuration of the world economy."
As the applause died down, the sounds of a little boy shouting "daddy" was heard coming from the rear of the hall.
And with that, the godfather of the euro happily transformed into the father of Nicholas. |
