Wolfson’s prize is impossible to win

by Tim Harford

Financial Times
October 21, 2011

“Lord Wolfson, a prominent eurosceptic . . . is offering £250,000 to the person who comes up with the best plan for winding up the euro in an orderly way. The Wolfson Economics Prize . . . will be the second-largest cash prize for an academic economics after the Nobel Prize.” – Financial Times, October 19

Cheap at the price.

Very cheap. The European financial stability facility has €440bn to disburse, and it’s a sign of the eurozone’s woes that this is widely regarded as far too puny.

Let’s hope somebody wins it, then.

I doubt that will happen. Lord Wolfson is offering a prize for turning an omelette back into its constituent parts.

I like omelettes.

So do I, but the eurozone is currently lacking in light, fluffy deliciousness. Hence the talk – and not just from millionaire eurosceptics – of a break-up.

Will that help?

If Greece somehow managed to leave the eurozone in a tidy fashion, that would help up to a point. Many of Europe’s peripheral countries, including Spain, Italy and Greece, have a growth problem for which a neat euro exit could be a cure. Their wages and prices are too high relative to those in Germany and so they’re struggling to grow. Wages and prices can of course fall, but that is a slow, painful and politically fraught process. If they had an independent currency, they could devalue and the growth problem would disappear.

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