Yet Germany, supposedly the strongest advocate of the eurozone's integrity, has explicitly refused to do it. Angela Merkel, the German chancellor, has rejected a public plea by Spain's prime minister, Mariano Rajoy, to juice the German economy with new spending. By doing so, she has put her country's fiscal health above the health of the eurozone -- an understandable decision, but one that keeps the currency union in peril.
The situation wouldn't be so dire if the eurozone were taking full advantage of its other channel for smoothing out the differences between its economies: people. Free internal migration, a founding tenet of the European Union, can have a similar effect to trade. If one country is in the dumps, its people can move to another country where prospects for work are better. All other things being equal, the unemployment rate would drop in the first country and rise in the second, bringing their economic cycles closer together.
Alas, internal migration in the eurozone is not exactly free. Not every country recognizes the others' professional qualifications, and the requirements for starting a business can be completely different from member to member. Moreover, each country can have different administrative formalities for migration, and immigrants who lose their jobs can be forced to return to their countries of origin. Aside from these administrative issues, there are social and political barriers; in the midst of economic hardship, anti-immigrant sentiment is rising across the continent.
Of course, most successful currency unions don't just rely on trade and migration to synchronize their members' economies. Alongside a shared monetary policy, they also have a shared fiscal policy. That's right: Canada, India, the United States, and other big countries with regionally diverse economies are among the world's thriving currency unions. When one region is suffering, the central government can send cash to prop it up. It's no secret, for example, that federal tax revenues are redistributed from Washington toward some of the poorer states.
There's also a degree of redistribution in the eurozone (and the EU as a whole) thanks to the recent bailouts, farm subsidies, and other programs. But the amounts of money pale in comparison to the entirety of the eurozone governments' budgets, which totaled about 4.7 trillion euros in 2012. In addition, there is no central authority for taxation in the eurozone or the EU, so half of fiscal policy is completely off limits.
Teetering on two unsteady legs -- the third is barely a stub -- the eurozone will continue to be a weak currency union at best. I say "at best" because its members' economies are heading in very different directions in the long term, with distinct risks and opportunities in each region. Indeed, as I wrote in a recent book, the EU could conceivably split into several contiguous economic blocs, each of which would have a much easier time maintaining its own currency union. For now, though, the eurozone seems feebler than ever, and no one is doing much to strengthen it for the future.
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