Back in the 1960s, Ronald Reagan famously said there were no easy answers to the U.S.’s then growing problems, but that there were simple answers. In a way, today’s Europe may resemble Reagan’s view of America.

The future of the euro zone doesn’t look bright. Still, there are simple answers to the problems in the euro zone, although we lack leaders with the political courage to pursue them. At every turn, Europe’s political elite demonstrate shortsightedness and a desire for the easy route.

The first question the EU must address is how to untangle the mess in which the euro zone finds itself. The adoption of the euro brought some benefits to its members. In particular, it depoliticized monetary policy in a number of countries in which governments had traditionally debased their currencies. Arguably, however, the adoption of the euro has prevented monetary policy from adjusting to shocks and has led to economic dislocation in some of its members.

Euro-zone members have only two options—both are simple but neither is easy. The first involves radical liberalization, in particular labor-market liberalization, to ensure that euro-zone economies are flexible enough to respond to shocks. The second is to contemplate a euro-zone breakup.

Read the rest of the article on the Wall Street Journal website.

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Philip Booth is Academic and Research Director at the Institute of Economic Affairs and Professor of Finance, Public Policy and Ethics at St. Mary's University, Twickenham. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. Previously, Philip Booth worked for the Bank of England as an advisor on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs and on the editorial boards of various other academic journals. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.