The European Union: A Zero-Sum Game
The 2012 New York Times article entitled, “Using Game Theory to Predict the Euro’s Future” by Paul Taylor, explores the existential threat facing the European Union as Greece’s potential withdrawal from the euro zone, due to the country’s government-debt crisis, is put into question. Proponents of the withdrawal assert that removing Greece from the EU would eliminate difficulties imposed on other euro zone nation’s already seeing higher borrowing costs and other economic ramifications. On the other hand Angela Merkel, the Chancellor of Germany and the most powerful political leader in Europe, believes that Greece leaving the EU could cause a “disastrous domino effect” in which potential investors lose faith in the single currency zone. Paul Taylor directly ties the interconnected relationship of EU countrys’ membership to the concept of a zero-sum game which we explored at length in class.
The zero-sum game arises when two nations are in question of leaving the European Union and one of the nations has a superior economy compared to the other. If nation A decides to leave the EU and nation B stays, if both countries are slightly better off as independent states, then nation A “wins” and nation B “loses” and vice-versa for the opposite situation – both net-zero outcomes. If both countries maintain membership, then the nation with a better economy will profit relative to the other’s losses and depending on their unique economies, results in a zero-sum outcome. If both leave the EU, then assuming each country now competes directly with one another, the nation with a superior economy will dominate, and the lesser will lose again. This zero-sum effect can be seen throughout the European Union in two countries maintaining their allegiance to the euro zone and when two nations are in direct opposition for a political dilemma such as the issuance of bonds backed by EU credit.