The death of an elderly man at home on Easter Sunday in 2021 shocked the world. This man was Robert Mondale. You may not have heard of the name, but you must know another of his well-known titles – "The Father of the Euro".
Robert Mundell was an economic giant who influenced world economic policy and promoted the birth of the euro, a great prophet who predicted that the renminbi would become one of the world's three major currencies, and also advised China's economic development and obtained a permanent residence permit in Beijing. Now, let's look back on the legendary life of Robert Mundell and pay tribute to this amiable economist.
What kind of life experience did Mundell have?
Robert Mundell was born in October 1932 in a small town called Kingston, Ontario, Canada. Mundell's father was an officer, his mother was the heir of a large family, and their level of knowledge and insight was far from being comparable to that of ordinary people, and the influence of such a family environment made Mundell develop a good habit of independent thinking from an early age, which affected his life.
However, due to the high taxes levied by the government and the overall economic situation of the society, the economic conditions of the Mondale family were very general. At that time, Canada was still in the shadow of the Great Depression. In order to protect its own market, the United States raised tariffs and blocked the inflow of foreign goods, and Canada, whose economy is mainly dependent on exports, inevitably suffered a serious blow.
More than a quarter of the population in Canada has lost their jobs, a large proportion of people depend on government handouts to survive, many are in a semi-wandering state, and the society is very poor. Until the age of 13, the Mundell family lived on a humble farm, reading with a dozen children on the farm.
The gifted Mundell exhibited unusual traits as a teenager. When discussing problems with teachers and classmates at school, Mundell never easily agreed with other people's views, so he often fought with his classmates to get red in the face, and also became a "strange student" in the eyes of the teacher.
After the end of World War II, European countries generally suffered huge economic losses and had to import a large amount of materials and production materials from the United States to restore their national economies, which formed a huge trade deficit. In order to increase the export volume of domestic goods and achieve trade balance, European countries have devalued their currencies, and Canada is no exception. The depreciation of the Canadian dollar aroused Mundell's intense curiosity, and he was eager to know what this depreciation meant.
Mundell consulted his teacher and consulted the newspaper, but he never got a clear and accurate answer. The obstinate Mundell was furious and decided to study economics, which was not popular at the time, and to find the answer himself. Mundell then began his life studying economics at a top school. He went all the way from undergraduate to master's degree and finally to doctorate.
Among his teachers were several Nobel laureates in economics, such as the famous master Paul Samuelson. Famous teachers out of high apprentices, in such a school with extremely strong teachers, Mundell is destined to be unusual. During his studies, Mundell was not limited by these masters of economics, and he held his own views on the economies of various countries.
After graduating with his Ph.D., Mundell has served as a professor of economics at Columbia University and other well-known universities, and has also served as a consultant to many international institutions and organizations, covering the world and leaving a strong mark in the field of economics. It is no exaggeration to say that since the 1970s, most of the heavyweights who have been active in the global financial and monetary fields have been disciples or re-disciples of Mundell.
In 1999, Mundell won the Nobel Prize in Economics for proposing the theory of the "optimal currency zone", and became internationally famous for a while. In addition, his theories such as the Mundell Fleming model and the dynamic model of money have always occupied a central position in economics textbooks, and have been regarded as treasures by countless economists and dominated world economics.
Why is Mundell called the "father of the euro"?
The euro began to be the common currency of the EU countries decades ago, and in our current view, this is an important manifestation of global economic integration, and there is nothing special about it. But at the time, the issuance of the euro was a groundbreaking event, and it was almost unthinkable to give up its own monetary sovereignty. But the reason why all this can be achieved is inseparable from one person. This man is Robert Mundell, known as the "Father of the Euro.". It all started with the birth of the euro.
From 1929 to 1933, an unprecedented economic crisis broke out in the capitalist countries, with a large backlog of commodities, industrial and commercial enterprises collapsing, unemployment rising sharply, financial institutions collapsing, and domestic contradictions becoming increasingly fierce. In order to deflect the crisis, these countries set off a boom in competition for international markets and colonies, which eventually led to the outbreak of World War II.
This unprecedented war directly changed the pattern of the entire world: before World War II, the world was dominated by European powers, and after World War II, the world was dominated by the United States and the Soviet Union. Europe, which was greatly weakened by the war, began to move towards unity in order to counter the hegemony of the United States and the Soviet Union. Against this background, France, the Federal Republic of Germany and other six countries signed the Treaty on the Establishment of the European Community in March 1957, with the aim of establishing a common market and promoting the coordinated development of the economies of all countries.
After the entry into force of the Treaty in 1958, economic exchanges between countries became increasingly close, and transnational corporations gradually emerged and developed rapidly, followed by the problem of currency exchange. The wide variety of currencies and various exchange rates make economic exchanges between countries very inconvenient, and even produce a series of contradictions.
So in March 1969, the European Community proposed the idea of establishing the European Monetary Union, with the aim of creating a new single currency between member states, thereby replacing the national currency between member states. The theoretical basis of this idea is the theory of optimal monetary area proposed by Mundell in 1961.
Mondale believed that the advantage of a unified currency was that it could greatly reduce the cost of foreign exchange conversion, but also eliminate the risk of exchange rate fluctuations, and most importantly, it could allow the currency to flow freely between countries, thus facilitating larger transactions. As soon as Mundell's theory was published, it caused an uproar in all walks of life. At the time, everyone thought Mondale was crazy.
Previously, each country had its own unique currency, for the country, although the currency itself does not represent power, but it has the imprint of its own history and culture, such as the renminbi printed with Chairman Mao's portrait and China's important attractions, Mundell wants the country to take the initiative to give up its own currency sovereignty, this is not crazy what it is.
No matter how much the outside world criticizes and questions, Mundell always adheres to his own ideas and publishes many articles to argue his point of view. Finally, in 1999, driven by the tide of globalization, the most important step in Europe's monetary reform was taken - the euro was born, and it was used as a virtual currency for banks and other financial institutions in 11 countries, including Austria, Belgium, France, and Germany.
In July 2002, after three years of warm-up, the euro was widely used among ordinary people and became the only legal currency in the eurozone. As of 2019, the euro has reached more than 300 million people in 19 EU countries. Mundell's theory became a reality. Mundell, the theorist of the euro's basis, is therefore known as the "father of the euro."
What is the origin of Mundell and China?
Mundell's death has also made countless Chinese sigh, not only because of Mundell's great achievements in the field of economics, but also because of Mundell's deep friendship with China. In 1997, southeast Asia's economy experienced a false boom, and then under the combination of domestic and foreign capital, the Thai baht was forced to abandon the fixed exchange rate that lasted for 13 years and implement a floating exchange rate, and the thai baht depreciated sharply.
Some financial experts keenly anticipate that a serious financial crisis is about to erupt in Thailand and spread across Asia. Experts from the International Chinese Chamber of Commerce and Industry discussed it carefully and consulted Mr. Mundell and suggested that the mainland keep the RMB exchange rate unchanged. This decision proved to be entirely correct.
The domestic economies of South Korea, Singapore, India, Russia, and other countries that have adopted a policy of currency devaluation have been greatly damaged, factories have closed down, workers have lost their jobs, and the mainland has survived the financial crisis that has swept across East and Southeast Asia, thanks to the foresight and enthusiastic help of Mundell and others.
Mundell has come to China for exchanges many times, has given speeches to many universities, and has also served as an honorary professor at Tsinghua University, Nanjing University and other universities, cultivating a large number of talents for the development of Chinese economics. In 2001, Mundell and Huang Da, a member of the China-US Economic Exchange Committee, founded the "Huangda-Mondale Economics Lecture Series" at Chinese Min University, and 8 of the main lecturers have won the Nobel Prize in Economics.
In 2003, the SARS epidemic was fierce and soon spread throughout the country. Some media with ulterior motives maliciously hyped up and exaggerated the impact of SARS on China's economy, and a small number of countries took advantage of the fire and robbery to take the opportunity to attack the mainland's RMB exchange rate and export trade policies. Thanks to Mundell's righteous words, citing a large number of data to argue that the impact of SARS on China's introduction of foreign investment is very limited, and China's economy will quickly recover its upward momentum after the end of SARS, which has stabilized public opinion.
Mundell also took a huge risk and moved his corporate headquarters in New York to Beijing, an epidemic area, to show confidence in China with practical actions. As Mondale argued, China's economy rose steadily after a brief downturn. In addition, Mundell is also full of confidence in China's economic development, he predicted that the renminbi is expected to become one of the world's three major currencies, and China will surpass the United States in 2025 to become the world's largest economy. This prediction has not been confirmed, but there is hope for the current state of the mainland economy.
Mundell has been to China more than two dozen times in his lifetime, and he has a love for Chinese culture. During his lecture in Hunan, Mundell ate all of Hunan cuisine and learned to use chopsticks. As the economic and cultural center of the country, Beijing has a high-speed economic development and an open and inclusive culture, which makes Mundell yearn. So in August 2004, Mundell wrote a letter to the leaders of the relevant departments in Beijing, expressing his idea of living in Beijing.
In March 2005, when Mundell came to Beijing to prepare for the upcoming Nobel Laureates Beijing Forum in May, he finally obtained the "Permanent Residence Permit for Foreigners" issued by the Beijing government and officially became a "Beijing citizen". Although he did not stay in Beijing for long, Beijing will always remember him.