Greg Mankiw correctly points out that there was a lot of skepticism within the economics profession about the adoption of a common currency. He cites two prominent conservative economists who said the obvious things about the European Project. Everyone knew that it would be difficult to make the common currency work without a fiscal union, and the inability of each nation to devalue its currency in response to recessions. However, many hoped that the European Project would help to reduce the potential for warfare between nations that were bound together by a common currency. Friedman and Feldstein were not among them. They did not believe that nationalism could be overcome. Perhaps they also disliked the very idea of a more centralized government in Europe.
The European Project worked well economically and politically for many years. The financial crisis and recession exposed the central weaknesses of the common currency. It has also ignited a resurgence of nationalism and enmity within the eurozone. Some, like Mankiw, will cheer this result and tell us that conservatives were right about all along about potential for a more united Europe.
Mankiw is also wrong on another front. He claims that the austerity which was imposed upon Greece, and which helped to deflate its economy, was a necessary response to the crisis. Its hard to see how this helped Greece or the prospects for the eurozone. Some believe that it was the only way to force structural changes that would make Greek exports more competitive. Destroying a weak economy through austerity has turned out to be bad medicine for Greece and for the European Project.