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Take this as a true lesson that Socialism doesn't work. The Euro idea is exactly that. It's socialist currency manipulation. They take a poor country with just about 0 GDP and put them on the Euro. How can a country with such a low GDP work on currency valued as high as the Euro??? It's impossible, just like Socialism.
Take this as a true lesson that Socialism doesn't work. The Euro idea is exactly that. It's socialist currency manipulation. They take a poor country with just about 0 GDP and put them on the Euro. How can a country with such a low GDP work on currency valued as high as the Euro??? It's impossible, just like Socialism.
The point of having poorer states adopt the Euro was to create an instant market for goods manufactured in the rich states. Suddenly people that previously couldn't afford German cars, French washing machines and Italian tractors could because they were buying them in a high value currency and not krowns and drachma's.
Socialism, no matter how liberally you may define it, had nothing to do with extending the Euro.
The point of having poorer states adopt the Euro was to create an instant market for goods manufactured in the rich states. Suddenly people that previously couldn't afford German cars, French washing machines and Italian tractors could because they were buying them in a high value currency and not krowns and drachma's.
Socialism, no matter how liberally you may define it, had nothing to do with extending the Euro.
How in the world could a country that has just about 0 GDP operate on a currency like that? It IS socialism, those countries contribute hardly anything to the value of the Euro. It's the same thing when someone who doesn't work gets the same living standard as one who does. It fails in the end. Also, if those countries are indeed poor, how do they afford those high priced items? It's basically impossible unless you are over paying your populace, which is what they are doing by putting them on the Euro.
The truth is that all countries have both socialist and capitalist leanings. Nothing is black and white here. Socialism doesn't work when the hand outs are too great and population gets lazy and systems get corrupt like in Greece, Spain, Italy, etc. But in places like Sweden and Norway, they have huge tax rates and government hands outs but they are productive, well organized, innovative and generate solid growth. In other words, they did not drop the ball like southern european nations and many would label them socialist states. So I think its more complicated than just looking at the amount of government hand outs and making the conclusion that socialism doesn't work. It might or it might not. There are cases of both. And broadly speaking, looking at both sides of the Atlantic - it's funny that both the US (more capitalist) and Europe (more socialist) are both going through recessionary times whereas China (communist) is holding up world growth right now.
The point of having poorer states adopt the Euro was to create an instant market for goods manufactured in the rich states. Suddenly people that previously couldn't afford German cars, French washing machines and Italian tractors could because they were buying them in a high value currency and not krowns and drachma's.
Socialism, no matter how liberally you may define it, had nothing to do with extending the Euro.
I think you're mistaking something.
Euro didn't make poor people any richer - in fact, most of them will tell you it made them much poorer. Each currency had certain exchange rate with Euro so if someone was making 160,000 Spanish pesetas before, the same person was making just 1000€ after switching to Euro.
The problem lays somewhere else. Apart from the reasons why European South collapsed so bad (which is mostly too much welfare state combined with too much spending), there are reasons why these countries can't get out of the hole they're into. Normally, the PIGS countries would just gone bankrupt or devaluate their currency but as they have Euro, they can't since it is not in the interest of other Euro Area countries. The autonomous currency is a key factor here, as we can say by comparing PIGS countries to Baltic countries that have experienced even worse economic collapse (Estonia and Latvia noticed over 10% GDP loss in 2008 only) but they managed to undergo vast reforms (most of which, I must admit, would fit the libertarian ideas) and now Estonia have the healthiest economy of all EU states, with just 6.7% debt to GDP ratio.
Quote:
Originally Posted by johnathanc
And broadly speaking, looking at both sides of the Atlantic - it's funny that both the US (more capitalist) and Europe (more socialist) are both going through recessionary times whereas China (communist) is holding up world growth right now.
Well, just to point out:
1) China's economy is actually laissez-faire capitalistic economy (with all its pros and cons), just the country is controlled by a bunch of people calling themselves the communist party. There is no real communism in China, there is not even socialism there. The only exception of laissez-faire economy in China now is that every foreign investor have to make a joint-venture company with a Chinese one (so that the Chinese can get know-how). It's actually pretty clever.
2) Please notice that 8% unemployment level in the US is called a complete disaster whereas 12% unemployment in European Union is called a success of governmental programs.
The southern european countries need to be out of the euro so they can devalue and become competitive.
I wonder if its apples to apples compared to the US. I mean I don't trust our unemployment numbers anymore since we hide so many in the disability rolls
The point of having poorer states adopt the Euro was to create an instant market for goods manufactured in the rich states. Suddenly people that previously couldn't afford German cars, French washing machines and Italian tractors could because they were buying them in a high value currency and not krowns and drachma's.
Socialism, no matter how liberally you may define it, had nothing to do with extending the Euro.
Right.
The goal was to increase the ability of poor European states to take loans (by decreasing % because of strong currency implementation), and - the main part - to buy products made by German and French factories. The biggest winners were large companies such as Siemens.
But average people were losers not just in PIGS, but in Germany and France too. And I am not saying only about bail outs from Germans' taxpayers. After start of Euro prices of all goods in Germany and France at least doubled very quickly, salaries remained same.
How in the world could a country that has just about 0 GDP operate on a currency like that? It IS socialism, those countries contribute hardly anything to the value of the Euro. It's the same thing when someone who doesn't work gets the same living standard as one who does. It fails in the end. Also, if those countries are indeed poor, how do they afford those high priced items? It's basically impossible unless you are over paying your populace, which is what they are doing by putting them on the Euro.
They afforded high priced goods with the help of cheap credit. Totally wrong way, imo.
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