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Comment by pif | Hacker News Reader

> If they had separate currencies, Spain could inflate away a lot of their debt.

Which is why Euro is good for Southern European countries: it forces them to concentrate on productivity rather than economic alchemy. Spanish labor got too expensive? You don't need a government to inflate your currency, you just start lowering your rates. My fellow Italian workers cannot find a job? Stop talking about "articolo 18", stop looking for assured indefinite term contracts, accept the reality! Enterprises know ups and downs: when thing go well, they'll be happy to pay you good money for your services, but when hell breaks loose your salary will be a burden for them. Either accept that employment contracts can be terminated before your retreat, or keep up the good work... uh, keep up the work... just keep up!

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So glad to see someone make this point.

Every time I read histrionics about how the euro is a straightjacket, a trap, an evil German plan to benefit itself at the cost of its neighbours etc I just sigh. I am not even a supporter of the EU, but blaming the euro for low southern productivity is just wrong. The PIGS countries aren't seeing high unemployment and poverty because of the euro. They'd still have high unemployment even if they had their own currencies. The causes are fundamental.

All a floating currency would do is make it easy for them to screw over lenders in the short term by inflating their debts, which would be compensated by the markets charging much higher rates (this already happens because investors fear default instead of inflation). It'd also act as a forcing function to require the people living there charge (foreigners) prices that are reasonable for what they can provide, rather than expect them to accept market realities and actually lower their prices in order to compete.

The Euro has caused their debt to appreciate, so now they owe more money in real terms because the currency doubled in value. Meanwhile, Germany is able to export their goods without any currency risk. And now you have another layer of bureaucracy. The real issue is that when they created the Euro, they failed to consolidate the debt of all the nations. It's only a matter of time before the whole thing collapses.

>The real issue is that when they created the Euro, they failed to consolidate the debt of all the nations.

No one failed, we just didn't want to (for reasons very obvious now, in hindsight).

Also, the countries (Spain, Greece, Portugal...) accumulated most of the debt _after_ they got the Euro precisely because the Euro enabled them to do so.

> No one failed, we just didn't want to (for reasons very obvious now, in hindsight).

Would you mind explaining a bit more, please?

The Euro took away the single most painful thing still plaguing travel between EU countries. These days an EU citizen can up and leave to a different EU country with very little friction (aside from the language in some places), which was the idea. That goal was achieved.

It is unrealistic to expect that countries will somehow not be able to solve their financial issues just because they lost one tool. That's an excuse, not a reason.

They lost control of their own currency. That's not just "one tool". It doesn't work and without full economic integration it never will. I think I know what I'm talking about as I'm living with this problem, have analysed it thoroughly because I have nothing better to do, know the history of this southern European country and their people, and as a result of all this I can't trivialize it by simply making up the belief that it'll be fine at some undetermined point in the future. It's more like the death by one thousand cuts, in slow motion.

> They lost control of their own currency.

Germany lost it, too. If it worked for Germany, why not trying to learn from their experience rather than keeping complaining?

how does the Euro have anything to do with free movement? You could have one without the other.

>The Euro took away the single most painful thing still plaguing travel between EU countries.

In other words, it took away one insignificant burden on travelling, something which people do a best a few weeks a year, and in exchange it devastated their jobs and communities, for which they depend on survival (and for having the money to travel) all year long...

>These days an EU citizen can up and leave to a different EU country with very little friction

Yes, and usually with tears in their eyes, because they're forced to leave their country, culture, friends and close family to go work on some country that did better. Often even at 40 years old or later, and after their job in their own country crushed, because (among other things) of the Euro. The saddest songs in most southern countries are about migrating.

The kind of migration you describe is only a good thing (and a chosen option) for more privileged people who chose to do it and can chose to live where they want at a whim -- not for the millions merely forced to go find work elsewhere.

>which was the idea

Yeah, just not an idea that people asked for -- just the dream of the elites that created and pushed for it.

Human migration is not some new 21st century phenomenon. Humanity has been migrating in search of food, peace, and (later) jobs since before civilization. The poorest of the most desperate poor have migrated not even because of those Maslovian needs but for religion: "The Lord had said to Abram, “Go from your country, your people and your father’s household to the land I will show you"" (Genesis 12).

The US suffers from the same problem. The rural interior has dropped out, towns have turned into ghost towns, and instead of picking up and moving for greener pastures, people cling to hope that their livelihoods will return.

They won't. The wheels of capitalism are ruthless. The market forces capital to become more efficient over time, and capital has left in search of higher efficiency. People can stay behind and wither or get with the program and move and thrive.

Freedom of movement in the EU is so precious precisely because it offers the choice to avoid desolation, to not be stuck in a place with no opportunity and no future. A unified currency is precious precisely because it is a store of wealth that transports across the Union without loss or risk of sudden inflation. If people decide not to make these choices that is their fault and theirs alone. It's not easy to pick up and move to a new place with a new language - I've done it myself - but it is very, very much doable, and the world's poorest do it every day, picking up and moving to the US/EU in search of opportunities which were completely absent in their home countries.

>Human migration is not some new 21st century phenomenon. Humanity has been migrating in search of food, peace, and (later) jobs since before civilization.

Well, slavery and poverty aren't new either, but at some point it would be good we'd left them behind.

Migration by reasoned choice is OK -- forced mass migration for man-made causes (war, unemployment, wealth distribution, kleptocracy, ecological disaster, etc) is bad, and we should fix its causes.

>They won't. The wheels of capitalism are ruthless. The market forces capital to become more efficient over time, and capital has left in search of higher efficiency.

Well, I don't believe in bending over to blind forces of nature. That is a regression to primitivism, when we made altars of forces like the thunder or rain that we could not control.

I believe in people actively shaping their future and their societies, and not just by reacting to some "market forces".

Capital would have us all live in slums and lick our master's boots if they could absolutely have its way.

>Freedom of movement in the EU is so precious precisely because it offers the choice to avoid desolation, to not be stuck in a place with no opportunity and no future.

Until now, the EU was enforced, and follows the politics, that precisely create this desolation, and turns countries into places "with no opportunity and no future".

Not playing that musical chairs game is the wiser choice.

The Euro (Not directly but by risk sharing) also gives these countrys artifically low interest rate.

Thats why they still can borrow cheap money despite being basically broke

>Which is why Euro is good for Southern European countries: it forces them to concentrate on productivity rather than economic alchemy.

Yeah, and that experiment has gone very well... /s

What it actually does is cripple them from one of the major tools to control your own economy. It's no "alchemy", it's a tool -- the greatest economies of the world use it whenever they have to.

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