The euro benefited Germany immensely because weaker nations basically hindered the appreciation of the common currency.
But with the Euro, other countries in the Eurozone which have had a negative balance of trade (a trade deficit) balanced out Germany, preventing the Euro from appreciating too much. This helped Germany's export sector, helping keep them competitive.
The other issue with the Euro is that Germany's economy was already adjusted for low interest rates; but the introduction of the Euro meant low interest rates in countries which had not historically had them.
Ireland didn't have a big government deficit problem; Ireland's problem was a property bubble driven by reduced rates on mortgages. It only turned into governmental debt when the government guaranteed bank debt, having been convinced by the banking-political cabal in the middle of the 2008 crisis that the bank problem was liquidity, not solvency; but with banks holding assets formed from inflated house prices, they didn't have as much capital as they thought.
Let's take porsche cars as an example. Porsche pegs a price in euros, and the price that US customers pays is the equivalent price in dollars (plus some extra fees, but those are generally negligible). A weaker euro means that 1 dollar is worth more euros, so that the dollar cost of the porsche to US customers is lower than it would have been otherwise.
On the other side, US exporters are hurt because the stronger dollar means that they have to charge more euros for items.
A similar issue exists between US and china
http://seattletimes.nwsource.com/html/businesstechnology/201...
Wouldn't it be better for Germans to work less and have other people send valuable goods to them?
Aren't we considering the counterfactual where Germany never entered the Euro and had it's currency dragged down by weaker nations? In that counterfactual, the currency appreciation would have been slow and there would have been plenty of time to adjust. So the unemployment effects would have been minimal.
So ultimately, all the Euro did was reduce German buying power and force Germans to work more.
ADBOC[0].It seems to me that it actually works out more like redistributive taxation than one might naively think from what you wrote. An artificially cheap currency means more manufacturing jobs at static wages more than the same number of people working more hours. It has very approximately similar effects to progressive taxation, or more accurately it acts as a subsidy to the German manufacturing sector.
I don't know (but doubt) if the German people would have signed up for this, but the possibility is stronger given that Germany is in the extremely unusual situation, for a developed country, of having a larger manufacturing sector than a services sector.
I don't think I actually disagree with you on any point.
[0]Agree denotationally but object conotationally
(Did I misread you? What you write seems rather xenophobic besides being somewhat economically illiterate. From a strict economic point of view, there is no surplus of jobs. The price of labour should rise until the demand for labour abates; and the German workers would be better off. To the degree that that isn't happening (though Germany's population overall is decreasing, not increasing), it is because Germany has an open economy with free movement of labour. If you're attacking that, you're attacking the whole foundation of the EU, and I don't want much more to do with you.)
Unless you are looking to increase your population you don't design policy to encourage immigration, you design policy to improve the lives of people already living there (indigenous or not). After all the government has invested in these people prior to working via services and schools. It is not xenophobic to put your needs ahead of those outside the country or suggest it should be so.
The reason the price of labour doesn't increase needs only a simple answer; that demand is met by supply from an open economy and free movement of labour. This benefits immigrants from weaker economies, of course, but also German businesses who employ them. If the EU did not have this freedom, ordinary Germans would be better off, but we would all lose out for three reasons described by DuncanIdaho.
Furthermore, I don't actually think tsotha was being Islamophobic, just that that was a potential misreading; it seemed slightly xenophobic at best, given the reality that a combination of healthy market for labour and an economy open to free movement of labour naturally gives rise to immigration.
Plenty of countries design policies to encourage immigration, of the right people, for different values of "right". Your assertion seems to me to be flat out wrong; the qualification of "looking to increase your population" seems semantically meaningless in this context, as it is assumed in encouraging immigration.
I also strongly dispute your assertion that if the EU didn't have freedom of labour, then ordinary Germans would be better off, on far more grounds than DuncanIdaho. Germans would be at least worse off from lacking freedom of labour themselves (these things are normally reciprocal); and they'd have a lot fewer opportunities to trade, and more obstacles, without all the rest of what the EU brings to the table. Furthermore, the character of the European continent would be dramatically different; I think it's questionable that it would have been as peaceful has it has been. Germany would still be split without the EU, for one thing.
No, obviously you don't see at all. My point was there's no benefit for a country to create more jobs than it has people. The rest is just projection. It must be easy pride yourself in a good post when you respond to things people didn't write.
>From a strict economic point of view, there is no surplus of jobs. The price of labour should rise until the demand for labour abates; and the German workers would be better off. To the degree that that isn't happening (though Germany's population overall is decreasing, not increasing), it is because Germany has an open economy with free movement of labour.
Which was my point. This doesn't benefit the Germans. They would have been much better off allowing the price of labor to rise, which would have meant broadly-shared prosperity. As it is, only the large corporations and the state will benefit. But that was the point of the EU, wasn't it?
> If you're attacking that, you're attacking the whole foundation of the EU, and I don't want much more to do with you.
Oh my! Has the EU become a sacred thing now? It was a stupid idea, or at least a stupid implementation, one that Europe will be regretting for generations. Personally, I try to see the humor in it all - beyond that it's not my problem. Now, if you'll excuse me I need to find a soft shoulder to cry on now that you don't want anything to do with me.
Specifically, I live, work and travel in many different European countries, none of which are the country of my birth; and so too does my (German) girlfriend. The way of life I've experienced would not be possible without the EU or something very like it. Your opinion, as expressed, is in opposition to my way of life. That's the source of the vehemence of my opposition.
(Hopefully you'll note that I am neither a state nor a large corporation, yet I've benefited in many different ways.)
(This nationalistic notion that nations are important, that they should look after their own above others, I think is responsible for many evils in history, some very recent. I think humanistic cosmopolitanism is far better than "us for ourselves" ideologies.)
These people will become centres of new productive hubs, where there has be nothing of the sort thus far.
It is just globalisation on smaller scale. Europe is trying hard to integrate and mix all the countries and cultures in Europe to the level that would make warfare between their citizens too costly to anyone.
That's what the Germans thought, originally. Turns out to be wrong. If you move to a new place and live there for a few decades, raising your family there, you don't leave unless you don't have any choice. That place is home, especially for your children.
>Europe is trying hard to integrate and mix all the countries and cultures in Europe to the level that would make warfare between their citizens too costly to anyone.
Yes, and it's not working. Even the leaders acknowledge that now. And before they get too comfortable they should remember Yugoslavia tried to do the same thing.
>Yes, and it's not working. Even the leaders acknowledge that now. And before they get too comfortable they should remember Yugoslavia tried to do the same thing.
Hmm. Saying its not working is rash. It didn't work as well as optimists hoped for it also didn't works so bad as pessimists hoped for. What leaders are realizing now is not that EU integration isn't working. It's just that current approach is losing steam.
And one should note, that current approach was more of an amalgam of inertia and half assed attitudes than something coordinated and sincere.