Comment by epolanski | Hacker News Reader

Comment by epolanski | Hacker News Reader

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Germany's paying almost two decades of Merkelnomics, and Europe is paying for it's choice of favoring exports outside the EU rather than focusing on building a strong internal market.

The economic union is still not a union when laws and taxes and regulations still heavily change from country to country.

Merkel's decision on not taking drastic measures and the over reliance on Russian energy (as a matter of fact the second pipe between Russia and Germany started being built after 2014 is now showing its shortcomings.

Volkswagen focused on Chinese and overseas markets and as soon as those disappeared it started cracking. That's just the tip of the iceberg.

EU has plenty of ways to steer the ship, we went from an economy as big as the US one in 2000, to being half the size of it.

EU has money and capabilities to move forward, but a lot has to be done not just giving hundreds of billions in generic "innovation" over the next year's, but also by reforming our corporate law.

As a former startup founder I had more incentives into incorporating in Delaware from Italy than in my own country. Why? Because stock options essentially do not exist here. But I can't be giving equity straight ahead to people that I don't know what they will bring.

There's also too much laws protecting employees. Way too much. It's very hard to fire people here, this creates also a stagnating job market where workers don't want to risk losing their security for a better job where they will be on trial for 2/3/6 months before protections kick in.

There's many things on which Europe keeps being behind but populist agendas won't face it.

We'll still hear how they will pour hundreds of billions in startups, that will move to UK or US as soon as they can because being an entrepreneur in Europe only gets you

Additionally state pensions are beginning to be a positive feedback loop with protentional to wreak havoc across Europe - there is not enough young people to keep the financial plane flying, but there is constantly growing amount of pensioners who don't care about the future. Thus populists have simple job: constantly promising increasing of pensions. Pensioners will then always outvote young ones and there will be no chance for a change.

Germany is a disaster zone in a number of ways, but it is as easy as pie to fire people in companies with fewer than 10-12 people so startups can move quickly there.

Starting a startup on the other hand is damn near close to test-tube fusion and even then makes you think, why would I bother?

So fucking hard to enter any kind of industry or profession here, and most industries do not share the value like companies in the US do. It’s a country of dragons hoarding wealth.

> It’s a country of dragons hoarding wealth.

So true and applies to every EU member state. It's why the EU is not the US, and can never be like the US and compete against the US, even if all things were equal like labor laws and such.

Unlike the US, there's no such thing as a unified European culture, European language, European law, European army, etc. Every EU member state wants to be its own dragon hoarding wealth at the top of the union, the expense of the other members in the union, leading to internal squabbles and back stabbings, while the US and China steam ahead gaining more and more of the global GDP.

All countries in the Eurozone monetary system are hamstrung by the fact that they don’t issue their own currencies.

There is no fiscal authority at the same level as the monetary authority so they’re like states rather than countries but with no federal government.

As a dumb American from the outside, I feel like the EU is on a path to full federalism, and they should just get it over with. We figured out with the Articles of Confederation very quickly, even in the 18th century, that it wasn't a viable path

The EU is around only 30 years old, there's no way to push for federalism until all the cultures inside it start to internalise being European first. There's a lot of EU-skeptics in most countries, pushing too hard towards federalism will very likely break the EU apart from the push back coming from national anti-EU parties.

Just look at Brexit to see what anti-EU sentiment can do if the environment is ripe.

It'll take at least another 30-50 years for any meaningful push for federalism to be possible.

The euro is the best part of the eurozone, period.

That I'm not gonna criticize even a bit.

Without it it would be much worse.

It's handy to have the same currency, but it's a terrible choice economically because it limits the sovereignty of each nation.

"But there is much more to it all. It needs to be emphasised at the start that the establishment of a single currency in the EC would indeed bring to an end the sovereignty of its component nations and their power to take independent action on major issues. As Mr Tim Congdon has argued very cogently, the power to issue its own money, to make drafts on its own central bank, is the main thing which defines national independence. If a country gives up or loses this power, it acquires the status of a local authority or colony. Local authorities and regions obviously cannot devalue. But they also lose the power to finance deficits through money creation while other methods of raising finance are subject to central regulation. Nor can they change interest rates. As local authorities possess none of the instruments of macro-economic policy, their political choice is confined to relatively minor matters of emphasis – a bit more education here, a bit less infrastructure there. I think that when Jacques Delors lays new emphasis on the principle of ‘subsidiarity’, he is really only telling us we will be allowed to make decisions about a larger number of relatively unimportant matters than we might previously have supposed. Perhaps he will let us have curly cucumbers after all. Big deal!"

https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastri...

> because it limits the sovereignty of each nation

Why are you pushing such a bs populist agenda? Those read like the weak and pointlessly stupid arguments I've heard around brexit and each country deciding per se, etc, etc.

As an Italian I'm stoked that my country has given up sovereignty on money printing, it would've been a disaster otherwise as it has been for decades before.

The Eurozone and common fiscal policy is the only thing that keeps our populist governments in check.

And don't you think that this wasn't known when the eurozone and common currency was decided among the members?

The pros *far* outweight the cons. It's not even an argument.

Opinions about the euro have always been positive and no country would go back.

The european commission regularly polls europeans for their stance towards the euro:

> Nearly eight out of ten respondents in the euro area think that having the euro is a good thing for the EU and nearly seven out of ten respondents think that having the euro is a good thing for their country.

Of all the things in the EU, the Euro is by far the most positive, without it the last 20 years would've been an absolute disaster for many countries in Europe.

> As an Italian I'm stoked that my country has given up sovereignty on money printing, it would've been a disaster otherwise as it has been for decades before.

My point is that sovereignty over issuing currency is synonymous with sovereignty in general.

What you're saying is that you're glad the government in Italy is more like a state, than a nation.

That's a fine point of view, but it implies that your country is incapable of self-governance. Do you think that's the case?

It should also be noted that I don't think there is any issue with economic federation, only that there is economic federation without political federation. As such, you have a monetary body whose power exceeds any political authority. However monetary policy can't truly operate in the absence of fiscal policy, so what you really have is a bank as your federal government.

You have a solid point, yes I don't trust half the governments in eurozone to conduct their monetary policy.

And yes, I agree that we have a strong fiscal authority (the eurozone has strict rules for members about debt, deficit, spending, etc) without a strong political one. But it's an okay compromise.

The eurozone should indeed move into a federal entity, but I don't see that happening anytime soon.

A common currency is a massive boost to tourism and trading. Just think about the fact that many non-eurozone countries still bill tourists in euros, even turkey does that in their state run museums.

Ehh. No.

Europe is fine. Germany is a developed economy with a highly skilled population. It will eventually recover from its crisis.

You mentioned that the US economy is now double of Europe, but where did it grom from 2000? Big tech? Do we really need huge advertisement companies (google and meta) or a manufacturer of luxury toys (apple)?

Some people just really want to use a moment of crisis to push for less labor protections and welfare. Fuck that noise.

The U.S. economy ($27 trillion in 2023) is largely services based, including "advertising." About 70% of U.S. GDP comes from industries like professional services, real estate, finance and health care. Manufacturing only accounts for around 10% of GDP, or $2.7 trillion in 2023. Apples's revenue, by comparison, was $383 billion. Advertising in the U.S. accounted for 1% or $270 billion.

From what I can see through Google search, Germany's GDP was around $5 trillion in 2023 with around 20% from manufacturing (or $1 trillion)--or about 3 Apple's.

Another comparison: the U.S. and German automotive industries were about the same in 2023. The coming of EV's will likely impact both countries, especially with pressure from China (and potentially Japan and South Korea.) EV's will also likely disrupt the after-market repair and parts industries, since they technically require less maintenance.

The situation is not fine under the premise of neverending growth economies.

Under other points of view, yes, Germany and Europe isn't turning in third world economy.

> premise of neverending growth economies.

Maybe that is the issue.

>Germany is a developed economy with a highly skilled population. It will eventually recover from its crisis.

The real purchasing power of the average German worker has been on a steady decline for the past 20-30 years with sharper declines in 2008 and 2022 while the US has only been surging up. When is this mythical recovery coming? Any day now?

>Ehh. No. Europe is fine.

Burring your head in the sand to slow decline is not fine. It's just ignoring the problems hoping they go away but that's not how it works.

> The real purchasing power of the average German worker has been on a steady decline for the past 20-30 years with sharper declines in 2008 and 2022 while the US has only been surging up. When is this mythical recovery coming? Any day now?

That is not the only measurement of prosperity. It's just a data point you picked to push for a certain agenda.

> Burring your head in the sand to slow decline is not fine. It's just ignoring the problems hoping they go away but that's not how it works.

Neither is pretending that trickle down economics will do anything for the common man.

You still haven't answered when is the recovery coming, and to which point in time it will recover at.

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