Four members of the Euro elite
(details below in green) try to write an article in the Wall Street Journal.
Get ready for a laugh.
They twice claim that the solution to
the EZ’s problems is “competitiveness”. You’ve no doubt noticed politicians the
world over continually wittering on about “competitiveness”, which is a good
reason for being suspicious of the idea.
Anyway, the above four worthies seem
to think that competitiveness for the EZ as a WHOLE is the solution: that is
they make no mention of the particularly serious need for improved competitiveness
in the EURO PERIPHERY. To put that more bluntly, competitiveness can improve by
unprecedented amounts throughout the EZ, but that’ll do precisely nothing for
the disaster that is Greece, Spain, etc.
To expand on that, if competitiveness
for the EZ as a whole improves, that will create no extra employment in the EZ
in the long run because the improved competitiveness boosts the EZ’s balance of
payments position, and assuming it started from a balancing balance of
payments, that imbalance has to be reversed at some stage: by boosting the
value of the Euro relative to other currencies. So the EZ’s external position
reverts to balance, destroying the jobs initially created by the above
mentioned improved competitiveness.
Put that another way, any lack of
competitiveness for the EZ as a WHOLE can be dealt with via a devaluation of
the Euro.
Of course, improved productivity is
BETTER THAN devaluation: improved productivity brings about a REAL INCREASE in
GDP and living standards. But the point I’m making (to repeat) is that improved
competitiveness for the EZ as a whole will do nothing for high unemployment
rates in Greece and Spain.
_________
The authors of the WSJ article were: Jeroen
Dijsselbloem, president of the Eurogroup meeting of euro-zone finance
ministers, 2, Olli Rehn, vice president of the European Commission responsible for
economic and monetary affairs and the euro, 3,
Jorg Asmussen is a member of executive board of the European Central
Bank, 4, Klaus Regling, managing director of the European Stability Mechanism,
and 4, Werner Hoyer, president of the European Investment Bank.
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