20 years of the € - winners/losers

[ori]

ori called the authors of the study "one of the more merkel-friendly think tanks" so I ruled out that it was anti-EU propaganda.

This based on who is/was part of the board of trustees: former president Roman Herzog certainly was a conservative in the vein of Merkel, former constitutional court justice di Fabrio is a conservative judge, Steltzner is one of the editors of the conservative/liberal newspaper FAZ, Stark is a former ECB member who quit because he was not going anywhere (officially because he objected to the bond buying scheme), Bolkestein is a conservative dutch politician and former EU commissioner and Balcerowicz a polish conservative politician mostly known (outside Poland) for being a proponent of austerity to get through the financial crisis. It really reads mostly like the conservative CDU wing... Their publications are at a glance pro-EU where it is pro-business and semi critical where they start getting fancy ideas about improving social services or saving the environment.

 

[Hygro]

I'll take a look later when I have time, but rather interesting that they say that even if most countries lost with the Euro, Greece of all places is still a net beneficiary, however slightly.

It's a beneficiary on their devised "propserity" measure but when they just look at GDP, the euro has set Greece back 4000e, deep in the losers' territory.

 

[innonimatu]

I had missed this thread back in February.

Comparing countries outside the eurozone with those inside is something I've done also, but I wouldn't date try to put numbers on the effects. Ant attempt to quantify the size of the damage will always be very uncertain. But broadly this ranking of damage (and in the cases of Germany and the Netherlands, benefit) matches what I'd expect.

One interesting thing to take notice is that the Euro was overall damaging for the whole zone. It also shows up in these estimates if you just add all the absolute numbers. The global number is very negative. And that is indisputable: the eurozone has had far worse economic performance that either the countries within the EU that refused the Euro, and the countries outside the EU. Remember all those promises that the Euro would bring prosperity? Lies, deliberate lies. Numbers made up to push through the euro project, as one step towards the european federation.

It's easy to figure out possible explanations for this. Centralization led to a reduction of flexibility and adaptability of policy responses to local conditions. Removal of democratic controls on policy adopted by governments (the EU/ECB demands austerity, there's nothing we can do about it...) allowed more opportunities for decision makers to serve interests other that those of the populations they supposedly represented (corruption). Less "barriers to trade" allowed greater market consolidation reducing both competition and productive investment.

Germany only "benefited" because it adopted a mercantilistic policy at the beginning of the century, with repression of wages and therefore of consumption. This it became more "competitive", freed capacity that went into exports, and increased profits by its corporations. The per-capita gains are deceitfut.
The Netherlands probably "grew" its economy over the average because of its central position as a trade hub. It is very likely that it would have prospered more (it would still have that same geographic position) in an Eu without the Euro over the same time period.

Economically the Euro was and is an unmitigated disaster. Its raison d'etre is political, not economic.

 

[rah]

One interesting thing to take notice is that the Euro was overall damaging for the whole zone. It also shows up in these estimates if you just add all the absolute numbers. The global number is very negative.

You have nothing to compare it to during the period of time. It might have been worse without it.

 

[innonimatu]

I do, and they did. Economies in the same region that did not use the Euro. Though they seem to have used also countries from other regions.

Granted, it's not the same. But it is as good as we can do. The Eurozone has had the worst economic performance than any other large or medium developed economy I can think of comparing it with, except Japan that had already a series of problems. It had it worse than Switzerland, despite Switzerland's disadvantage of being surrounded by it. It had it worse than the UK or Sweden, developed and within the EU.

In the past I've compared these economies, fortunately now I can simply point to studies already done with the same idea. Consider this one, for an example, if you want a really complex one that tries to factor in past performance prior to the Euro also. It does not compare directly the growth rates ans is less negative on the effects of the Euro but still concludes that it failed to deliver.

 

[FriendlyFire]

While not terribly surprising (at least in general terms - and the specifics should be taken with a few truckloads of salt i guess) the fact that one of the more Merkel friendly think tanks essentially states that apart from Germany no one really benefits from the € is pretty interesting. So what to make of it?

The entire EZ rules are based on the German stable economic model, which the germans are using so its no suprise that being the Germans and following the rules the Germans benefited the most
Countries like Greece which are based on deficet, inflationary economic model and didnt bother to play by the EZ rules of course lost the most
On the other hand northen ayran (jk) countries like the baltics, nordic and now poland getting large amount of Eurodollars to build up their economies have also done reasonably well.

 

[Ferocitus]

Some neighbors of mine at the Center for European Policy, a (lets say conservative) think tank dedicated to the tradition of economic policy along the Freiburg school of economics...

I can't take that non-peer-reviewed, partisan report seriously, so...
GG, Germany! Glad you're playing as if led by Mansa Musa, rather than Fred or Alexander.

 

[luiz]

I had missed this thread back in February.

Comparing countries outside the eurozone with those inside is something I've done also, but I wouldn't date try to put numbers on the effects. Ant attempt to quantify the size of the damage will always be very uncertain. But broadly this ranking of damage (and in the cases of Germany and the Netherlands, benefit) matches what I'd expect.

One interesting thing to take notice is that the Euro was overall damaging for the whole zone. It also shows up in these estimates if you just add all the absolute numbers. The global number is very negative. And that is indisputable: the eurozone has had far worse economic performance that either the countries within the EU that refused the Euro, and the countries outside the EU. Remember all those promises that the Euro would bring prosperity? Lies, deliberate lies. Numbers made up to push through the euro project, as one step towards the european federation.

It's easy to figure out possible explanations for this. Centralization led to a reduction of flexibility and adaptability of policy responses to local conditions. Removal of democratic controls on policy adopted by governments (the EU/ECB demands austerity, there's nothing we can do about it...) allowed more opportunities for decision makers to serve interests other that those of the populations they supposedly represented (corruption). Less "barriers to trade" allowed greater market consolidation reducing both competition and productive investment.

Germany only "benefited" because it adopted a mercantilistic policy at the beginning of the century, with repression of wages and therefore of consumption. This it became more "competitive", freed capacity that went into exports, and increased profits by its corporations. The per-capita gains are deceitfut.
The Netherlands probably "grew" its economy over the average because of its central position as a trade hub. It is very likely that it would have prospered more (it would still have that same geographic position) in an Eu without the Euro over the same time period.

Economically the Euro was and is an unmitigated disaster. Its raison d'etre is political, not economic.

I tend to agree the euro did more harm than good. The evidence certainly points that way.

But it's more complicated than it seems. It's not just about evil North European elites pushing a bad project for their own benefit.

Part of the elites in all countries love the euro. If you're a highly paid executive in Paris or Milan, the euro was great, even if for your country it mostly sucked. Now you can store your savings without fearing devaluation, not to mention the whole practical benefits (doing business and traveling are now easier).

But it's not a class issue either. Italian industrialists probably hate the euro for the most part. Poor people who depend on government assistance probably like it.

So it's a complicated web of supporters and detractors, and any manicheistic analysis will fall short.

 

[Akka]

It's a shame too, because I'm a fan of the European project. I think that European countries have a lot to gain from closer cooperation, it's just that the way we've gone about it is, in my opinion, less than ideal. The common currency might have been a little too ambitious of a project.

The problem is that it's been done in reverse.
We should FIRST have had a fiscal union, and THEN a monetary union.

That being said, after a short search, I don't notice any noticeable difference between the growth of the Eurozone and the growth of the rest of Europe, so paint me doubtful.