As the Eurozone countries find themselves once again in the position of having to play the bank of Mum and Dad to Tsipras the usual “euro-is-dead” critics are out in force. Needless to say, most of these critics neither live nor work in a Eurozone country, which does rather beg the question why they are all so concerned about a currency they don’t even need to use? Could it be that twenty years ago they confidently wagered the euro was never going to fly? They’ve been proven wrong all these years and are still determined to be proven right?
Take Lord Blaby and Joseph Stiglitz by way of example. The first a former Thatcher cabinet minister and vociferous opponent of not just the euro but the entire EU project. In January 2016 Blaby announced that the euro “has been extremely damaging economically for the countries which are members of the Eurozone.” Stiglitz, an economic Nobel Prize winner has written a best seller on the euro entitled “The Euro: How a common currency threatens the future of Europe.” The blurb on the jacket cover reads, “The 19 countries of Europe that share the euro currency―the eurozone―have been rocked by economic stagnation and debt crises. Some countries have been in depression for years while the governing powers of the eurozone have careened from emergency to emergency”. If that were not bad enough the outlook for Europe is “stagnant and bleak”. In The Guardian Stiglitz writes, “The euro has failed to achieve either of its two principal goals of prosperity and political integration: these goals are now more distant than they were before the creation of the Eurozone.”
Whilst Europe stagnates not so Blaby and Stiglitz who have made a lot of money out of predicting the euro’s imminent demise. Indeed, the euro’s death bed status has been one of the longest running “sick man of Europe” stories since it was first conceptualised some twenty years ago. Frustratingly, for all those who’ve been poised to write the euro’s obituary (“flawed at birth” according to Stiglitz) the deformed infant refuses to die. In fact it is even proving to be quite robust and resilient and very much alive and functioning albeit – one has to admit – not always in tip-top condition.
Which is why euperspectives is more inclined to go with the views expressed by Miguel Ortero-Iglesias, “As persuasive as these ideas may be at a time of rising populism — in Europe and abroad — this view does not take into account the public mood across the Continent, where the euro remains very popular indeed.”
Sorry to burst Blaby’s bubble but few living in the Eurozone recognise the “extremely damaging” economic consequences he describes. Nor do they understand what “catastrophic” lack of prosperity Stiglitz is talking about. What glitzy, fabulously wealthy, earlier era have they lived in if they deem Europe’s current economic situation such an abject failure?
The eurozone countries enjoy a form of prosperity our European forefathers could only have dreamed of – and unlike the eurozone’s outside critics – they are not complaining about the euro.
If there are economic concerns within the eurozone it is not because of the euro – it is because outside critics keep talking the currency down. To such an extent it is giving rise to populism which, should it spread, will indeed be very damaging to our economies.
Let’s get this clear from the start – no one is suggesting for a single moment that the euro is perfect and without fault – but can anyone, hand on heart, point to a currency that is?
The euro, like every other currency circulating on the global market today, is prone to rises and falls, inflationary pressures, over valuation, under valuation, speculation, fiscal constraints, quantitaive easing etc. etc. Everyone knows that all is not rosy across the 19 members of the Eurozone. The Greek’s are suffering. Unemployment is a problem, sluggish growth needs to be addressed – but – and this is a big but the other side of the story is rarely, if ever, told to those living out-side of the Eurozone countries and in needs to be.
To British sceptics living in Sheffield, Sunderland or Salisbury (and sceptics living in America’s Sheffield, Sunderland or Salisbury) it is all to easy to believe the dire warnings of a failed euro peddled by the naysayers Blaby and Sitglitz. Yet, euperspectives believes readers in Sheffield, Sunderland or Salisbury deserve to know that this economic wasteland narrative is simply not true. In many places the euro does actually work. Catastrophic failure is wild off the mark. Most Eurozone countries feel prosperous not left-behind.
The reality on the ground is that the majority of Eurozone countries are dynamic, functioning economies with vibrant high-streets, excellent public services and public authorities ready to tackle the real problems of our generation – the redsitribution of wealth, pollution and ensuring we do not wreck our fragile environment.
Walk around most Eurozone cities, towns, villages and country-side and the casual visitor is exposed to signs of wealth and prosperity – strong family run businesses, a well regulated market giving expression to universal health care, universal education for all from infant to adult and a functioning security net for those most in need.
Whilst politicians, journalists and economists such as Blaby and Stiglitz appear to be extremely concerned about the fate of a currency they do not even need to use the same can not be said of politicians, journalists and economists who actually live, work and are representatives of Eurozone countries. They are not concerned or even worried about the euro’s ability to deliver prosperity. Hell, even Tsipras and Varoufakis have absolutely no intention of abandoning the euro itself. Similarly, the last thing on the Italian government’s mind as it faces yet another banking crisis is ditching the euro in favour of the lira. Neither country is stupid enough to abandon the goose that lays the golden egg or bite off the hand that feeds it.
Stiglitz makes much of Europe’s lack of overall growth as proof that the euro is a failure. “Germany” Stiglitz posits, “ holds itself out as a success providing an example of what other countries should do. Its economy has grown by 6.8% since 2007, but at an average growth rate of just 0.8% a year – a number that, under normal circumstances, would be considered close to failing.”
To many “economic growth” is yesterday’s yardstick – an out-dated, anachronistic measurement, one which serves little or no use in economically developed societies such as Europe’s. Of course economic growth is going to be important for countries coming from ground zero such as China but Europe is an economically advanced economy with a fully functioning infrastructure already in place. The main concern in Eurozone countries now is to maintain the infrastructure sustainably and keep it updated. A growth rate of 0.8% a year would reflect that trend.
Modern, progressive societies view constant and increasing growth as cancerous. Only tumours keep growing indefinitely. Keeping the body ticking along in a sustainable, healthy and clean condition is a far more important long-term goal than trying to grow taller and taller or fatter and fatter, year on year.
Thus, whilst it may be true that many Eurozone countries are not recording spectacularly high-energy growth rates this does not necessarily mean the Eurozone countries are economic waste-lands scared by the introduction of the euro. None of the 19 Eurozone countries – not even Greece – are complete banana republics presiding over destroyed economies. Quite the reverse. In many euro-zone countries from France to Cyprus, from the Benelux countries to Finland, from Portugal to Estonia the euro is an accepted piece of legal tender viewed as a valuable tool delivering prosperity not as a poisoned chalise imposed from on high and wreaking failure and economic carnage.
It is not just the big cities in Europe such as Rotterdam, Munich, Porto or Barcelona that are visibly prosperous so too are smaller towns such as Münster in Germany, Ghent and Leuven in Belgium, Bordeaux and Lyons in France, Leiden in the Netherlands and Cork in Ireland. Similarly, away from continental Europe’s cities and small towns, villages and farms do not feel decimated by the euro. The problems of the “left-behinds” seen in the UK and the US following years of governmental neglect are not the same problems the Eurozone countries face. Far from it.
This is because most Eurozone countries still adhere to the principle of redistributing the wealth generated by globalisation through a properly functioning state and not hoarding it in the hands of monopolies such as those we’ve seen emerge out of Silicon Valley.
Stiglitz considers the US more prosperous than Germany because it recorded higher growth rates. He also asserts that people are better off in the US because it has less unemployment than in the eurozone countries, “When the US unemployment rate hit 10% in October 2009, most Americans thought that was intolerable. It has since declined to less than 5%. Yet theunemployment rate in the eurozone reached 10% in 2009 as well, and has been stuck in double digits ever since.”
….but let us just pause for a moment and consider which population fared worse after the 2008 financial crash? The Germans who recorded a lower growth rate or the Americans who recorded a higher one? The eurozone’s unemployed or the millions of American workers on zero-hour contracts, no job security, no medical care and no expectation of a higher education for their children? Most would agree that Germany, for all its faults, would be a far preferable place to live after 2008 than say Michigan, Pennsylvania or Ohio where whole communities are in decline. Yet, under the Stiglitz theory America should be the one with fewer left-behinds since it records lower levels of unemployment and higher growth rates than Europe. Trump voters in Michigan, Pennsylavania and Ohio may beg to differ. They do not feel prosperous. They feel hopeless and abandoned.
The US approach to wider social problems (which the Tory government in the UK apes) is to assume it is somehow all the fault of the individual for not working hard enough or not being enterprising enough to see their way through the financial crisis that ruined many good people’s lives. Rather than supporting local economies the US decided to applaud and promote huge on-line monopolies that literally sucked (and continue to suck) the dynamism out of local economies and concentrate wealth in the hands of a few big bruisers – so much so that these beasts of enterprise are literally giving the money away not knowing what to do with it all whilst the community that formed Detroit is left to crumble into the Mid-West dust.
Back in Europe just about the only institution really bothering to help the left-behinds in the UK, ironically enough, is (soon was) the EU with its Cohesion and Regional Development Funds. The EU is just about the only body willing and capable of creating a more regulated banking sector to try and prevent a repeat of the 2008 finanical crises that devasted so many people’s lives. The EU is just about the only institution willing and capable of going after the big tax evaders (Starbucks, Amazon, Apple, Google) who refuse to accept they have any role to play in helping local communities rebuild their lives through a proper functioning state system.
Yet, the populist media in the UK is excellent at peddling the myth the EU is an evil foreign power draining money out of the UK not Santa Clause with a bag full of funds to help regenerate impoverished regions and cities. Both, the US and the UK are paying the price for their neglect through a wave of populism which is only going to exacerbate, not solve, the woes of the left-behinds.
Not so those in the Eurozone.
Not only are Eurozone politicians united in their need to redistribute the wealth of globalisation through a properly functioning and accountable state they are also committed to supporting small and medium sized family run businesses referred to as the mittelstand. Politicians in Eurozone’s countries go out of their way to protect, nurture and encourage their mittelstand. Yes,Mr Johnson, the car industry is hugely important to the German economy but possibly even more so is Germany’s family run businesses. Within the Eurozone the mittelstand is seen as an essential, vital part of a healthy, bio-diverse economy critical to a nation’s overall prosperity. A prosperity that in turn feeds into the welfare system that redistributes the wealth to the most needy in their society. The mittelstand is the oxygen that breathes life into the project. Whether you are a Eurozone Christian Democrat, a Liberal, a Socialist or a member of the Green Party the viability of the mittelstand is of paramount importance and the euro is seen as central to supporting this hugely important sector of the European economy. Continental European politicians have absolutely no desire to sweep away the family run enterprises who support and benefit from the euro and who in turn benefit Europe’s wider economy.
The old cliché, “I don’t own this Company. I hold it on trust for my children” has a strong philosophical pull on the identity and functioning of a Eurozone economy. Of course there are plenty of people who are not as rich as others but the welfare state funded by a diverse economy ensures that those really in need are taken care of. The Eurozone looks after their needy. They do not abandon them. Unlike the US and now the UK under the grip of right-wing factions in Parliament, Eurozone nations have no libertarian right-wing monopolists on their back suggesting that this is all somehow wrong. Whether there is much room in this thinking for endless growth as Stiglitz keeps banging on about is anyone’s guess – but here’s a message to all the euro-bashers guess what it does work.
Will the euro still be here in ten years time?
Perhaps not but its demise will not be because the euro is culpable of economic damage, stagnation and failure. Should the euro fail it is because populists and naysayers such as Blaby, Stiglitz, Farage and Le Pen peddle exaggerated tales and narratives.