Henry,
It is my belief that the main validation for the creation of the Euro is to form a large and strong economic group (market), to compete, with the US economy, and [formerly] the Japanese economy, (perhaps we should now read Chinese economy).
The German economy has been suffering lately, because they simply and recently "bought" a new country (East Germany), and the West German infrastructure, is paying for the purchase and "remodel" of the same.
Once this is out of the way, the Germans are more inclined to participate and execute what is needed to achieve the efficiencies that will be required in order to compete with the US and China, and the world. Latin America, eventually could become an interesting block either by themselves, (if they ever agree and put their minds to achieve it), or in conjunction with the US.
I do not think that the French have the inclination to do what it will be required to meet the challenge.
As for the rest of the member countries of the agreement, I cannot see how the weaker ones will execute, (or even be capable of), the reforms in their systems to be on a par with say the stronger ones, i.e. Germany.
As you indicate the hardest part will be to form a political "unity", even assuming that a possible structural solution of implementing low rates where economic growth is required, and high rates where inflation lurks.
The differences in mentalities, customs, idiosyncrasies etc. will make this an incredible task of diplomacy and political skill (Maybe Bill Clinton should run for the post of President of the United States of Europe, at least over there, they will not mind if BC runs around with pretty French and Italian "interns"), in the mean time, the political job is "made to measure" for Mr. Clinton.
In order to succeed, it will be interesting how the people, (local constituencies), will react to mandated specific policies to stimulate/restrict economic growth and social benefits in the different regions.
Perhaps for a change, you will have "reverse immigrations", where workers of highly industrialized nations go to work in southern countries, (the weather will certainly be an attraction). Much like the Frost Belt workers moving down to San Diego in the U.S.
Perhaps, such efficiencies will be achieved, and everyone will behave more appropriately. Reallocations of resources (including labor) will take place more peacefully, finally achieving a more harmonious Europe, objective that in the past has been impossible to achieve.
Imagine such scenario, where the French will be less critical of their neighbors.
Is it possible that finally reason will be facilitated, by the forces of the free market?
I am somehow suspicious that the ingrained bureaucratic mentality of the European leaders will cope with what is a task more suited for an entrepreneurial spirit, such as the US.
If success is achieved however, and the more efficient re-allocation of resources takes place, the end result will be a far more prosperous environment for all, and indeed a bonanza for consumers, worldwide.
Perhaps the African continent will be a direct beneficiary of this success, in the same way that Latin America has been the beneficiary of the ever-increasing efficiencies achieved by the United States.
As an example of the above, in Latin America the implementation of free markets throughout is proving, albeit slowly, due to specific cases of continued corruption (Mexico), a huge success, Chile and Argentina, Costa Rica, to name some, seem to be the main beneficiaries of these new local policies, supporting free markets.
The above, of course, is my opinion, and I could be wrong, (would not be the first time).
Interesting times we live in these days.
Z. |
