First off, I want to make a note of Paul Krugman. I know he’s everybody’s favorite left-wing economist. Howewver, first off, he has a habit of making grand pronouncements of opinions as if they were fact, particularly when it’s far outside his actual expertise. He’s a trade theorist, and he knows little more about macroeconomics than any well-educated college graduate. Moreover, he knows nothing more about public finance than the average man on the street. I don’t claim to be an expert, but I at least listen to many experts who disagree. For what it’s worth, here’s what I believe:
In the last few years, he further has a habit of handwaving objections to spending other people’s money. This is especially funny in the case of Greece, because there is no such money to spend anymore. Every time Greece needs cash, they basically have to go begging and scraping to Germany. (He likewise seems to be awfully puffed up about “calling” the bubble, when he called it at the wrong time, in the wrong scale, for the wrong reasons, and was beat to it by more accurate predictions.)
Frankly, why the Germans should care how much damage is being done to Greece is a question he doesn’t answer. He, and many others, seem to have assumed it automatically came with the Euro, but Germany is not well-situated to continually bail out Greece, let alone the entire southern Eurozone, even if it were interested or had a mroal obligation to do so. And make no mistake, Germany will have to bear the brunt of this burden and really can’t do it for long. Meanwhile, Greece will essentially engage in long, slowly, mouldering collapse rather than getting it over with. Frankly, either Argentina or Peru would be a damn site better than what’s going on, and epect this to repeat down the line, along with new demands from Italy, maybe Portugal, and possibly Spain.
Of course, Germany is also part of the problem in a way, because its getting a freakish proportion of foreign exchange. Their economy has exploded because the Euro is underpricing their exports, which is in reverse crushing the economies of southern Europe, now well overpriced. In short, the honest and hardworking German laborer is also sucking out a lot of the vital force from Europe. And the same Greek citizens who are being crushed by forces beyond their control are also lazing it around. Neither might be totally getting what they want, but both make rational choices in response to the environment (stupidly) created.
But the issue here is not the relative morality of workers: after all, the German workers aren’t going to do all that for nothing or let all their gains be taxed away to keep southern Europe afloat, and likewise the Greeks can’t work if there’s nothing to make, do, or sell. And tyhis is where so many desperate dreamers, trying to find a way to kleep tye Euro around just One. More. Day. fail. You can’t effectively tax total wealth; only income. And you can’t tax income the way you want because (surprise surprise) people won’t pay. There are laws which go far beyond the whims of an increasingly unelected ruling clique.
Yes, the only awy out is to bite the bullet and find a way to end the Euro. The EU doesn’t have to go, at least not yet. And it will probably survive in some form, if not the dream of a federal state so badly tarnished in recent years. And it will be brutally painful along the way. However, you’re trying to stick together a dozen trains of wildy differing size, scale, and purpose. Are you really surprised they’re running off the rails? Forward thinkers warned about this, and the only thing they got wrong was how badly it would fail and how long Europe’s leaders would dance about avoiding reality.
