There has been a lot of derailing in this post so I will try to stay on point:
Why was the EURO failed before it begun? Its an easy question but the answer is not a short one.
As anything that is DOOMED to fail, its always a lot of issues, not just one. Even if its a huge problem, if its only one, it is easy to focus on it and take it down eventually (just like a boss in games).
Here are the issues I saw when the euro was starting to be used in Spain:
1. Common currency, different cultures:
There is a reason why German deutche mark was strong. Because Germany was strong, because Germans were efficient and produced good products with high quality at premium prices. Now, you unite that to the Spanish Peseta, that is mostly coming form a country of lazy people (Most of the Income for Spain was tourism, where you barely have to do anything and construction where all the workers were from Eastern Europe).
Now you out them together and in order for the EURO to represent correctly its value (its it has to be the same everywhere) you need to balance its value OR (and this is the key part) change the mentality of an entire country.
As you can guess, they tried the second option (it was the only one that could make few people very rich, very quickly).
2. Better trade for the EU area between European countries, worse with others:
Yes, on paper the idea of boosting internal trade was a good thing, but always remember there must be a cost for something good (nothing is free). Lets try to understand what happened here:
a) You have one Currency, so the no money is lost in converting one currency to another… sort of. Since of course its all based on demand and supply, if the cost of selling something overseas changes, the market adjusts.
b) The countries that you did not buy from (for price/quality perspective) wont drop their price 50% because now you have the same currency. In most cases, it does not increase your interest in a product you didn’t like before.
It does however make it harder for goods from cheaper countries outside of EU to be competitive, since that is what is signed in order to have a better deal on the inside, its offset by a worse deal on the outside.
Here in lies the problem: Now, a country that was not wealthy enough to buy from the EU is forced to do so, at prices it cannot afford, going deeper into debt by a union that encourages going into debt.
In the end it boils down to one thing: You have to trade goods for goods, currency is a means to do so. What do you do when Germans dont want what they consider to be poor quality Spanish goods?
3. Common Greed: Milton Friendman was spot on when he said “Of course it is never us who are greedy, it is always the other fellow that is greedy”.
This is another big problem. You unites people who all want more for themselves at the expense of others.
The pie is not getting any bigger, you are just looking for different ways to slice it. Each country for their own, politicians vs “the people”, European politicians vs local politicians, right vs left… does it matter that you put them all under one roof if they keep fighting?
4. History of wars: Lets not kid ourselves, humans are humans natural predator. Countries in Europe have been in so many wars its hard to count. We close our home doors, we have police officers (or how I like to call them secondary tax collectors with a gun) and we have jails.
And then we have huge wars where people REALLY hate other people… and now it all gone cus we got the same currency. Good luck with that.
Those are the points I noticed, I am sure there are many more.
It’sallbs 3 years, 1 month ago.
