Monday, August 12, 2013

Samuel Brittan correctly identifies the basic Eurozone problem.

Do you want a quick and concise summary of the Eurozone problem in about four hundred words, or tens of thousands of words that fail to identify the central problem? If the former, I recommend this article by Samuel Brittan.
As he rightly says, it’s all about competitiveness. I.e. when the periphery becomes competitive with the core, that solves just  about everything. For example the periphery’s balance of payments deficit ceases.
Plus lenders are always happy to lend at reasonable rates to any entity that is competitive. So those elevated rates that periphery countries have to pay for borrowing money would no longer obtain.
There is of course the banking problem to solve, but that’s a problem that plagues the US, and UK and other countries. So that’s not the central EZ problem.
Alternatively if you want hundreds of thousands of words that fail to identify the central competitiveness problem, I recommend this or this produced by sundry academics. It may of course be that somewhere in all that verbiage the central problem IS IDENTIFIED. But I just don’t have time to wade through the first link above to find out, though I have done a bit of skimming and word searching. As to the second, I’ve been through that and confirmed that it doesn’t identify the central problem.
So why this voluminous and impenetrable output from academics? Well Samuel Brittan put his finger on it. He said, “Meanwhile, it is in the interests of the eurocrats to make the problems seem as complicated as possible that only a small number of so-called financial experts can even discuss them.....”
Same goes for academics. It is in the interests of every profession to make their subject look more complicated than it is.
Or as Adam Smith put it: “People of the same trade seldom meet together . . . . but the conversation ends in a conspiracy against the public..”

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