‘”But this won’t save monetary union in the end because it is not a debt crisis. It is a currency crisis. The weaker states are uncompetitive and you cannot force them to deflate their way back to competitiveness by cutting wages 30pc. The EU elites won’t admit it, but the euro experiment is over,” he [David Heathcoat-Amory, Britain’s former Europe minister] said.’
Not a lot I can add that Heathcoat-Amory didn’t already say. If someplace is not attractive to business — lack of reliable or educated workers, wages too high with regards to other business sites, too much government corruption, lack of rule of law, excessive amounts of regulation, etc. — then business will go somewhere else if it can.
I’ve known a lot of people who will say that’s because of flaws in capitalism or Western culture, but really, it’s just human nature. Same thing happens in Asian or African countries, socialist countries, or fascist countries. You can argue about what may or may not make a place attractive or unattactive to different businesses. But if it’s an unattractive place to do business, then business — or rather, the people who run businesses as they are the ultimate decision makers, a “business” doesnt’ make decisions any more than a business license is going to climb out of its frame on teh wall and go pour itself a cup of coffee — will see if there’s somewhere else to go.
And being uncompetitive in wages by 30% in comparison with other nearby countries (*coughcough* germany *cough*) is pretty darned unattractive.