251–260 of 277 posts
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Germany paid net €12bn. California has net federal tax receipts of $450bn. Not identical types of figures, but comparing the tiny transfer payments in the EU to the gigantic ones in real financial unions is where the difference lies.
Pretty sure that billions in Europe have three extra zeros.
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The Czech Republic isn't in the Eurozone and doesn't face the structural disadvantages that Greece or Portugal do.
The Czech Republic definitely shows one way to approach the EU: get the transfer payments from a political union and partial economic union (in trade policy, etc.), as well as remittances from emigrants employed elsewhere in the free-movement zone, but retain an independent floating currency and avoid monetary union. Greece would've been in a considerably different position if they had taken the Czech route and staye…
On the other hand, Slowakia and Ireland are part of the Eurozone and are doing very well despite starting out poor. (Maybe Ireland doesn't fit here, because they've been doing very well since long before the Euro.)
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The gist of it is that if Germany were still on the Mark, then the Mark would be significantly stronger than the Euro is today. Having weaker economies on the same currency causes Germany's currency to be artificially weak, which makes its exports artificially cheap on the world market. In contrast, the poorer Eurozone countries have an artificially strong currency, which makes their exports more expensive than they…
how is having an artificially weak currency a subsidy to Germany? isn't that like underpricing their goods? and wouldn't that imply that countries who import German goods are being subsidized, because they are able to get German goods at artificially low prices? also can you suggest a place where I could read more about this? its awfully confusing, and somewhat counter-intuitive and it would be helpful to read where…
Yes, and that makes German products more attractive, boosting German exports. Germany gets a boost to their export, at the cost of importing at higher prices. Because Greece's currency is artificially boosted, they can import relatively cheaply, but they have trouble exporting because their exports are too expensive, so money is leaving the country.
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> “The Eurozone is fatally flawed because they share a currency but have no transfer payments between rich and poor members.” This is incorrect. The EU has substantial transfer payments. Wealthier EU countries (like Germany) subsidise poorer ones (like Poland) on the order of tens of billions of Euros annually. Regional development (subsidies for poorer areas) is the second largest EU budget line item after agricultu…
Germany paid net €12bn. California has net federal tax receipts of $450bn. Not identical types of figures, but comparing the tiny transfer payments in the EU to the gigantic ones in real financial unions is where the difference lies.
It is meaningless to compare a net transfer to gross tax receipts. California's large, wealthy population generates high federal tax receipts, but it's net contribution is actually negative because the federal government currently spends more in California than it receives in taxes.
Source: https://www.governing.com/week-in-finance/gov-taxpayers-10-s...
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>If there is enough to exchange for the price that is claimed, then a billionaire can't break the peg by exchanging out pounds and forcing their hand. Sure, doesn't mean that there is no other way to break it.
What do you mean by 'break' and how would it happen?
That isn't what happened here of course, but it could happen to a smaller country trying to maintain a pegged currency.
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Higher minimum wages to solve imbalances in the Euro-zone would probably result in a disaster. In areas where countries like Germany directly compete with poorer countries, they do so by having more and better automation. Productivity is not that people work harder, is it that there are more machines to do the work. The net effect of raising wages is that there will be more automation, largely negating the increase i…
Not disagreeing that poorer economies need more automation. But when looking at countries it is very important to not only look at wages as cost. Especially in Germany the low wages result in low domestic demand, which results in the country being a net exporter again and again. Rising wages, especially minimum wages, are mostly spent domestically on services (think going to the hairdresser instead of cutting your ow…
Even before minimum wages, Germany has very high sector-level minimum wage due to union tarrifs that are binding for non-union employees. Job losses were negligible because the number of people that have been affected by the minimum wage was rather small.
> the lower 60% of the population only hold 3% of the wealth.
Germany has state pensions that you can live on comfortably, and renter-friendly housing laws. So people don't need to own a house as a retirement plan (unlike much of the rest of the world).
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It's a two way street, the sovereignty argument. A bigger entity has different sovereignty to multiple smaller entities. The British pound is worth about half what it was when I first moved to the UK - that's not the kind of sovereignty that's kind to my pocket. A bigger currency is a more stable store of value for citizens. That's not worthless, independent of the lack of friction in international transactions - not…
And yet, the argument here is that a weak currency is advantageous for an economy. Advanteageous relative to countries also having the Euro burden perhaps. But even just from a marcoeconomic perspective there seem to be distinct contradictions everywhere.
Some nuance please... Your fallacious point of view is pushed by certain lobbying groups because a weak currency is
- horribly harmful to inhabitants' living standards (how many days of disposable income does it take a developer to buy an iPhone in the UK vs in the US? About three times as many.)
- very helpful to the shareholders of exporting companies (cheap labor and high profit margins)
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What do you mean by 'break' and how would it happen?
If the currency is priced at fair value but the country is small and thus has proportionate reserves, a multi-billionaire could simply pump all his money into pushing the currency out of its declared price range, causing a loss of trust in the currency, resulting in a further slide of the currency. That isn't what happened here of course, but it could happen to a smaller country trying to maintain a pegged currency.
Putting more money into a currency makes it worth more. If a currency is backed by something else, you buy more of it as your currency is bought. That's how pegs work, the currency is an IOU for something else.
Insolvency happens when a financial institution says they have more than they do and someone withdrawals enough to call their bluff. You don't 'break' a currency or financial institution by pumping money into it.
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Not disagreeing that poorer economies need more automation. But when looking at countries it is very important to not only look at wages as cost. Especially in Germany the low wages result in low domestic demand, which results in the country being a net exporter again and again. Rising wages, especially minimum wages, are mostly spent domestically on services (think going to the hairdresser instead of cutting your ow…
> one of the two countries out of 27 European countries not having minimum wage laws [...] zero job loss could be observed Even before minimum wages, Germany has very high sector-level minimum wage due to union tarrifs that are binding for non-union employees. Job losses were negligible because the number of people that have been affected by the minimum wage was rather small. > the lower 60% of the population only ho…
True! Those were for the "high-paying" low wage jobs, though - mostly in construction. Gastronomy, hotel industry, haircutters etc. didn't have those. Wage laws in construction mosty were already at more than 9€/h before country-wide minimum wages were implemented.
I can't really agree on that being the reason for no observed loss of jobs though - there are too many other examples of successful minimum wage laws in other regions where the feared job losses failed to materialize, too [1].
>> the lower 60% of the population only hold 3% of the wealth.
> Germany has state pensions that you can live on comfortably, and renter-friendly housing laws. So people don't need to own a house as a retirement plan (unlike much of the rest of the world).
Yes, my angle was a bit different, though: As middle class and upper class earn more, they can afford to save more. Saving, though, does mean that the money saved doesn't take part in the economy anymore (or at least to a lesser degree).
If a low-wage person gets lets say 100€ more per month, that money will get spent almost completely at places like groceries, haircutters etc. - places that also have relatively low wages, which means those people will also spend the money completely and so on. A rise in minimum wages gets you the most bang for the buck, if your goal is stimulation of domestic demand.
[1] As one example New Jersey in the US: https://www.nytimes.com/2015/07/17/opinion/paul-krugman-libe...
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Germany paid net €12bn. California has net federal tax receipts of $450bn. Not identical types of figures, but comparing the tiny transfer payments in the EU to the gigantic ones in real financial unions is where the difference lies.
> "Germany paid net €12bn. California has net federal tax receipts of $450bn" It is meaningless to compare a net transfer to gross tax receipts. California's large, wealthy population generates high federal tax receipts, but it's net contribution is actually negative because the federal government currently spends more in California than it receives in taxes. Source: https://www.governing.com/week-in-finance/gov-taxp…
[1]: https://rockinst.org/wp-content/uploads/2018/02/2017-09-28_B...