Collapse of the Euro or of the EU?

Mr. Niall Ferguson writes in the Washington Post that a EU-collapse is more likely than a collapse of the Euro. I would tend to agree.

Given the mandate to argue that only one of the two, the Euro or the EU, should survive, I would find it easier to argue the survival of the Euro.

The Euro has brought a lot of benefits to all (including Greeks). It is a mistake to think that one can only be a successful member of the Eurozone if one becomes as productive as the Germans. Lower levels of productivity should result in lower standards of living. In Greece, it was the other way around: since the Euro, the standard of living has increased dramatically but the Euro was only the indirect cause of this.

The direct cause was the flow of foreign debt into the Greek economy: from 2001-2010, 283 billion EUR (net) flowed into the economy as debt from abroad. If that had happened during the last 10 years of the Drachma, the same disaster would have occurred. One may argue that this debt only flowed into Greece because of the Euro and because of Greece’s membership in the Eurozone but financing from the rest of the US does not flow into Alabama simply because Alabama is a Federal State of the US. Lenders pay attention to what Alabama does with those funds (and they didn’t pay attention to what Greece did with her foreign debt).

Devaluation is certainly the easiest mechanism to adjust to different productivity levels within one Common Market but it is not the only one! One should do a lot more thinking about alternative adjustment mechanisms before one throws the Euro out with the bathwater for the wrong reasons.

Now to the EU. If EU-elites continue to strive to turn all the different cultures into one norm, then the EU should be dissolved. The EUs unique selling proposition is that it can house many different cultures under one roof. Conformity does not work with light bulbs; much less with people and cultures. If Brussels doesn’t know how to unite different cultures without destroying them, then they might want to read up on the Hapsburg Monarchy. The Hapsburgs managed to accomplish this for several centuries.

As regards Greece, the country must understand that there are Judeo-Christian values on which Europe rests (and ancient Greeks formed many of them). Total lack of solidarity within one society (as evidenced by tax-paying Greeks being taken for a ride by the other Greeks); the absence of a functioning state of law (165.000 pending law suits for unpaid taxes); extreme corruption as more or less a code of conduct --- all those are things which make a society unfit for Europe. If Greece doesn’t get a handle on those things soon (very soon!), she has no place in Europe.