[inglor_cz]

Germany was a huge winner from introduction of the Euro. Some other countries, especially the Latin bloc, cannot cope with the common currency.

(Ironically, it was the German economists who used to be very skeptical against the common currency and were loud about it.)

At the end of the day, the single market will only be popular if growth and prosperity are shared across the continent. If the economic periphery plagued by anemic growth and high debt burden expands, so will populist sentiments. And the economic periphery of the EU is already rather sizeable - even the former GDR could be counted in it, at least when looking at the structural unemployment and migration patterns of young qualified people.

In the US, Trump won his mandate riding on a wave of such populist sentiments from the Rust Belt. In Europe, ethno-national differences run much deeper than interstate differences in America, so the end result may be a fatal split in the Union.

[mmarq]

The Latin block (Southern Europe??) countries joined the euro to cut their interest rates, and that happened.

The periphery is poor because it has been ruled by embarrassing governments for decades.

[inglor_cz]

Italy used to be quite an industrial powerhouse when I was young.

I still remember visiting the country in 2000, and even though the lira was weak, the overall atmosphere was much more lively, optimistic and vibrant. Contemporary Italy feels worn down and without hope. Too many young people with diplomas have simply fled.

I get the same vibe in Spain, by the way, and in many cities of the former GDR, which is actually part of Germany. Dresden is fine, but Hoyerswerda, Chemnitz or Zittau are semi-deserted and feel distinctly "over": no future for them, only slow decay. The local political scene reflects that: the anti-system AfD gets plurality of votes, just to stick it to the "elites".

[mmarq]

Italy was already significantly behind Germany and far from the technological frontier in the 1980s, it wasn’t the euro that slowed its growth.

Then it took 40 years of obscene governments to bring it where it is now.

[harperlee]

> it wasn’t the euro that slowed its growth

This only follows from the first phrase if you assume that one and only one thing can slow Italy.

[mmarq]

TFP growth has stopped in the mid-70s or in the 80s at best, there isn’t much more to say.

[harperlee]

And in turn saw their industry unable to compete with the German one as deutsche marks stopped relatively appreciating with every german export.

By the way they didn’t just join for that, so obviously saying “don’t complain! You got what you asked for” doesn’t really make sense as an argument.

[mmarq]

After 20 years, everybody should really stop believing the conspiracy theory of the Germans that invent the Euro to rule them all, à la Sauron.

[harperlee]

Perhaps read a comment twice before publicly dismissing it as childish, in case you were not able to fully grasp what you read.

The only thing I said regarding intentions is that the “Latin block” intentions portrayed above were overly simplistic.

The mechanism by which german exports sharing a currency with weaker economies makes german currency appreciate less than otherwise is not a conspiracy theory but simple, generally accepted and well understood economics.

[nalaz]

The periphery is and will always be poor because of cultural problems. People make the politicians, not the other way around.

[tkk23]

If you look at the USA then the profits are made at the periphery. Profits can be made anywhere. Sooner or later, they will be made where living is more pleasant and that's at the European periphery.

Which cultural problems exists that keeps the periphery poor? I would like to argue that the cultures of the periphery are what will attract people and customers and what will allow the periphery to develop.

[yrgulation]

Germany is making a killing in selling their cars and tools to the “periphery”. East europe being their largest export market - some 30%.

The main cultural issues that keep the periphery poor are those stemming from the “core”. Always shitting on the south and east is what keeps those regions stagnating. What upsets me is that they turn the other cheek instead of slapping right back.

[tkk23]

Do you have an example for the 'shitting'?

I don't understand how the shitting, and slapping right back is economically relevant. How is it preventing a country or a region from picking a market and becoming a global leader and thus earning high margins? E.g. people have been dissing China's product quality for ages and yet that hasn't prevented China from improving.

As a side note, it shouldn't be an economic disadvantage that Germany exports 30% to the European periphery. Cars are a competitive market with French, Korean, Japanese and American offers. The periphery should be able to make back much more if they specialize in products of a high-margin market. E.g. if I were a politician, I would go all-in on medical research and try to develop some world-leading equipment or cures.

[mmarq]

I find this obsession with Germans selling cars to the Italians partly amusing and partly patronising.

Of course the Italians can’t take their responsibilities because of… pizza? Super Mario? The godfather?

[tux3]

To an extent, the political climate and the weight of existing institution can uphold the culture.

People governed by politicians with suboptimal characteristics don't necessarily get to make decisions with perfect information, or to enjoy a voting system where votes have equal weight and reflect popular sentiment.

A sufficiently corrupt system can self-sustain for many years. With enough indirection and few votes, people have correspondingly increasingly limited input into their political decisions (or the indirect decisions of their representants).

[yrgulation]

Is porn banned in germany or why do people enjoy poverty porn so much? The periphery is anything but poor. There are gaps between eu countries but east south and west are consistently ranking high in term of economic development. Anaemic growth doesnt equal poverty.

[inglor_cz]

My wife speaks Spanish fluently and we often travel to Spain.

Spain as such may not be exactly poor, but quite a lot of people are living in very subpar conditions. Andalusia in particular has a lot of visibly poor natives. Even African migrants do not want to stay there and if they manage to cross the Strait of Gibraltar, they immediately travel north to France/Britain/Germany.

[yrgulation]

Oh please. Thats like saying california is poor because san francisco has homeless people. Just because people dont drive fancy cars or homes arent refurbished in a region where it rarely rains it doesnt mean they are poor. Even east eu is rich compared to most of the world. I agree with you on slow growth but eu countries are anything but poor. Mismanaged yes. Poor not so much.

[inglor_cz]

I am not sure if it has anything to do with rain. Israel does not have much rain either and homes look much better there. And when we speak to the locals in Spain, their typical complaint is that they struggle to make the ends meet. "I wasn't on a vacation for seven years." - "I think twice before taking a RENFE train even though it is twice as fast as a bus." - "Kids won't probably be getting new laptops ever." etc.

Comparisons to the rest of the world are misleading. Being better off than Algeria or Brazil isn't that much of a result. Spanish people naturally compare themselves to other Europeans and the gap between the relative riches of Spain and, say, (West) Germany or Switzerland, is pretty visible. So is the fact that the gap does not seem to be closing, rather the other way round.

I agree that mismanagement is a huge part of the problem, and that it is mostly domestic. For one, the political parties seem to be enormously corrupt, on par with the Balkans.

[mmarq]

Actually I’d be very surprised if houses in Spain where worse than houses in Britain, whose lack of housing quality rivals with some central African countries.

[mmarq]

I don’t live in Germany and, of course, Italy and Spain are poor compared to Sweden or Germany, not in general.

[yrgulation]

So if all of these countries are not poor in general then why this poverty fetishism? Why the constant “i am richer than you” in europe when all of europe is sinking?

[inglor_cz]

People naturally compare themselves to their neighbors. This isn't anything out of the ordinary, it is just human nature.

[lazyeye]

Germany loves the common market due to the way their economy is structured. Normally what happens for a major exporting country is that their currency (Deutschmark) would go up in value because of high demand to pay for German goods. This drives up the cost of their goods making them less attractive.

But in the common market with a shared currency they are able to keep the cost of their goods artificially low due to other countries absorbing the demand for the currency.

So where Germany wins, you can guess that other countries lose.

[yrgulation]

Agreed. If change doesnt happen in everyone’s interest it will result in a fatal split. The biggest loser will be germany tho. Without access to the markets that prop up its economy it will suffer an economic contraction it’s never seen in modern times.

[ricardobayes]

That's an outdated view, Spain is the fourth biggest economy in Europe, and are net contributors into the EU budget.

[inglor_cz]

Go to Sevilla or Malaga and look around. Houses have old facades, people drive old cars, pavements have been last repaved 20 years ago and meeting a highly educated beggar is a common occurrence. That is not how a wealthy community looks like.

Spanish economy may be nominally big, but random folk in the streets do not seem well off. The contrast to, say, Austria or Denmark, where most of the population seems to live just fine, is big.

My friend, a nurse in Madrid, makes less than 1000 euro net. She and her son live in a small Franco era apartment where one of the tiny rooms does not even have a window.

[yrgulation]

Nurses are underpaid everywhere in europe. Its a common issue with public healthcare systems.

[inglor_cz]

True, but at this point the only thing that prevents her from moving to Czechia to make better money is the fact that her son likes Madrid and she does not want to uproot him.

That would be unthinkable some 20-25 years ago. Spain back then was, relatively taken, much richer than any post-Communist country and your living standard would have gone measurably down if you moved from Spain to Czechia.

[yrgulation]

I dont know why it surprises you that Czechia is more developed than Spain. Romania for instance has overtaken Greece and will overtake Portugal in the near future. Hungary is also doing rather well let alone Poland. Without wars those countries are returning to their natural state.

But that still doesnt mean Spain is poor. It just means other countries progressed. And many times its the progress and growth that matters as opposed to stagnation which feels bad. The reason i mentioned that eu countries are richer than others is to put things into perspective.

Europeans are used to growth and thats the issue, there isnt any as of recently. Its just germany flouting its economic dick in everyone’s face while the rest of the eu has to follow rules that dont benefit them.

[ricardobayes]

Hungary is doing so well it's about to progress into the middle ages. Not just economically, as it's closing many pools, restaurants and hotels from Nov 1st, but a few months ago actually brought back a feudal title to address high-ranking government officials.

[inglor_cz]

It surprises me because it goes against my lived experience. When I grew up in late Communist and early post-Communist Czechoslovakia and later Czechia, it was absolutely taken for granted that we are poorer than Spain and have much lower buying power. As late as 2004, I felt it in my wallet when I stayed in Barcelona for a cryptographic workshop - everything was so much more expensive than back home.

IDK what do you mean by "natural state". There are too many counterexamples. Ireland or Norway used to be comparably poor countries in the early 1900s, Slovakia was seriously underdeveloped etc. What is the "natural state" of Spain in your opinion? An Arab colony, a center of a huge empire, or a military dictatorship? The country has gone through so many iterations during its existence.

"Poor" is a word that has two meanings. No one in their sane mind would call Spain absolutely poor, like Niger or Afghanistan is. But relative poverty is psychologically damaging too. If other countries progress faster than you, you are slowly moving towards the end of the wealth distribution in your common club. And people don't like that.

[yrgulation]

There was a DW article that presented spain as one of europe’s poor countries. Cant find the link unfortunately. I swear these people get a boner when throwing around the word poor.