7 ms·

Can you explain this in more depth? I'm not that familiar with EU laws and treaties. Is it illegal to run a trade surplus? How does that work, functionally?

lkrubner 4y ago
I don’t think it is illegal but it was hurtful to the EU overall: https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/07/12/one-size-fits-one/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/0... Of course, you could make the argument that it violated the spirit of the treaties.
- deleted 4y ago
  [deleted]
- remarkEon 4y ago
  What specific harm is being done here though? Krugman has a tendency to take a lot of underlying assumptions for granted without actually enumerating them. I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own, which seems to be what’s implied here.
  - morelisp 4y ago
    Put simply, Germany wants (or wanted - we don't talk about the euro crisis much anymore even though it was never really resolved) everyone in the EU to a) trade mostly with other EU members, b) run a trade surplus. This is obviously impossible, but Germans don't want to hear that in a modern economy, for Germany to have no debts means someone else must. They sent moralists to do an economist's job. That being said I have no idea what the OP was on about, it's not illegal, it's just stupid.
  - lkrubner 4y ago
    “* I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own*” Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. As was pointed out many times during the crisis years of 2008-2013, many of the problems in the EU exist because of its partial and unfinished integration. It is very difficult to have a unified currency without also having a unified fiscal policy. As others have pointed out, the EU cannot survive in its current state, either it breaks up or it deepens its integration and becomes a United States of Europe.
    - remarkEon 4y ago
      >Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. Is this enumerated in a treaty? Which law says this? >As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. I live in the United States and I have never, ever, heard of this question being asked. Which thing is New York sacrificing for the rest of the United States?
      - Aeolos 4y ago
        Yes, there is a maximum allowed limit in the Maastricht treaty. Germany has been systematically breaking the rules. https://www.intereconomics.eu/contents/year/2018/number/3/article/on-current-account-imbalances.html https://www.intereconomics.eu/contents/year/2018/number/3/ar... "The rules established under the EU’s macroeconomic imbalance procedure (MIP)define a ceiling for current account surpluses of six per cent of GDP and stipulate that the three-year average for a country’s current account surplus should not exceed this ceiling.2 However, Germany has been running surpluses in excess of this figure for many years. Its most recent three-year average is eight per cent of GDP, while the 2016 figure was even higher, at 8.5%."
quarantaseih 4y ago
I read somewhere that europeans agreed to an open market and common currency that included Germany only if German's export surplus were contained. I dont know if they are part of the treaties of not. The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? A joint market would destroy French and Italian industry and in-debt Greece - as happened. <rant> The Euro zone was a mistake. Its premise was solid - the europeans no longer had the ability to have colonies to steal resources from, so they sought to create a large enough market to be relevant and muscle themselves into decent prices. It failed because the US quickly made sure the euro never seriously challenged the USD. Also, a continent that makes < 1.5 children/woman is not a going concern so no one has ever taken them seriously. Finally, the rise of China and India sealed the EU's fate. </rant>
- mmarq 4y ago
  > The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? Because they couldn’t manage their currencies and always dreamt of low inflation, in a few words: they wanted the Mark. Calling it Mark would have upset the nationalists, so they made the Euro. > The Euro zone was a mistake. Outside of the eurozone, Italy would have gone bankrupt in the mid 2000s, Greece a few years later.
  - imtringued 4y ago
    Poland is doing far better precisely because it isn't in the Eurozone.
    - mmarq 4y ago
      One would have to admit that Poland is still catching up, otherwise they would have to explain why the UK is doing so bad outside of the eurozone.
  - thriftwy 4y ago
    Or maybe they would devalue their currencies and reindustrialize?
Aeolos 4y ago
Yes, there is a maximum allowed limit in the Maastricht treaty. Germany has been systematically breaking the rules. https://www.intereconomics.eu/contents/year/2018/number/3/article/on-current-account-imbalances.html https://www.intereconomics.eu/contents/year/2018/number/3/ar... "The rules established under the EU’s macroeconomic imbalance procedure (MIP)define a ceiling for current account surpluses of six per cent of GDP and stipulate that the three-year average for a country’s current account surplus should not exceed this ceiling.2 However, Germany has been running surpluses in excess of this figure for many years. Its most recent three-year average is eight per cent of GDP, while the 2016 figure was even higher, at 8.5%."

lkrubner 4y ago

I don’t think it is illegal but it was hurtful to the EU overall: https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/07/12/one-size-fits-one/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/0... Of course, you could make the argument that it violated the spirit of the treaties.

deleted 4y ago
[deleted]
remarkEon 4y ago
What specific harm is being done here though? Krugman has a tendency to take a lot of underlying assumptions for granted without actually enumerating them. I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own, which seems to be what’s implied here.
- morelisp 4y ago
  Put simply, Germany wants (or wanted - we don't talk about the euro crisis much anymore even though it was never really resolved) everyone in the EU to a) trade mostly with other EU members, b) run a trade surplus. This is obviously impossible, but Germans don't want to hear that in a modern economy, for Germany to have no debts means someone else must. They sent moralists to do an economist's job. That being said I have no idea what the OP was on about, it's not illegal, it's just stupid.
- lkrubner 4y ago
  “* I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own*” Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. As was pointed out many times during the crisis years of 2008-2013, many of the problems in the EU exist because of its partial and unfinished integration. It is very difficult to have a unified currency without also having a unified fiscal policy. As others have pointed out, the EU cannot survive in its current state, either it breaks up or it deepens its integration and becomes a United States of Europe.
  - remarkEon 4y ago
    >Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. Is this enumerated in a treaty? Which law says this? >As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. I live in the United States and I have never, ever, heard of this question being asked. Which thing is New York sacrificing for the rest of the United States?
    - Aeolos 4y ago
      Yes, there is a maximum allowed limit in the Maastricht treaty. Germany has been systematically breaking the rules. https://www.intereconomics.eu/contents/year/2018/number/3/article/on-current-account-imbalances.html https://www.intereconomics.eu/contents/year/2018/number/3/ar... "The rules established under the EU’s macroeconomic imbalance procedure (MIP)define a ceiling for current account surpluses of six per cent of GDP and stipulate that the three-year average for a country’s current account surplus should not exceed this ceiling.2 However, Germany has been running surpluses in excess of this figure for many years. Its most recent three-year average is eight per cent of GDP, while the 2016 figure was even higher, at 8.5%."

quarantaseih 4y ago

I read somewhere that europeans agreed to an open market and common currency that included Germany only if German's export surplus were contained. I dont know if they are part of the treaties of not. The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? A joint market would destroy French and Italian industry and in-debt Greece - as happened. <rant> The Euro zone was a mistake. Its premise was solid - the europeans no longer had the ability to have colonies to steal resources from, so they sought to create a large enough market to be relevant and muscle themselves into decent prices. It failed because the US quickly made sure the euro never seriously challenged the USD. Also, a continent that makes < 1.5 children/woman is not a going concern so no one has ever taken them seriously. Finally, the rise of China and India sealed the EU's fate. </rant>

mmarq 4y ago
> The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? Because they couldn’t manage their currencies and always dreamt of low inflation, in a few words: they wanted the Mark. Calling it Mark would have upset the nationalists, so they made the Euro. > The Euro zone was a mistake. Outside of the eurozone, Italy would have gone bankrupt in the mid 2000s, Greece a few years later.
- imtringued 4y ago
  Poland is doing far better precisely because it isn't in the Eurozone.
  - mmarq 4y ago
    One would have to admit that Poland is still catching up, otherwise they would have to explain why the UK is doing so bad outside of the eurozone.
- thriftwy 4y ago
  Or maybe they would devalue their currencies and reindustrialize?

Aeolos 4y ago

Yes, there is a maximum allowed limit in the Maastricht treaty. Germany has been systematically breaking the rules. https://www.intereconomics.eu/contents/year/2018/number/3/article/on-current-account-imbalances.html https://www.intereconomics.eu/contents/year/2018/number/3/ar... "The rules established under the EU’s macroeconomic imbalance procedure (MIP)define a ceiling for current account surpluses of six per cent of GDP and stipulate that the three-year average for a country’s current account surplus should not exceed this ceiling.2 However, Germany has been running surpluses in excess of this figure for many years. Its most recent three-year average is eight per cent of GDP, while the 2016 figure was even higher, at 8.5%."