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At the moment only Greece (2,65% of eurozone gdp), Portugal (1,83%) and Ireland (1,82%) have received bailouts - which makes 6,3% not "half the Eurozone melting
by Atropos 14y ago
At the moment only Greece (2,65% of eurozone gdp), Portugal (1,83%) and Ireland (1,82%) have received bailouts - which makes 6,3% not "half the Eurozone melting down". Spanish banks may get a €100b bankout aswell - big deal.
But I agree with you on the source of the problem - socialism or uneconomic regulation. That is visible in the doing business rankings of the world bank (http://www.doingbusiness.org/rankings http://www.doingbusiness.org/rankings). Ireland(rank 10), France(29),Portugal(30) will hopefully be fine. Spain at 44 is troubling; I'm only really worried about Italy (87) and Greece (100).
However Portugal+Spain+Greece have voted in conservative governments, Italy has an interim economist technocrat government. There is the European Fiscal Compact (http://en.wikipedia.org/wiki/European_Fiscal_Compact http://en.wikipedia.org/wiki/European_Fiscal_Compact). And Germany is pushing very hard for economic reforms in the bailout countries.
Overall it is just a problem with a few countries with bad governments/regulation, not a "Euro" problem and certainly not a European Union problem... And we seem to be taking more steps dealing with it then the US or UK with their problems!
I compared to the US$ because the import/export in USD or GBP is incredibly more significant than the few currencies the Euro has done badly against, like the Swiss Francs or Japanese Yen or Norwegian/Swedisch Krones etc...
- excuse-me 14y agoHow is California's debt looking these days?
- mixmax 14y agoThe problem isn't socialism, it's a divergence of productivity between the northern and southern regions of the euro area. When you combine this with a shared currency you're asking for trouble. Note that the socialist nordic countries have stellar economies. I've noticed a lot of Americans blame the euro crisis on socialism which,is interesting since it doesn't seem to hold up to scrutiny. I'd be interested in hearing why this is. Is it the media, an American distrust of socialism or something else?
- Atropos 14y agoI only used the word "socialism" because the other commenter used it - in the original meaning of the word it doesn't exist anywhere in Europe. What I meant is simply bad regulation. You are correct that some of the nordish countries have a more ,,left'' reputation and have things like high taxes, alot of redistribution etc... But if you look at the "Heritage Ranking of Economic Freedom" (http://www.heritage.org/index/ranking http://www.heritage.org/index/ranking), you see: - Denmark (Rank 11), Finland (17), Sweden (21) - Spain(36), Portugal(68), Italy(92), Greece(119)
- potatolicious 14y agoI've noticed that socialism is definitely a pejorative term in the US - which dismays me as a socialist-leaning Canadian. It's like economic Godwin - call someone a socialist and effective discourse just kind of grinds to a halt. It's the modern "communism", without invoking the spirit of McCarthy.
- jl6 14y agoPeople use the word Socialism when they mean something like "perversion of incentives". We perceive that Socialism incentivizes bad choices, like having more children than you could afford without government benefits, or making investments that appear less risky because you assume a government bailout will protect you. As you point out, the nordic countries show that perverse incentives don't necessarily follow from Socialism. And indeed, America has its own non-Socialist perverse incentives such as encouraging pollution by not enforcing payment of the environmental externalities. But all things considered globally, more socialism does tend to imply more perverse incentives.
- mixmax 14y agoThanks for the good explanation. However you end your comment by an unfounded claim that more socialism tends to imply perverse incentives. The same could be claimed of capitalism (or probably any other ..ism), see the banking sector and American healthcare for good examples. In the rather socialist Denmark (where I happen to be from) when you break a leg you go to the doctor to get it fixed for free, and then you call your employer and tell him you won't be working for the next week, but you'll receive your paycheck nonetheless. When you get a child you take 9 months off work with full pay so that your offspring can get a good introduction to life. When you're out of a job the state will take care of you indefinitely. Despite of this denmark has a consistently strong economy, is one of the richest countries in the world, and has for many years been in the top three of both the happiest country and the least corrupt country in the world.
- deleted 14y ago[deleted]
- eli_gottlieb 14y agoWhen you're out of a job the state will take care of you indefinitely. Is that the Flexicurity system? How does that work?
- MaysonL 14y agoOf course less socialism also leads to perverse incentives at times, like avoiding starting a company because of fear of not being able to get health insurance.
- soc88 14y agoThis also amazes me too. The US has neither a working, efficient health care nor education system, but blames others for "socialism"?
- KaoruAoiShiho 14y agoNot sure about the health care system, but the non-socialist portion of the US education system is the best in the world, and only the socialist portion of it is terrible. I find those to be reasonable grounds to dislike socialism.
- eli_gottlieb 14y agoMajor public universities in the United States, known world-over for their excellence: * University of California, Berkeley * University of Washington, Seattle * University of Massachusetts, Amherst * Texas A&M * University of Wisconsin, Madison Shall I go on?
- kbolino 14y agoTo call any of those "socialist", when the paid-by-the-student cost has skyrocketed and the paid-by-the-government cost has plummeted, is a bit of a stretch.
- eli_gottlieb 14y agoFair point, but they were world-class universities when the government subsidized them, too. There's no inverse correlation between government support of a university and academic quality, being my point.
- kbolino 14y agoAgreed, and I think KaoruAoiShiho's original "socialist" comment was about K-12 anyway.