THW abolish the single European currency
“Having been an
early supporter of the euro, I now consider my engagement to be the biggest
professional mistake I ever made.” said Hans-Olaf
Henkel, the leader of economists who criticizes the use of the euro. Europe's
single currency is the most ambitious creation of the European Union, and may
yet turn out to be its greatest failure. It was supposed to promote economic
convergence among its members, and ultimately greater political integration.
Instead, the sovereign-debt crisis has exposed divergence in economic
performance and competitiveness that lay hidden in the early years of the
euro's existence. There are "indignados" on the streets of Spain and
Greece; taxpayers in Germany, the Netherlands and Finland are indignant, too,
at the prospect of having to bail- out crippled states. Is the euro worth the
trouble it is causing, politically and economically? Seeing what the euro has
caused until now, the answer for the question is likely to be negative. When the
government is pursuing certain policy, they must clearly justify themselves in
many different ways, but the most basic think they should prove is that rather
the policy harms the nation and its public or not; in this aspect, although the
euro has some benefits, the euro policy fails to justifies itself due to three
failures: harms to nation, harms to individual, and harms to international
society.
Primarily, the euro policy harms member
nations of EU themselves; shortly saying, since nations are refrained to use
single currency that the government of single nation cannot simply print it
out, member nations of EU cannot use monetary policy as an saving card and their
price level became more vulnerable to outer affects of contiguous member states
of EU. For instance, in case of Greece, they were renowned for their welfare
system which covers every single public in its country. Since welfare
infrastructures and systems were maintained by the government of Greece, the
government spending naturally was great in Greece; and yet, reason why the Greece
government could bear all these costs was because they were able to print out drachma,
currency unit of Greece, out of thin air which is also called monetary policy.
To simply put, because Greece was able to print out their own currency as they
want, they printed out money and used them to fill up the government deficit.
Nevertheless, after 2002 when the euro replaced the drachma, Greece lost their
last hole card, the monetary policy; their monstrous trillion dollars of debt
congregated throughout years of welfare spending started to surface itself and eventually
Greece crisis happened. Situation was no different for other nations in Europe:
not only those countries which loved to use monetary policy went bankruptcy but
also countries which tried to handle the European crisis through supports and
aiding are also facing great economic pressures. Now, no one could handle this
crisis happened in the world biggest market except for European nations
themselves. Unfortunately, only with fiscal policy, it would be really hard and
would take a long time for European countries to get out of economic dip.
Regarding the fact that the euro is aboriginal cause of European economic crisis
and key to get out of economic crisis at the same time, the euro system must be
abrogated. .jpg)
The
euro not only harms the member states of EU as slightly alluded in previous
argument, but also harms individuals in Europe. As a nation uses single
currency system, the price level become more vulnerable to other countries’
economic fluctuation. Correspondingly, economy of the nation naturally becomes
unstable. Pessimism in one economy naturally leads to higher unemployment rate,
soaring price level, a depressed economy. This not only makes the government
stressed out, but also puts great burdens on the shoulder of their public.
Although this was only a hypothesis of opposition of the euro system when the
euro was first initialized, now, we could see that this hypothesis is realized:
hundreds of thousands of public-sector employees and professionals gone on
strike in protest at privatization, pay ceilings and pension reform and major
public-sector strikes coincide to increase pressure on the government over its
economic policies in Greece. A strike in
Rome on Tuesday 6 September 2011 showed the strength of feeling that richer
Italians had escaped tax rises and spending cuts. The Dax share index
has lost 29% since the beginning of July 2011 – significantly worse than
London's FTSE 100 – while business confidence was tumbling at the fastest rate
since the collapse of Lehman Brothers in Germany. Not only these countries,
including Spain, Britain, Portugal, Switzerland and all the other European
nations are suffering from same phenomenon. To once again remind the role of
the government, the government has responsibility to save its citizens from any
kinds of threats and harms before any other benefits or harms; yet, the policy
of government is even threatening peaceful life of their citizens. If the government
truly cares about their public, they must abolish harmful policy, the euro
system.
Last but not least, these harms happened
within the territory of one nation and EU will eventually harm the
international society. Back in the history, ancient Chinese didn’t really care
about rather Rome prosper and conquer almost the entire Europe continent or
not; simply because Rome’s action did not affect China’s circumstances at all.
But now, if Italy starts a war in Europe, not only China but also the entire world
will pay sharp attention to it and will take whatever measure to stop Italy. Once
again, reason is simple: world nations are intimately connected to each other.
In this intimately established world network, what will happen if the entire
continents go bankruptcy? Great catastrophe will happen. Just by seeing how China’s
drastic economic development suddenly changed the international situation, if
the world biggest market EU goes bankruptcy or at least economic crisis, this
will greatly tumble the entire world economy. Although the euro stood as a
symbol of union and symbol of future world unionized economy, international
economy is too much of a cost to bear.
I would like to remind what chief of IMF
has argued: in a speech in Berlin, Lagarde, chief
of IMF, discussed raising that total by up to an additional $500 billion,
bringing the IMF's resources for lending close to $1 trillion. Currently, international society do not have much burden to
solve economic crisis in Europe, international society is desperately trying to
save EU from its desperate situation. If EU really cares and knows this effort
of international society, trying to save EU from economic crisis, they must do
their best to get rid of economic abyss; and the very first step they should
take would be abolishing single European currency the euro.
Sources
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