ABSTRACT
It always must be kept in mind that the euro crisis that first emerged in the wake of the GFC and re-ignited starting in 2010 was a result of unhealthy macroeconomic processes, a symptom of weaknesses that had accumulated over years, weaknesses with multiple causes rooted in complex, historically contingent sociopolitical processes. ‘Saving the euro’ is a misguided metaphor – the euro does not need to be saved. It is merely a tool, a currency shared by a group of countries. What needs to be saved is the capacity of this group of countries to produce goods and services that increase the welfare of their populations. With mass unemployment of 21 per cent and 24 per cent in Spain and Greece at the time of writing, it should be clear that the issue is not saving the currency but saving the people. In Spain, about two million people in one million households have no income at all. At the same time, the suicide rate in the crisis countries has risen drastically. Cost-cutting ‘reforms’ in the healthcare system have led to an increase in the mortality rate. Unemployment in the Eurozone set records starting in 2011, and over the last three years has fallen very slowly from 12 per cent to just below 11 per cent. This sort of thing destroys people’s confidence in society and in the political system, especially in a democracy. Adam Smith, in his book The Wealth of Nations warned that ‘Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.’ In the Eurozone, in the wake of the GFC, only banks and investors were bailed out, while millions of citizens were thrown into unemployment through no fault of their own. Even those that bought houses and flats by borrowing a lot of money should be assigned only partial blame. It takes two to agree on a loan contract – a borrower and a lender – and a non-zero interest rate exists because there is a risk of default. It cannot be justified that only banks have been protected from the consequences of their mistakes while borrowers have been left high and dry. It seems unlikely that by acting in this way a government will increase the wealth and welfare of its citizens.
