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Comment by tpm | Hacker News Reader

> Because I know how off mark you are about Croatian politics.

I am sorry, but what are you on about? Your thesis is that Eurozone accession enables future fascism ("Ngl joining the EuroZone (what Magyar did) is precisely the myopic decision that allows future fascist to rise to power."). What does that have to do with Croatian fascist leanings, which existed long before they joined the EU? Precisely nothing. So why are you mentioning them in connection with the euro?

> What I do know all major Euro economies are experiencing constant crises that never end

Compared to what?

> And that is excellent breeding ground for the populist movement.

Compared to what?

> Euro as a whole just produces more and more crises.

Compared to what?

There is no serious analysis, only talking points about perpetual EU crisis which are exactly what the fascist movements are pushing, so yeah.

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    > Your thesis is that Eurozone accession enables future fascism ("Ngl joining the EuroZone (what Magyar did) is precisely the myopic decision that allows future fascist to rise to power.").

Not really. I said it creates future crises that the fascists are usually best poised to seize.

If one country in the EU experiences problems (e.g. France/Greece/Italy/Ireland), then the whole EU will experience problems (because they have the same currency).

So rather than one country in Europe having its problems and dealing with it internally, most of Europe has a problem. And worst yet, if the crisis causes the euro to devalue, it will benefit only the net exporter countries, causing massive divergence in economies of different countries.

I hope you can see how this will cause losers to be more spiteful, while making winners more arrogant. That spite is great place for various far-right monsters to spawn.

It's a myopic decision because, as you said, it definitely has some benefits for companies and consumers alike, but long-term it sentences you to joint economic pain, without relief.

    > What does that have to do with Croatian fascist leanings

It was a response to your quote:

    >  ...of the new EU members from CE, Slovenia, Croatia, Bulgaria, Slovakia, and the Baltic countries adopted the Euro and I don't identify a fascist streak there.

You obviously are not good at identifying a fascist streak.

    > Compared to what?

Stable EU states that aren't in the EZ. Like, say Norway or Switzerland.

    >  only talking points about perpetual EU crisis which are exactly what the fascist movements are pushing, so yeah.

Fascists can also talk about massive poverty. That doesn't auto-disqualify it. Their approach to solving it does.

This is slightly different from mine: either tighter EU integration or disbanding the Euro.

> I hope you can see how this will cause losers to be more spiteful, while making winners more arrogant.

These are again fact-free arguments based on feelings. Who are the winners and who are the losers? Germany as a big exporter certainly doesn't look like a winner now, does it? Spain is doing better than Germany since Covid in GDP growth.

And of course we need the EU markets to be converging and you can't really do that with 27 currencies and monetary policies. Why do we need them converging? Because businesses like the US or China greatly benefit from having huge economies of scale in their internal markets, which makes it much easier to expand after that. The EU has to come as close as possible to that too, otherwise we have no chance and will suffer much greater economic pain. But I guess Varoufakis doesn't tell you that. He just makes you long for the great times where you had to pay for each currency exchange and every bank transaction to other EU countries.

As for far-right monsters, the nazis are currently the most powerful parties in Italy, France, Germany, Austria among others. So your thesis still doesn't make sense.

> You obviously are not good at identifying a fascist streak.

You still don't understand what I wrote. There is no fascist streak that would distinguish countries that adopted the euro from those that didn't.

> Stable EU states that aren't in the EZ. Like, say Norway or Switzerland.

Let's at least try being serious.

> These are again fact-free arguments based on feelings. Who are the winners and who are the losers? Germany as a big exporter certainly doesn't look like a winner now, does it? Spain is doing better than Germany since Covid in GDP growth.

You can't just weld two different time periods while ignoring what changed in-between.

Germany around 2008 was an exporter that benefited indirectly (devalued Euro) and directly (rescuing German banks) from Greek crisis. Germany today is basically deindustrialising at a rapid pace. It's exports can't compete with Chinese nor do they have access to cheap materials, and that's disregarding tariffs on their exports.

> You still don't understand what I wrote. There is no fascist streak that would distinguish countries that adopted the euro from those that didn't.

And you don't understand what I'm conveying. Far-right and fascist voices always exist. And no, Euro isn't the only possible crisis that can happen.

But those that happen are spread and amplified. Want example of this happening? It's happening right now. France crisis turned into a France+Italy+Greece+Belgium crisis.

> And of course we need the EU markets to be converging and you can't really do that with 27 currencies and monetary policies.

You can't have them converge (also converging to what?) even with same currency! If say Gambia adopted the US dollar it wouldn't help Gambia at all. In fact quite the opposite. Only once there is a political union of US and Gambia can we talk about possibility of convergence.

> But those that happen are spread and amplified. > France crisis turned into a France+Italy+Greece+Belgium crisis.

So first of all what crisis are we talking about here, a fiscal crisis (there is definitely one in France) or the sometimes violent protests? And can you spell out the exact connection to eurozone in this 'spreading'? Also why did it spread only to 4 Eurozone countries and not the rest?

> You can't have them converge even with same currency!

why?

> If say Gambia

We don't have a Gambia here and you understand a common currency is only one part of the project. What we have are many different countries that are indeed converging - for example we've got car factories in countries that never had them before on this scale. Can you without looking it up say which EU member produces the most cars per capita? But we have to do more of that convergence.

And yeah, a political union would help, but then we both know it's not possible currently, so an ever tighter federation has to suffice for now.

> (also converging to what?)

to freely (as freely as possible) doing business across internal EU borders, in this case

> So first of all what crisis are we talking about here, a fiscal crisis

France is in the red and bailing it out would put require all members to pool money (unlikely) or print money (causing inflation).

If you think that printing money is free win consider that non-EU countries aren't stupid, they will demand more EUR for their goods. Which might require another round of money printing.

> And can you spell out the exact connection to

Yeah, it's called Euro Zone. Look this wasn't some deep thought. Whatever one country in EZ does impacts others through the shared currency. If say Italy and France need to be bailed out this causes EUR to depreciate (hurting importers), and if say Germany and Poland are doing extremely good it causes EUR to appreciate (hurting exporters).

> We don't have a Gambia here

Sure we do. Gambia is a real country and it could peg their currency. This happens often during crises of currency trust.

However, pegging Gambia's currency to USD only works in short terms. If their policies aren't aligned and there is no money redistributions, Gambia will sooner or later have to float their currency.

This is nutshell what France was doing (on a less apparent scale). It was pegging its weaker currency to EUR (because it's a large importer). An importer loves strong currency, but importing too much devalues your currency, which would prevent overspending because the more you import the less profitable it is to import. A similar thing happens to exporters but their currency appreciates.

> Can you without looking it up say which EU member produces the most cars per capita?

No idea, my original guess would be Poland or some poorer country. Having checked it's Germany. I don't quite see the convergence this is supposed to show.

> to freely (as freely as possible) doing business across internal EU borders, in this case

That's a nice to have, but not necessary. I count prosperity and life satisfaction more important than free trade.

> (hurting importers)

Of course a fiscal crisis is a crisis but that might not be so bad in the long run? If we, as EZ, can't balance a budget and balance a current account, lowering the value of the currency will surely help with that, if it's possible at all.

> (hurting importers)... (hurting exporters)

But that's also called a diverse economy and you have to balance that in any big economy anyway.

> However, pegging Gambia's currency to USD only works in short terms.

How short? Ecuador is not even pegged to USD, it completely abolished its own currency back in 2000, while both Kosovo and Montenegro have done the same with euro. There are other economies whose currencies are far from freely floated. Of course this does not apply to big EZ economies. But it doesn't have to, because they can actually influence the monetary policy.

> Having checked it's Germany.

It's Slovakia.

> I don't quite see the convergence this is supposed to show.

Well you should see it now.

> This is nutshell what France was doing (on a less apparent scale). It was pegging its weaker currency to EUR (because it's a large importer).

And as was the case with Greece and in a lesser way with the rest of PIGS, there will come a painful payback time for France too (or it's already here). They are still a subject of the bond market.

But a broader point can I think be clearly seen here: if France (and others) can't run huge deficits and then simply devalue their own currency anymore, then that is surely convergence too?

> Of course a fiscal crisis is a crisis but that might not be so bad in the long run?

Tell that to Yugoslavia. The disagreement over debt caused the nationalist tensions to flare and it shattered into a hundred pieces.

> But that's also called a diverse economy and you have to balance that in any big economy anyway.

There is no EU wide economy. Only individual members. Which is the point. Without a good EU-wide redistribution and investment you're going.

> It's Slovakia.

Having checked your previous message, per capita biggest car maker is Czech Republic (often confused with Slovakia). Here is top 10 car manufacturers in EU and their population.

    | Rank | Country        | Production (Units) | Population | Prod per Capita |
    | ---- | -------------- | ------------------ | ---------- | --------------- |
    | 1    | Germany        | 4,069,222          | 83,644,258 | 0.0486          |
    | 2    | Spain          | 1,872,988          | 47,850,793 | 0.0391          |
    | 3    | Czech Republic | 1,452,881          | 10,909,500 | 0.1332          |
    | 4    | Slovakia       | 993,750            | 5,419,500  | 0.0002          |
    | 5    | France         | 910,243            | 66,746,401 | 0.0136          |
    | 6    | Romania        | 560,102            | 19,036,400 | 0.0294          |
    | 7    | Poland         | 496,000            | 37,843,188 | 0.0131          |
    | 8    | Hungary        | 437,045            | 9,585,818  | 0.0456          |
    | 9    | Italy          | 309,758            | 58,926,166 | 0.0052          |

Turns out keeping your currency does help you be more competitive with Germany - because your workforce works for less, while having better same or better purchase parity.

> How short? Ecuador is not even pegged to USD, it completely abolished its own currency back in 2000

Depends how deep of pocket of foreign exchange currency you have. Most stable currency usually are oil exporters.

> Well you should see it now.

Still don't see it, especially since the half that splinted of Slovakia is beating it at this benchmark of yours.

> But a broader point can I think be clearly seen here: if France (and others) can't run huge deficits and then simply devalue their own currency anymore, then that is surely convergence too?

Yeah. They only get austerity. Which is tremendous for the capital class, they can now buy Louvre for only $32m! And get a free Eiffel tower too!

I think I finally seem what you mean by convergence. In the same way you can converge to height of shortest economy by hacking at your bones.

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