Wall Street Journal
February 26, 2010
What has the euro zone ever done for us?
If you're German, the answer to that question is quite a lot. But that doesn't seem to be the way German commentators and politicians think about it.
The popular German narrative, as gleaned from media reports, goes along the following lines. Since the euro's inception in 1999, we have made big sacrifices to maintain the competitiveness of our economy, keeping wages down to boost exports and maintain our trade surpluses. Others in the euro zone, particular the Greeks, made no such sacrifices and built up big debts that they are struggling to repay. Now, they have the temerity to knock at our door to ask for a bail-out.
But, at a weekend conference discussing the lessons from the economic crisis, as much time was devoted to the prospect of Germany leaving the euro zone as there was to the "peripheral" countries of Greece, Portugal or Spain abandoning it. The conference of prominent economists, current and former officials and others was held at Ditchley Park, a stately home in the English countryside.
To be sure, nobody was predicting any such exit is likely, certainly not in the short term. But if Germans feel they got a bad deal in swapping their low-inflation Deutschmark for an arrangement that forces them periodically to transfer enormous sums of money to southern Europe, then that shouldn't be ignored. There was, however, another parallel message from the conference, organized by the London-based Centre for European Reform: Germans, get over it. You've been the biggest winners from the euro.
Why? Most importantly, because it's attached to the weaker economies, the euro is at a lower level than the mark would have been. That has been a huge boon to German exporters. Instead a $1.35 euro, exporters could have been facing $1.55 or higher.
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