Germany Should Stay in the Eurozone

by Aristides N. Hatzis

New York Times
November 12, 2012

Every divorce has its benefits. Independence is one of them. You can spend your evenings the way you want, eating pizza with your feet on the coffee table or hanging out drunk with your college friends until 4 a.m.

But every divorce also has its cost. During marriage both parties invest in many ways in their relationship and this investment is relation-specific – it’s worthless outside of the particular marriage.

If you are the stronger party in the relationship, with an independent career, a good income and solid prospects, you certainly have the bargaining power and you can set your own terms in the relationship. You might also come to persuade yourself that an “exit” would be costless. It never is.

Germany is the partner with the bargaining power. It’s the party who is not threatened by a divorce. It is the one who can credibly threaten all the others.

Are there any good reasons for a divorce? There always are: Germany would enjoy the advantages of independence without having to be responsible for its “immature” southern partners or for having to share decisions with wishy-washy mommy-figure France. Even former euro zone siblings will breathe freely after the over-achiever leaves the family: a depreciated euro would supposedly boost competitiveness and trim their debts.

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