Touche. Things have not been equal across Europe however. The Irish have reacted very differently to the Greeks, for instance. Is it as straightforward as just austerity? If it was, then you would imagine all economies who tried to balance their books would have responded in the same way, but they didn't.
Well, yes, different countries were affected in different ways. I'm not sure how much sense it makes to compare Ireland and Greece. Ireland has important advantages that Greece can never match, like better proximity to bigger, wealthier markets; its English proficiency alone probably accounts for a significant part of gap between the two countries' economic performance. Ireland is also a corporate tax haven and a real estate bubble, so its economy on paper is shaped to a considerable extent by exogenous capital flows. In the 'real' economy, a substantial amount of people through no fault of their own are having a
very rough go of it, mostly because of austerity. One thing they do have in common with Greece is that a substantial portion of their best and brightest have left, a huge opportunity cost which will harm the country for decades even if it isn't reflected in the statistics that make up conventional pop economics gospel. It is yet another example of the penny-wise pound-foolish consequences of contemporary European economic dogma.
Another important factor is that Ireland enjoys a much better quality of political class - though that is damning with the faintest possible praise. The Greek elite has been lavishly corrupt, and knowingly enabled every step of the way by the EU and its banks. They both combined to cook the books so that Greece could gain admittance, and from there, the French and German banks were positively delirious wining, dining, and kick-backing Athens into splurging its new purchasing power on French and German-made indulgences, like weapons systems or contracts to build the vanity projects of small-time Greek political crooks. And the banks did so only in the knowledge that if anything went awry, they would be repaid, in full, by the French and German taxpayer - which is exactly what happened (1), destroying Greece for at least a generation in the process as a disguise to keep the German public (and the Economist subscriber) quiescent. All the while, cesspools of corruption, like Malta, or Cyprus, or Luxembourg - whose Presidency of the Commission alone discredits any EU propriety - fell over themselves competing to absorb the proceeds of the Greek elites' corruption. The Greek public was understandable furious with the whole arrangement, and, shunning the far-right unlike in Hungary or Poland (or arguably Britain
), voted overwhelmingly to throw the bums out - whereupon the same people who had both exploited and scorned Greek corruption suddenly began railing against the spectre of 'populism'. The hypocrisy is breathtaking, but all too common, and no doubt so internalised at this point that it doesn't even occur to those who perpetuate it. And thus, an entire country was destroyed, to maintain the principle that Eurozone banks should never lose money no matter how idiotic or corrupt their investments, and so that the European political class need never admit that it was wrong.
This sort of sanctimonious moralising about national character on the part of self-styled elites - Germany prospers because Germans are frugal, Southern European stagnates because Southern Europeans are indolent etc. - likewise reveals just how poor a grasp these people often have of macroeconomics. At the macro level, surplus and deficits, savings and liabilities, are intimately linked. When countries like Germany (2) and
China build up trade surpluses then by definition it means other countries, mostly the United States have grown their trade deficits. And when surpluses of capital are accumulated, most often by suppressing ordinary people's wages to enrich elites like, again, in Germany and China, then interest-rates are forced down elsewhere, and the excess capital flows in, swelling deficits. These deficits are not necessarily a bad thing if the money is used constructively (rather than to, yet again, lower billionaires' taxes like in the United States), but when the savings/liability balance grows so lopsided, there is a limit to what deficit-driven countries can absorb. The routinely criminal practices that helped the Spanish and American housing bubbles soak up the overseas capital sloshing into them are instructive examples of how this plays out
in practice. (Michael Pettis has an outstanding podcast (3) which explains this much more authoritatively than I can - though I'll admit it took me several listens). Suffice it to say, while one can no doubt find examples of individual Germans saving prudently, and Greeks or Irish or Spanish or Italians behaving badly, these tendencies on a national level are far, far more structural than they are behavioural. In the case of the Eurozone, things are compounded further still because deficit countries can't control their monetary policy, and can't just devalue their way out of debt, which Italy did with great success up until preparing to join the Eurozone. And of course, the subsequent austerity imposed by Germany and friends' suicidal obsessions with Swabian housewife parables has only
made things worse.
