Is Germany the Euro Winner?

Has the introduction of the euro led to an improvement or to a decline in German prosperity? Daniel Stelter, founder of the discussion forum “Beyond the Obvious” and consultant, comes to the conclusion that the euro has led to a decline in German prosperity and eroded its long-term competitiveness; and presents ten arguments to support his view. In his opinion, the story for the “average German citizen” runs something like this: the introduction of the euro led to a long phase of slow growth, high unemployment and wage stagnation. The state reduced its expenditure on social services, infrastructure and investments. Companies had to focus on exports and their savings were used to grant suppliers credit. Now that these loans cannot be repaid, German savers and taxpayers have to cover the damages. Without the euro the debt party in southern Europe would never have happened, but the large export surpluses would not have accumulated either. But Germany would have enjoyed higher living standards and better infrastructure. In the opinion of Karlhans Sauernheimer, University of Mainz, exporters in Germany, the owners of exporting companies and their employees benefitted from the introduction of the euro. The losers are German residents, consumers, producers and employees, who have to pay higher import prices than if there were real exchange rates in line with market requirements. A second redistribution channel flows from employees to capital holders. Excessively high exports/ extremely low investments are tantamount to capital export. Domestic capital reserves are lower as a result, while the labour demand created by the deployment of such capital falls. Real wages and employment decline, while returns on capital rise. A third redistribution channel flows between the “debtor state and private household creditors”. The German Finance Minister is the interest rate winner and German savers are the interest rate losers. In all of these cases “Germany” is not the euro winner: some Germans are winners and others are losers. Klaus C. Engelen, a business journalist, also does not see Germany on the winners’ bench. The Eurozone is running the danger of becoming a community of economic weaklings. Those economies still able to perform are obliged to justify themselves and will be called upon by the majority and by the EU Commission to do more to curb their high performance and pursue a more expansive expenditure policy.