Friday, June 7, 2013

Frances Coppola — The creeping desert


Economic "desertification" in the EZ periphery?


Coppola Comment
The creeping desert
Frances Coppola

2 comments:

Ralph Musgrave said...

There’s one slight flaw in Frances’s argument: she rather claims that internal devaluation as such is the problem. I left a comment after her article saying that the real problem is the fact that austerity is being imposed WITH A VIEW TO BRINGING devaluation, but that that austerity is not having the desired “devaluation” effect – or not having the effect quick enough.

Frances Coppola said...

You've completely missed the point, Ralph. Can I suggest you read the article again? The point is that in a currency union where free movement of labour is enshrined in treaty and internal devaluation through austerity is seen as the only means of achieving economic parity, migration is inevitable. In the absence of fiscal union and with primacy given to debt service over welfare, the result will be progressive emptying and impoverishment of the countries that are "devaluing". It is not "austerity" that is the problem, per se. It is the structure of the currency union.