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Will The Internet Take Down The Euro?

If the Internet helped coordinate civil unrest and take down Mubarak and Ben Ali, why shouldn’t it play a crucial role in the demise of the euro?  Of course, the Internet can’t do these jobs by itself.  In the case of Egypt and Tunisia, authoritarian and corrupt governance systems created discontent.  When disaffected citizens took to the streets, their use of Facebook and Twitter amplified their power.  The formula: poor governance plus a disaffected citizenry plus the Internet equaled revolution.

The euro is a noble idea and its designers had noble goals and hopes.  One was that the euro would facilitate trade and commerce among euro zone members, and it has.  Another was that the euro would become a widely-used reserve currency.  This, too, has happened. The euro is currently the world’s second-largest reserve currency.  A third goal was that the euro would enforce fiscal discipline on its members and constrain profligate spending by irresponsible governments. This is a goal it is struggling to meet. Witness the problems in Portugal , Ireland , Greece , and Spain – and now Italy — that have the potential to be magnified in an Internet-driven, overconnected world. The result could be a dead euro, or a severely maimed one.

The euro can serve the interests of all the countries that adopt it only if their economies are similar.  The reason is that any country’s monetary system acts as an economic control system.  Monetary systems act as economic thermostats.  If they are not set to the right economic temperature problems are certain to develop.

Think of euro members as occupants of a skyscraper with only one thermostat, on the shady side of the building.  For the residents on the shady side, such as Germany, the temperature is always right.  But for a country like Greece, located in the sunny south, the temperature is always wrong.  To make both the Germans and the Greeks happy at the same time, the Greeks would have to move to the shady side.

But here’s the problem: in order to be a resident of the shady side of the building the Greeks will have to make their economy similar to the German economy in several respects.  This is almost impossible task.

Consider the current state of affairs: German citizens pay their taxes but many Greeks do not.  Some officials estimate that $30 billion in taxes go uncollected.  This number is about 10% of Greece’s GNP. Greece’s budget deficit was around 10.5% of GDP in 2010, compared with around 3% for Germany. Germany’s economy runs a trade surplus of over $150 billion per year while Greece ran a trade deficit approaching 10% of GNP. It is difficult to see how a currency that works well for Germany would meet Greece’s needs.

Smart Growth Building an Enduring Business | Your Stuff Work

Wall Street believes that all public companies should grow smoothly and continuously, as evidenced by ever-increasing quarterly earnings, and that all companies either "grow or die." Introducing a research-based growth model called "Smart Growth," Edward D. Hess challenges this ethos and its dangerous mentality, which often deters real growth and pressures businesses to create, manufacture, and purchase noncore earnings just to appease Wall Street.

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