France and ‘the need for labour market reforms’ – The German Minister of Finance will never understand the currency union and France should finally respond assertively (0,50 €)
This is the translation of an article that was published April 24, 2015 on flassbeck-economics. We are publishing one article in English every week to allow more readers to follow closely our analysis of global and European events. However, translation is not free and we have to ask for a contribution from our English speaking readers also.
I have said a lot about Germany’s Finance Minister Wolfgang Schäuble and his economic world-view in the past and I do not feel like repeating myself because it is like criticising a student that is unwilling to learn and stubbornly continues to make the same mistakes. As for austerity and the ‘structural reforms’ that Schäuble defended once again in his article in The New York Times, Krugman already said everything there is to say about it.
So far, on his trip to the U.S., Schäuble has at least demonstrated on two occasions that he does not understand the basic logic behind a monetary union in general and the European monetary union in particular. We are not surprised and we are not the only ones. Most politicians of the Euro group do not know what Schäuble is really talking about when he criticises other countries. According to the EU Observer, he asked the Greeks why the country is still having a minimum wage that is higher than some other member states. He demanded to know why Greece has a higher ratio of civil servants to the population as a whole than any other member state. Such questions betray a fundamental lack of comprehension of what the problems really are. As I explained many times, such matters do not deal with the real question. It was never the idea that living conditions in the EU would even out across all member states. This is impossible and not even desirable. There would be rich and less rich countries. In a currency union it is important to align inflation rates and their most important determinant, unit labour costs – nothing else.
(The rest of the article can be purchased for 0.50€)