Portugal: Cortes salariais de 20 ou 30%

o pessoal viu esta do Krugman?

May 17, 2010, 9:42 am
Et Tu, Wolfgang?
Perhaps the most startling and frustrating thing about the debate over the fate of the euro is the way almost everyone avoids confronting the core issue — the elephant in the euro. With a unified currency, adjustment to differential shocks requires adjustments in relative wages — and because the nations of the European periphery have gone from boom to bust, their adjustment must be downward. At this point, wages in Greece/Spain/Portugal/Latvia/Estonia etc. need to fall something like 20-30 percent relative to wages in Germany. Let me repeat that:

WAGES IN THE PERIPHERY NEED TO FALL 20-30 PERCENT RELATIVE TO GERMANY.

But nobody is willing to say that outright. Even the ever-pessimistic (and hence realistic) Wolfgang Munchau writes

None of the governance reform proposals that are currently discussed even attempt to answer the questions of how Spain is going to get out of this hole, and how the competitiveness gap between the north and the south of the eurozone is going to be closed … What the eurozone needs is an increase in domestic consumption in the north, particularly in Germany, and labour and product market reforms in the south, most importantly in Spain.

How many readers will get that what he’s really saying is that

WAGES IN THE PERIPHERY NEED TO FALL 20-30 PERCENT RELATIVE TO GERMANY.

How hard will it be to achieve this? Look at Latvia, which has pursued incredibly draconian austerity. Unemployment has risen from 6 percent before the crisis to 22.3 percent now — and wages are, indeed, falling. But even in Latvia labor costs have fallen only 5.4 percent from their peak; so it will take years of suffering to restore competitiveness.

The official answer is that this just shows the need for more flexible labor markets. But this was a subject we all batted back and forth in the initial debate about the euro, circa 1990: nobody has labor markets that flexible. If the euro isn’t workable without highly flexible nominal wages, well, it isn’t workable.

Anyway, this is my morning euro rant.

aqui.

antes da irresponsabilidade grega, o €

esta é uma velha discussão: se o euro evita a guerra entre os europeus (Kohl), ou se o euro acaba por conduzir os europeus à guerra (Feldstein).
Voilà os capítulos mais recentes:


The Making of a Euromess

By PAUL KRUGMAN
Published: February 14, 2010

Lately, financial news has been dominated by reports from Greece and other nations on the European periphery. And rightly so.

But I’ve been troubled by reporting that focuses almost exclusively on European debts and deficits, conveying the impression that it’s all about government profligacy — and feeding into the narrative of our own deficit hawks, who want to slash spending even in the face of mass unemployment, and hold Greece up as an object lesson of what will happen if we don’t.

For the truth is that lack of fiscal discipline isn’t the whole, or even the main, source of Europe’s troubles — not even in Greece, whose government was indeed irresponsible (and hid its irresponsibility with creative accounting).

No, the real story behind the euromess lies not in the profligacy of politicians but in the arrogance of elites — specifically, the policy elites who pushed Europe into adopting a single currency well before the continent was ready for such an experiment.

...

o resto está no jornal, mas o artigo acaba assim:

Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger “the mother of all financial crises.” So the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states.

But that’s not going to happen anytime soon. What we’ll probably see over the next few years is a painful process of muddling through: bailouts accompanied by demands for savage austerity, all against a background of very high unemployment, perpetuated by the grinding deflation I already mentioned.

It’s an ugly picture. But it’s important to understand the nature of Europe’s fatal flaw. Yes, some governments were irresponsible; but the fundamental problem was hubris, the arrogant belief that Europe could make a single currency work despite strong reasons to believe that it wasn’t ready.

Krugman unofficial

arquivamento não-oficial, mas com alguma sistematicidade, da produção do Krugman: aqui

Por exemplo, tem lá esta produção - a seis mãos - sobre a segurança social:

4.3.05

Hey Folks! We now have Dean Baker, J. Bradford DeLong, and Paul Krugman (forthcoming 2005), "Asset Returns and Economic Growth," Brookings Papers on Economic Activity 2005:1.. Brad DeLong has three posts on the debate over this paper here (regarding "criticism" from Luskin), here (regarding a NYT article by Ed Andrews), and here (regarding criticisms from Greg Mankiw)

We also have two posts from Brad DeLong's Blog, containing fragments of a memo from Paul Krugman to DeLong on Social Security, here and here. If I can get the entire memo, I will post it in one place. They are all archived in the American Economy Section

-Bobby