The Real News Network has the video German Exporters Benefit from European Austerity. When I first read that headline, I thought I’d really like to see them justify this counter-intuitive conclusion. Justify it they did. The Euro common currency certainly has what I suspect are unintended consequences. Either Germany is unknowingly taking advantage, or very cleverly learning how to take advantage.
But number two–and this is a very interesting point that came out of the conference–is this, that generally when an economy is successful at exporting, what usually happens is that the value of its currency goes up. So if we think about the United States, if we exported more, that would mean more people want to hold dollars. And when more people want to hold dollars, the value of the dollar goes up relative to other currencies, which in turn would make the U.S. less competitive in export. But Germany has the situation in which it benefits, ironically, from the fact that even though they are very successful at exports, they share the common currency, the euro, with the rest of Europe, and the rest of Europe remains in the tank, the rest of Europe is not succeeding in exporting, so that Germany is, ironically, benefiting by the fact that the euro does not appreciate, does not go up in value. And that enables Germany to continue to succeed as an exporter far more than they would be under other circumstances. So the situation is in–where Germany is able to dominate economic policymaking in Europe because they’re the most successful and largest economy–and they’ve also been able to rig the policymaking with respect to the euro, because it benefits them most. It benefits them most to be able to be an exporter that still can contain the euro, the value of the currency lower.
So the austerity agenda is helping the wealthy in Germany while it is hurting everybody else in Europe
There are a few other interesting points in the interview. Watch the video below.