There is talk that the Euro will become obsolete because the European Union is close to becoming insolvent. Well, I don’t think that will happen since governments can just print more money to keep afloat and deal with inflation by implementing price controls. This creates other problems and only delays the inevitable problem of a massive trade deficit and declining productivity since investors and job seekers will begin to flee.
We are seeing the debt tragedy unfold first with Greece, now Ireland, and soon to be Portugal and Spain. All will need other European governments to bail them out because they have spent more money than they bring in.
How can so much short-sighted behavior take place in countries as diverse as Ireland, Greece, and the Iberian Peninsula?
The terrible answer is that this was done over decades and perpetuated by both conservative and socialist governments. Perhaps the conservatives spent a bit less than the socialists, but nobody ever rectified the fundamental deficit. Basically all governments regardless of ideology gave the voters what they wanted: A bloated social and corporate welfare system that ignored debt and fundamental productivity. Democracy worked and now voters have ended up financially bankrupt.
Social Democracy has shown its true colors. It spends beyond its means and now we see the consequences. Democracy gets trumped by economics because it is economics the feeds us. Economics is based on fundamental rules that are real such as supply and demand, it is not an artificial system of choosing governments.
Socialists and Europeans needs to understand that government programs need to be paid for, and the only ways they get paid for is by taxes, and the only taxes that count are those generated by jobs that create something new and of value.
It is not enough that government employees pay taxes, because the cost of single civil servant or government sponsored employee need to be paid for by people whose money come from the private market. A private individual who works for a private company needs to generate something of value, spur a market transaction, generate a profit so that jobs are created, and taxes paid. The engine of the modern economy is and always will be the private sector.
Government needs to resume its a role to keep the court systems efficient to protect property, contract law, competition, and the safety of workers and the public. Democracy needs to simply become a vehicle to elect leaders that give us best results, not ignore fundamental laws of economics.