Guest Post: Greeks Want To Stay In The Euro? Why Don’t They Move To Germany?

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Submitted by John Aziz from Azizonomics

Greeks Want To Stay In The Euro? Why Don’t They Move To Germany?

Above 80% of Greeks want to stay in the Euro:

About 80.9 percent of Greeks believe Greece should struggle to stay within the eurozone “at any cost,” fresh opinion polls showed on Wednesday.

 

Some 45.4 percent of respondents in a survey conducted by GPO firm for local private television Mega channel said that they regarded as most probable a Greek exit from the European common currency. And 48.4 percent of the respondents said that such a prospect was less likely.

But they don’t like the austerity measures that staying in the Euro entails:

About 77.8 percent expect the next government to emerge from the June 17 general elections to renegotiate the harsh austerity terms of the two bailout deals reached since May 2010 with international lenders to avoid a disorderly default

So the question is why don’t they leave Greece and move to the core where companies are hiring and public services aren’t being slashed, and where there is no overhanging threat of being thrown out of the euro?

Greeks claim that that’s exactly what they want to do:

Conducted in January by the Focus Bari company using a sample of 444 people aged between 18 and 24, the study shows 76% of interviewees believing that leaving Greece would be the best response to the effects of the economic crisis.

But they’re not doing it:

However, for most of them, the idea of leaving appears a dream that cannot come true. Half of those interviewed (53%) spoke of having thought about emigrating, while just 17% said that they had resolved to leave the country and that they had already undertaken preparatory actions.

 

A slightly lower percentage (14%) stated that they were forcing themselves quite consciously to stay in Greece, as it is their generation that has to bring about the changes that the country so desperately needs.

And it’s not even like they have to return home should recent immigrants become jobless — after twelve months working in another European state, Europeans are generally entitled to welfare:

Who can claim benefits in the European Economic Area (EEA)?

You may be able to get benefits and other financial support if any of the following apply:

  • you’ve lived, worked or studied (a recognised career qualification) in an EEA country
  • you’re a stateless person or refugee and you live in an EEA country
  • you’re a dependant or the widow or widower of anyone who was covered by the regulations (your nationality doesn’t matter)
  • you’re the widow, widower or child of someone who worked in an EEA country and was not an EEA national or a stateless person or refugee (but you must be a national of that country)
  • you’re not an EEA or Swiss national but legally resident in the UK
  • you’ve lived in the EEA country long enough to qualify

Just twelve months of work separates a jobless young Greek and austerity-free arbeitslosengeld

Yet this isn’t just a Greek issue. Labour mobility is much lower in Europe than the US:

The fact that labour mobility is low in Europe is indicative of a fundamental problem. In any currency union or integrated economy it is necessary that there is enough mobility that people can emigrate from places where there is excess labour (the periphery) to places where labour is in short supply.

Now, there is free movement in Europe, which is an essential prerequisite to a currency union. But the people themselves don’t seem to care for utilising it.

Why? I can theorise a few potential reasons people wouldn’t want to move — displacement from friends and family, moving costs, local attachment.  Yet none of those reasons are inapplicable to the United States. However there are two reasons which do not apply in the United States — language barriers and national loyalty. It is those reasons, I would suggest, that are preventing Europe from really functioning as a single economy with a higher rate of labour mobility.

The people who built the Euro realised that such problems existed, but decided to adopt a cross-that-bridge-when-we-come-to-it approach:

I am sure the Euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created.

 

Romano Prodi, EU Commission President, December 2001

But long-term and deep-seated issues like language barriers and nationalistic sentiment cannot simply be eroded away in a day with an economic policy instrument. No bond-buying bazooka can smooth the underlying reality that Europe — unlike the United States — is not a single country.

Greeks who want to stay in the euro in the long run would do well to move to the core.