Having a larger internal market provides exchange rate stability, economies of scale and opportunities for innovation and development that smaller fragmented markets simply don't have.  So there are structural benefits to being part of a larger Eurozone which can be somewhat offset by the imbalances that uneven development, asynchronous shocks, and uncoordinated Government fiscal policies can create.  

Deflation is much more painful than devaluation but the impact on comparative competitiveness can be similar.  Countries which habitually inflate also tend to habitually devalue and vice versa.  The German strategy of export led growth can only be replicated across the Eurozone if the Eurozone, collectively, improves its competitive position Vis a vis the US, China etc.

Globalisation implies that, ultimately, we are all competing with China in productivity, wage rates, "flexibility", workers rights, and perhaps even with human rights, but I remain convinced that long term, good human rights are a prerequisite to ongoing growth and development.

The challenge for Europe is to show that relatively good human rights, workers rights, political democracy, ecological responsibility, gender equality, and income equality are not only compatible with higher aggregate incomes and wealth, but perhaps a prerequisite for them.  Certainly they lead to a quality of life that cannot be measured in economic terms alone.

Europe arguably has the highest average quality of life in the world today.  To the neo-libs this is a worrying anomaly to be challenged and dissed and propagandised negatively at every opportunity.  Our challenge is to develop an alternative narrative and paradigm which shows that it is in fact the logical outcome of more equal, fairer, and more sustainable policies and systems.

Yes, we are competing with China and the USA.  Just not on their terms.

notes from no w here