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Q: Do the periphery nations have too high costs?

A: No, they have low productivity.

In the real world of business, those are essentially the same things.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Dec 14th, 2011 at 08:44:18 AM EST
[ Parent ]
But my point is that the same worker is more productive with better tools.

So, if the business is undercapitalised it can blame the worker and pay it less or blame itself and improve its capital and pay both itself and the worker more...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Wed Dec 14th, 2011 at 08:54:32 AM EST
[ Parent ]
Still, what matters most is that at the end of the day you must produce a product your customer wants, at a price he is ready to pay. Otherwise, he'll choose another supplier. That's why SAAB is going under, and good riddance.  

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Dec 14th, 2011 at 09:03:18 AM EST
[ Parent ]
What your consumer is prepared to pay depends on his income, which in turn depends on his government's employment, fiscal and currency policy.

If you want a currency union, you must be prepared to increase government deficits, increase employment and increase inflation until you do not run a current accounts surplus against other members of the currency union.

If you don't want to do that, then you don't want a currency union.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Dec 14th, 2011 at 10:00:36 AM EST
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