When I wrote two years ago that the eurozone resembled the Hindenburg approaching the docking mast at Lakehurst, New Jersey, euroskeptics cheered and only those committed to the worst features of europhilia suggested I had underestimated Europe's capacity for recovery.
Through gritted teeth, I am now forced to admit that the europhiles were right, at least in the short term. Disaster has not occurred, and in some places even some recovery has taken place. Nevertheless, this week's European elections give me an opportunity to suggest that even though the EU Hindenburg may have docked safely two years ago, its construction remains fundamentally unsound, and it does not represent a viable means of transportation in the long term.
The fundamental problem of the eurozone, and of the European
Union as a whole, is its cost structure, which is excessive at all levels of the political economy.
Before the increased competition produced by modern telecoms, this didn't matter much. Tariffs could be erected against disfavored American goods, while Japanese and Korean VCRs could be forced to clear customs at Poitiers (where, one gathers, efficiency and procedures hadn't improved much since the Black Prince decimated the flower of French cavalry there in 1356).
However, in a world where labor supply has been commoditized and supply chains snake through the poorer parts of Africa and Asia, Western countries need to supply truly heroic levels of technology, specialist manufacturing or service skill for many goods to remain competitive. More ...
Martin Hutchinson is the author of Great Conservatives (Academica Press, 2005) - details can be found on the website www.greatconservatives.com - and co-author with Professor Kevin Dowd of Alchemists of Loss (Wiley, 2010). Both are now available on Amazon.com, Great Conservatives only in a Kindle edition, Alchemists of Loss in both Kindle and print editions.
(Republished with permission from PrudentBear.com. Copyright 2005-14 David W Tice & Associates.)