I’m generally in line with Martin Wolf’s thoughts on the eurozone and his criticisms of the German government, but while this is a great line I don’t think it’s analytically correct or helpful:
This is not a monetary union. It is far more like an empire.
It’s important to recall that countries are made of people. China’s policy of undervaluing its currency benefits Chinese factory owners, but it reduces living standards among Chinese farmers. The German government’s approach to the eurozone has the effect of creating a substantial undervaluation of German currency and overvaluation of Spanish and Italian currency. But it’s misleading to think of this as primarily a means by which Germany engaged in imperial exploitation of Spain and Italy. Domestic politics continues to be primary, and undervaluation of Germany’s exchange rate is a means by which German factory owners exploit German pensioners and schoolteachers. The consequences of this are terrible overall for Spain and Italy, but in some ways very convenient for certain classes of Spaniards and Italians. If you’re an Spanish member of parliament, wealthy landowner, doctor, or tenured professor then devaluation would sharply reduce your real income in order to solve an unemployment problem that doesn’t afflict you personally.
Since ultimately the populations of different countries end up represented by a single head of government, it becomes easy to identify individuals with the stances of their governments. But the systematic consequences of these policies can vary widely. When “America” and “Canada” were in a policy dispute over the Keystone XL pipeline, lots of Americans agreed with the “Canadian” pro-pipeline view and I assume a fair number of Canadians agreed with the “American” anti-pipeline view. It’s simply that the exigencies of politics brought Barack Obama into office here and Stephen Harper into office there.