Thesis: Greece has been left with no other choice but to leave EU
There has been no single day when I do not find articles regarding Greece’s financial crisis from media since January, 2015. Greece has been brining spectacular events including ECB’s bailout, Greece’s appeal to ECB, and the Greek Financial minister’s letter to ECB that promised for the future reforms of Greece. Despite all the efforts made, what has been proven is that Greece is unable to overcome the financial crisis on its own. Neither does it appear to have willpower to confront crisis as Greece keeps on indirectly threatening to withdraw EU if Germany does not lend extra money. It seems that Greece is deteriorating the whole economy condition of EU by contributing to devaluating Euro. Now Greece should see the reality and be prepared to leave EU.
The European Union tried to equalize 27 heterogeneous countries, with different value systems, work ethics, factor endowments, dogmas, languages, and objectives in life. Of course, nothing of this has happened, and the cost of integration has exceeded the benefits for the Europeans. Citizens have lost their jobs due to competition from the other country-members and from other foreign nations with which the European Union has signed free-trade agreements. Prices have increased because of the common market, goods are moving to markets with higher income and prices—to attract them you have to pay the same high prices, which is impossible for Greece because income there is lower compared to the wealthy manufacturing EU members of the North (U.S News).
Maurice McTigue, Vice President of the Mercatus Center at George Mason University, also argues that Greece’s irresponsible fiscal behavior leading up to the Great Recession caused its current problems, not the recession itself. The recession simply made abundantly transparent what insiders knew, but were unwilling to accept: Greece’s fiscal behavior was unsustainable. Greece is now at a point where it only makes economic sense that they either leave voluntarily or have the European Union expel them.
Greece is at the verge of default and might have to exit the euro zone sooner or later. Then Greece would have to print its own currency, which is drachma, but this measure is likely to cause economic and financial chaos in the nation. In the long term, however, Greece would see some benefits to be gained from its weak currency that is the missing link in allowing the country to pull out of its debt deflationary spiral (WSJ).
P.S) I learned a lot from this class, especially about the world economy and the U.S economy. I would like to thank Professor. Kimball and Adam for having run such a great class.