History does not always proceed in straight lines. Whether they are dark tunnels to get out of quickly or safe highways to move on quickly. History, whether or not its creators are aware of it, also moves by hairpin bends. For turns that open suddenly and that place all the responsibilities of the guide on the traveller. Crossroads where the automatic transmission no longer works. Mantras and dogmas are not valid. Turns where, suddenly, it is necessary to rediscover capable pilots. If you want to avoid the worst.
The recent developments of the Greek debt crisis represent a significant non-linearity in the economic and political history of Europe and its single currency. Many certainties have been broken. First of all, the belief in the irreversibility of the euro, now called into question by the hypothesis of a "temporary" exit from the single currency by one of its participants. According to its supporters, a "time-out" from the single currency could be necessary for Greece to return to growth.
A bankrupt economy needs a devalued currency to give new impetus to growth. Those who support the "time-out" hypothesis say that in the historical experience of many countries this recipe has always worked. Is it really so? To get some idea about it, an interesting reference is that of the 2001-2 crisis in Argentina.
Towards the end of 2001, Argentina "came out" of parity with the dollar, recovering exchange rate flexibility. After five years, in 2007, Argentina's GDP returned to pre-crisis 2001-02 values, taking full advantage of a long rally in international commodities of which the South American country is a strong exporter. However, in the first year of the crisis, the implosion of Argentina's dollar-valued GDP corresponded to a fall of as much as two-thirds.
Between 2008 and today, remaining in the euro, Greek GDP has already decreased by a quarter, from 240 to 180 billion. If Greece now left the single currency and the Argentinian proportions were valid for it, the Greek gross product valued in euros at current prices could fall by a further two-thirds in a year. From 13 to 2015 billion. Sixty billion is the GDP of an Italian region the size of Puglia. But the Apulians are only four million, against the eleven million Greeks.
If the numbers of the Argentine crisis hold true, there is the risk that, after a year of "time-out" of the single currency, the per capita GDP in euro of a Greek will be reduced to a tenth of the average per capita of each of the eighty million Germans. For the Greeks, this could be the price to pay to be competitive again. But it would also be a dangerous and probably intolerable turning point in the direction of increasing economic and social inequalities in the common European home.
Inequalities that would fuel distrust such as migratory flows between the south and north of the continent. Post not to proceed, after the time-out of the currency, also to that of the passports. A very dangerous crossroads is the one that Europe, and not just Greece, found itself facing on the evening of Sunday 12 July. It was better to have decided not to take the currency "time-out" route.
Better to choose other ways to achieve growth and reforms together. Also because the ancient world of thaumaturgical devaluations and development driven only by exports is no longer what it is today, dominated by the secular stagnation of economies, even those we used to call emerging. A scenario that today asks everyone to find new internal growth engines that are economically and socially sustainable.
From the USA to China they teach us this. In the autumn of globalization, growth must be re-internalized. At the last corner, Europe chose not to go off the road. But, now, we need to clarify. The European project cannot stop at an “à la carte” euro or a little further. Time is to give us and future generations a future by working seriously on the economic and social growth of our continent.
