...which would have created unemployment in its export sector, reducing German wealth production until the German economy adjusted.
Aren't we considering the counterfactual where Germany never entered the Euro and had it's currency dragged down by weaker nations? In that counterfactual, the currency appreciation would have been slow and there would have been plenty of time to adjust. So the unemployment effects would have been minimal.
So ultimately, all the Euro did was reduce German buying power and force Germans to work more.
So ultimately, all the Euro did was reduce German buying power and force Germans to work more.
ADBOC[0].It seems to me that it actually works out more like redistributive taxation than one might naively think from what you wrote. An artificially cheap currency means more manufacturing jobs at static wages more than the same number of people working more hours. It has very approximately similar effects to progressive taxation, or more accurately it acts as a subsidy to the German manufacturing sector.
I don't know (but doubt) if the German people would have signed up for this, but the possibility is stronger given that Germany is in the extremely unusual situation, for a developed country, of having a larger manufacturing sector than a services sector.
I don't think I actually disagree with you on any point.
Aren't we considering the counterfactual where Germany never entered the Euro and had it's currency dragged down by weaker nations? In that counterfactual, the currency appreciation would have been slow and there would have been plenty of time to adjust. So the unemployment effects would have been minimal.
So ultimately, all the Euro did was reduce German buying power and force Germans to work more.