“They’re Bust. Admit It.”

The fiscal state of things in Europe is far from stable. With the recent resignation of Portugal’s Prime Minister, Jose Socrates, the Portuguese economy is on a fast downward spiral. Greece and Ireland are not in any better conditions economically themselves. These nations are considered in the worst economic state in Europe. European officials from various nations met on March 24^th-25^th. They set many goals to “rescue” any and all nations from their economic plight by the year 2013. However, the delay in their plan is said to come from many of the nation’s own leaders. For example, Angela Merkel (German Chancellor) refused to give the money to the “rescue plan” that her finance minister had pledged to the 2013 plan. Due to these nations failing economies, investors refuse to pour their money into Greek, Irish, and Portuguese economies that seem to be failing faster and faster each day.

I chose this article because I think it is a good example of how command economies in Europe are very difficult to keep successful and effective. Both Greece’s and Ireland’s governments have stepped in and tried to make drastic reforms to their failing economies. Both nations’ governments have tried to implement budget cuts. Portugal has tried to tighten their fiscal policies, hoping to bridge the gap that their debt has seemed to stem from. Our textbook defines a command economy as economies in which the government makes all important decisions about production and distribution. In Europe, a command economy is difficult to uphold because of most of the European nations being on the Euro, unifing their currency, and in turn causing many different hands to take control in each nation’s economic policies.

In the case of Greece, Ireland, and Portugal, the European Union cannot have their (Greece, Ireland, and Portugal) massive debt be present the overall European economy. Because of this stance by the European Union, they want to give these failing economies a quick fix, despite the crippling effects these fixes will have on any future potential growth of these three economies. Most economists have attributed the economic difficulties found in these nations to mistakes that occurred in Brussels (which is understandable considering Belgium has not had a standing government for over 290 days), Frankfurt and Berlin.

Europe has set up a bizarre command economy within their Union. The European Union in a way acts as the “government” that is supposed to be regulating. This causes problems when individual nations’ economies fail, as opposed to just a single market failing (the latter would be the situation in a true command economy). I think that the European Union should seriously consider re-organizing. Clearly this method of a skewed command economy is not working out. Most economies today are mixed, in fact, most economies within individual European nations are probably mixed, so to have them all answer to the European Union does not make much sense. The line between micro and macro economics has been seriously blurred, combining expectations of the nation with those of the European Union. If the European community would focus more on the growth of their markets as opposed to the wealth (or lack there of) of each individual nation, then they might be in a much happier financial place.

http://www.economist.com/node/18485985