There are many questions that I have about the Euro - when will I stop converting prices back into 'real' money? What were they thinking when the designed the Scandinavian section of the 2 Euro coin? In years to come, will we look back on its introduction as the dawn of a new era for Europe, or as an act of folly in an experiment gone wrong? Lately, however, the question that has been foremost in my mind is how much did it all cost?
In the media, the primary
approach to the Euro's introduction was concern about rising prices. Would
businesses use the confusion that accompanied its introduction as an opportunity
to push up prices? But doesn't that miss the point? It must have cost (this
figure is off the top of my head) hundreds of millions of Euros just to
introduce the bloody thing -
tills that to be changed
to handle dual currencies, vending machines changed to take different coinage,
accounts revised to a different currency and so on. Do people imagine that
companies can do all these things for free? The real cost of those changes
must be passed on to consumers in the end.
In other little ways,
prices have to change to accomodate the Euro. It costs companies if the
products they sell cost €5.37 and not £4.99, because it takes
staff longer to deal with the same number of transactions - and employees'
time is money after all.
One of the 'delights'
associated with the Euro's introduction were the government ads featuring
various celebrities informing us that the 'change is in your pockets'.
Unfortunately, the memory of such ads has not faded. Advertising time does
not come free - nor do billboards, or detailed booklets sent to every household.
But have you ever seen a figure for the total cost? Across the sea in Britain,
the debate about joining the single currency ebbs and flows, theoretical
costs and benefits are discussed but I have yet to hear anyone raise the
subject about the practical cost of introducing a new currency to a country
of 60 million people.
It is ironic indeed
that the Irish Minister for Consumer Affairs, Tom Kitt made frequent announcements
telling us that his department would be vigilant to ensure that consumers
were not ripped off because of the Euro, when the government had made a
decision which
could only cost consumers
and taxpayers money.
There may be a backlash for the very governments that introduced the Euro, however. Prior to the introduction, we were told that having a common currency would give greater price transparency for consumers because we could now see exactly what different goods cost in different places. Once again, however, that ignores the very real costs associated with living on a small island like Ireland, compared to an economic powerhouse like Germany, when it comes to transporting goods. But in one area, we can see exactly where we are being ripped off, and that is taxation. How much longer can a country keep its non-income tax rates out of synch with its partners in the Eurozone?
Another benefit proposed
was the ease with which we could now travel to other Eurozone countries
- no need now to go through the expensive and awkward process of converting
your currency prior to heading for France or Italy. One cannot argue with
that, but what about Irish people who wish to go on holidays to Britain
or America, or even buy goods from those countries?
To the outside world,
the Irish Punt effectively ceased to exist when we were locked into Monetary
Union with the other Eurozone currencies at a fixed exchange rate. The
Euro has not performed well against the Dollar or Sterling, falling below
the crucial psychological point of 1 Euro for 1 Dollar. Consequently, the
real value of every Irish punt (and subsequently Euro) that you own has
fallen, making it more expensive to buy anything from outside the Eurozone.
These things do not seem to bother the plain people of Ireland, however. Any unhappy feelings they have about the Euro are getting displaced onto businesses and banks, not onto the Single Currency project and the governments that signed up for it. It will take something bigger to do that, the failure of the great Euro experiment itself. In the words of renowned economist Milton Friedman, "you have locked yourselves together and thrown away the key." The consequences of such a failure would be devastating to Europe's economic health, and even if one thinks it may happen, one hopes that it will not.
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