Krugman: Polls show that Greek voters want to stay on the euro. But what does this tell us?

[pampango]

Not very much, I think — because I’m pretty sure that voters consistently want their currency to be strong. The advantages seem obvious, and there’s also an element of national pride; meanwhile, the difficulties created by an overvalued currency are obscure except to those directly engaged in exporting.

That’s an impressionistic view, but are there data? Well, searching iPoll doesn’t turn up very much, but here’s an interesting result from 1985, when the U.S. dollar was very strong — so strong that the G5 famously met at the Plaza Hotel to agree on a plan to push it down:



So if Greek voters oppose the idea of a new drachma that would surely be weak against the euro, they are just echoing the preferences of voters always and everywhere.

Now, that consistent preference may itself matter, just as the eternal popularity of the household metaphor for fiscal policy — voters always favor a balanced budget — is one reason Keynesian economics is so hard to apply. But I don’t think there’s much news in Greek sentiment in favor of keeping the euro.

http://krugman.blogs.nytimes.com/2015/06/20/voters-always-want-a-strong-currency/

Whether Greece stays with the euro or goes back to the drachma, if the decision is up to Greece, may be one of those issues where politicians have to decide whether you do what the people seem to want or what you as a politician/leader think is best.

[Erich Bloodaxe BSN]

1. I've always found the notion of 'strong' or 'weak' currencies intriguing.

I know the arguments in favour of keeping it weak - that when the dollar is weak, foreign tourism money flows in, exports go up, etc.

But I'd still rather the dollar be strong, too. So my family can better afford to travel, so we can buy (quality, expensive) foreign products that aren't available from US manufacturers. I don't really give a rat's about 'national pride'. I'd also like manufacturers to be focusing on the domestic market, rather than foreign markets, because that seems to tie in with better wages, so that people are buying your products. If you're focusing on exporting, you don't care whether people here have the money to buy your products, so there's even less pressure to pay better wages. And we can import more resources more cheaply when the dollar is strong, with which to actually do that manufacturing.

[Recursion]

2. And that was a very effective view 40 years ago

However, the realities of a global economy make it not work well at all. We want China's currency to be about 50% stronger than it is now. (That maybe a way to look at it: we don't want a weaker dollar so much as a stronger renminbi.)

[Erich Bloodaxe BSN]

4. If it's no longer effective, it's because multinationals have worked with governments to make it so.

It's not a consequence of 'nature', but the deliberate outcome of guided changes to trade policies. Guided specifically to lead us to where we are now, a point at which we may very shortly be bound by treaties that let corporations sue countries, and corporate lawyers decide who 'wins', and who owes money.

The 'global economy' is designed for the very wealthy and the corporations, not for the regular people who live in countries.

Breaking free of that sort of 'globalization' should be a top priority for us. We should instead be seeking 'fair trade', where we work to push wages up for workers around the world, slowly inflating poverty-stricken nations' currencies until their pay rates and standards of living are in line with ours. Our current set-up instead seeks to depress wages and standards of living around the world, in the name of corporate profit.

[Recursion]

3. It tells me voters rarely understand monetary theory

Without eurozone wide fiscal policy they have the fuzzy end of that lollipop.

[DanTex]

5. Yup. I would imagine that if you polled US citizens today, they would be in favor

of both a "strong Dollar" and also stopping China's currency manipulation, not realizing that the two are the opposite of each other.