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The euro needs Emily in Paris

The eurozone is prone to financial crises because, for political reasons, we are unwilling to redistribute surpluses. A European sense of identity could offer a solution. The Netflix show Emily in Paris leads the way.

Posted on August 29, 2021.

The excellent show Emily in Paris has been renewed by Netflix for a second season. For the uninitiated: the show follows Emily, an American woman who works in marketing. She moves to Paris as part of her job and soon takes the city by storm. Not only does she miraculously overcome every professional obstacle in her path, but her romantic life also flourishes. She consistently evokes that sense of barely hidden arousal we value so much in the French.

Some people have made fun of me for liking this show. They are wrong. There is something to this show that should give all Europeans pause.

The European identity

As you know, Paris is in Europe, not the United States. Emily’s culture shock is a big driver of the show’s — and I’m using this word generously here — plot. Two examples.

When a French coworker tells Emily that Europeans work to live, and Americans live to work, she simply replies: But I love my work.

At some point, she angers her boss so much that she gets fired. She is heartbroken, so her colleagues come to console her. They explain that she should not worry: you cannot be fired without a good reason. Just lay low for a while, then pick up where you left off. This isn’t America.

And that is the point. By contrasting it with American culture, Emily in Paris implicitly sketches a European culture. I would summarize it as follows: at its best, Europe is the continent of the good life. Here, ordinary citizens are treated with a certain respect and dignity. Here, high material wealth is combined with the enjoyment of life.

One aspect of this enjoyment of life is a great number of personal rights. Of course we have the classics: freedom of speech and religion, liberal democracy, rule of law — you name it. Moreover, a European is not surprised by swearing on tv, by women working, and increasingly, also not by same-sex couples. This respect for individual citizens may sometimes be contested, but Europe seems to be ahead of the pack in this area. Is it any surprise that the toughest privacy regulation in the world is made in Europe?

The other aspect of the enjoyment of life is that European governments protect their citizens against the worst that life can offer. If you fall ill, you can count on state-sponsored healthcare. Your employer cannot simply exploit you, and if you lose your job, you don’t immediately fall into poverty. Inequality is kept relatively low, so everyone can enjoy a weekend or a pension.

Like I said, this would be Europe at its best. Of course, not all of the above applies everywhere all the time, and that’s putting it mildly. But that nuance is unnecessary when it comes to forging an identity. Americans may believe their country is meritocratic, but it is easy to see that that is a lie. (Remember that Donald Trump was their president.) The point is that a shared set of values can forge an identity, a we. It does not truly matter if those ideas about ourselves are true, as long as we believe them to be true. And if we Europeans really believe there is something that binds us together, that we are on the same team, then perhaps we can muster the solidarity that our common currency needs.

The need for redistribution

Let’s elaborate on that last point. In the Netherlands for instance, people pay different amounts of taxes. This is not unreasonable: I for one would not like every citizen to pay exactly €18,000 in taxes per year, regardless of income. People also benefit from government expenses to different degrees. Here too absolute equality would be weird to enforce: Did you not visit a hospital this year? Well, then we’ll just break one of your legs for you.

We therefore accept that different people make different net contributions to the collective. This holds between people, but also between regions. Not all provinces in the Netherlands are equally prosperous. Some are booming, some have been struggling for decades. Consequently, in some regions more taxes are collected than spent, while it is the other way round elsewhere. Money is continuously redistributed from the affluent regions to the poorer regions. This is not a big deal: we are all Dutch in the end. We feel connected by a shared language, culture, and history. Solidarity can be organized through this sense of identity.

That brings us to the euro. It has been remarked by many others before me that a major weakness of the common currency is the lack of solidarity between member states. Just like people and provinces, countries are not created equal. Some are, for whatever reason, a bit less competitive than others. This used to not be a big problem. Before the introduction of the euro, a country could depreciate its currency (which makes it sound like a more conscious choice than it sometimes was). This would make its exports more attractive to foreigners and imports less attractive to the country’s inhabitants. The result is an increase in demand, which boosts the country’s economy and keeps its trade deficit in check.

The euro has removed that option: now if your currency is too expensive for you, bad luck. The permanent shortfall in demand sends a country’s workforce to the unemployment line. The only way consumers, businesses, and the government can keep up living standards and reduce unemployment is by borrowing money to shore up demand. The rise in debt, public or private, makes the country vulnerable to financial crises. And a crisis in one eurozone country has the potential to spill over to others.

The obvious way to prevent such a rise in debt is by redistributing more money at the European level. That would first of all support the demand for goods produced by surplus countries without debt buildup — and let’s not forget, our jobs do depend on someone buying our stuff. Secondly, it allows for investments in struggling areas such as southern Italy. The good news is that the European Union’s pandemic recovery fund, Next Generation EU, does precisely this. The bad news is that it is temporary (at least, officially). The European Council only approved this redistribution out of solidarity with those hit hardest by the pandemic. Something more will have to happen before redistribution can be made permanent.

Alle Menschen werden Brüder

Economically, it would make sense to permanently redistribute wealth within a currency union. We do the same thing within the Netherlands: money is transferred, year after year, from the richest people and regions to the poorest. But we — and I do mean the Dutch in particular — seemingly cannot stomach such solidarity at the European level. Perhaps a shared sense of identity can make it palatable, like it does in the United States. Fortunately, Emily in Paris presents the main building blocks of that identity.

It really is an excellent show.