Thursday, June 24, 2010

The European Union was built by a process of piecemeal social engineering, indeed it is probably the most successful feat of social engineering in history. The architects recognized that perfection is unattainable. They set limited objectives and firm deadlines. They mobilized the political will for a small step forward, knowing full well that when it was accomplished its inadequacy would become apparent and require further steps. That is how the coal and steel community was gradually developed into the European Union, step by step.

George Soros
Humboldt University
Berlin, Germany
June 23, 2010

The full speech is absolutely worth reading. It is a great clarification of some aspects of the Euro's structure, and the situation surrounding it. I don't necessarily agree with Soros that deflation is a Bad Thing - of course, he does go on to say that the EU needs to invest into education and infrastructure, and mentions that the reason Germany is such a powerhouse in Europe is that it is a competitive, efficient country, and a lot of others aren't.

Labour efficiency is Estonia's next great target. The milestone we should be aiming for, now that we've achieved Euro entry, is a positive trade surplus. Currently, Estonia's IT sector creates and exports a huge amount of added value that cannot be properly reflected in financial statistics, because of the way the IT sector works - and the way that Estonian subsidiaries of foreign corporations work. IT will remain a core competence of Estonia's, and we should support it (the big thing there is an improvement in the quality of education), but to safeguard the economy, we need to make sure that Estonia retains and increases the actual production capacities it has. That is the long-term backbone of an economy.

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