UNASUR should create a single currency
Unasur is the stronguest Union of South American nations.
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A single currency will help South America to have a complete integration.
A single currency will make a stronger union because the unification of the currency allows a bigger process of integration of the states so when a member decides to leave the union is not as easy as they could if there was not a single currency because of the difficulties of changing currency. A bigger process of integration between south american nations will make it the fourth economy in the world, because the UNASUR members consolidate GDP is the fourth but having a single currency could increase the GDP and push South America as an economic great power of the world and that will contribute to reduce assymmetriers between states and more important between the rich and the poor. For example Eu has increased the level of integration due to the change to a single Currency. It allows its member to have an unique policy based on the circulation of money, wich is one of the most important issue in a society. This signifies, the presence of a same point that will be the begin of other important discussions. We can see now, how this union is stronger and not only implicates economic topics: An example is the desire of create a common cultural, educational and defense policy,. Certainly the single currency has helped those countries to explore other ways of integration. We have to consider too that our countries in unasur has a regular developement and growth level, fact that is importat to consider because we will not hace the current problems they have in europe because of the euro.
Alas Prop used their first phase for this point where they advance 3 statements with little or no evidentiary support and one preemptive rebuttal.
They state that a single currency will make it harder for a country to leave UNASUR. They don't explain why this is a good thing. There's hardly any benefit for a country to remain trapped in an organization it wants to leave. Besides, countries could want to participate in UNASUR and not be a part of the single currency scheme, just like the UK is part of the EU commercially and politically but not the Euro (and its current crisis).
Second, they talk about being the 4th economy in the world by the GDP. This may be so, but they didn't explain how is a single currency going to increase each country's GDP growth rate. However, the truth is assymetries between the rich and the poor are not affected at all by single currencies. Inequalities still exist in the EU and between countries (income of Germans and Dutchs is 5 times Romanians and Bulgarians income [[http://bit.ly/ghSm80]]), and we'll challenge prop to prove that wouldn't happen in UNASUR and if this is so, how this could be fair to countries like Chile, Colombia and Brazil that have set the example in economic policies, to lose their advantage to countries that behaved irresponsibly.
They also say that UNASUR countries have a regular development and growth level, but in fact the opposite is true. Latin America has experienced lower levels of growth and have stagnated in comparison to its peers in Developed countries (this includes the EU) and Asian countries [[http://bit.ly/nhzzRh]]. So setbacks are even more probable in Latin America than in Europe.
Prop misses they point on European Integration. They integrated militarily in 1949 (NATO), educationaly in 1987 (ERASMUS), there's Schengen (1985), culturaly they speak romance and germanic languages, christianity. But the Euro came in 1999. Integration led to a single currency and not the other way around.
A single currency brings interdependency between the countries that contributes to peace in the continent.
First we must see that that having a single currency and therefore a monetary policy united, facilitations in the commerce and more relations among; brings an interdependency of countries part of UNASUR, So these countries and more important their political representatives in order to don't affect their economies will rather to have better and peaceful relationships with the others political representatives to ovoid an affectations to their own countries, so it gives them stronger reasons to consider starting a conflict or even having conflicts, taking into a count that they are interdependent and they need to have consents; in opposition to the case where each country has individual objectives, and doesn't depend from other in these strong way, because let's remember that the level of integrating in these cases in higher. In this order contributing to the peace of the continent. Let's remember the beginnings of EU [[http://europa.eu/about-eu/eu-history/1945-1959/index_en.htm]] in order to have consensus about crucial points of discussion, so in order to avoid conflicts, and have cooperation and integration between the countries in a peaceful environment. And it was just the beginning with lower levels of integration; so in these types of integrations that involve more dependence and conciliation among the countries to conquer the benefits of all, peace can last in time. And in the case that differences appear countries will try to solve them in a peaceful way because they all depend on the other.
Prop. is assigning some magical powers to a SC. Having one currency won't do for different countries what it has never managed to do for one single country. If it could civil wars would occur, and of course, all fractions involved in a civil conflict have a SC. We'll talk about what really creates economic growth and peace in another point.
We agree that, to some leaders, the interdependency forced by a SC might weight in the reasons-not-to-declare-war column. But let's look at the two possibilities in the leader-decides-war-should-be-declared scenario: if she is sane, she'll think about the negatives, economical, political, etc and will balance them with the Casus Belli.For example that another country has invaded her's with an army and has attacked citizens. In this case, if we were citizens in that country we would say: "To hell with our SC, they attacked us!". If the leader is crazy she'll declare war for insane reasons and a SC won't deter her.
It's not true that the origins of the EU coincide with the peace in the reason. Europe decoded not to engage in conflict after WWII. We refer prop to our rebuttal of their first point where we explain the correct order of events.
A single currency contributes to social and cultural integration that contributes to peace in the region.
Is important to see the impact that this measure has in the citizens of these countries, and it contributes to peace giving the fact that decreases possible differents or conflicts, because it creates an environment of identity, sense of ownership, sense of brotherhood in the southamericans, because a single currency is a unity symbol, a representation of a people; and in the other hand that gives citizens from all countries more facility to move among South America and have contact with the people from those places, giving the fact that they would not have to change money when travelling and would encounter less red tape when transferring large sums of money across borders; so it will contribute to cultural and social integration; as a fact of the previous affirmation it happen in the UE, where they feel referent as Europeans in certain part because of the EURO; and as it was established by the Commission to the European Parliament, the Council, The European Economic and Social Committee, The Committee of the Regions and the European Central Bank [[http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0238:FIN:EN:PDF]]:
"The single currency has become a symbol of Europe, considered by euro-area citizens to be amongst the most positive results of European integration together with the achievement of free movement within the EU and peace in Europe".
1st, a SC does is in no way a representation of a people and we refer you to our accountability point.
They say that a SC should be implemented because then people would feel united and that would contribute w peace. We applaud unity between S Americans! But let's analise the impact of a SC in achieving unity. The example of the UK as a Schengen member of the EU proves that what freedom of movement is what creates unity in the EU. So there can be free movement without a SC (Schengen even precedes the Euro) and unity without a SC. Also, there is no freedom of movement in S America. Sadly, Colombians need (and many times don't get) a Visa for Venezuela, amongst other instances. There is also no freedom of movement in their model. They are jumping from the motion, about SC to freedom of movement, just out of nowhere. But even if they had proposed it, they should prove why freedom of movement couldn't be enough to create unity and as they say, create
We are sure that if prop would have thought about it for a minute, they wouldn't have quoted the same body responsible for the Euro, saying the Euro is a good thing. Of course they like the Euro! We don't and we have given reasons, not yet answered by prop, which has done litte more than defend integration when they should have given us benefits that are unique to a SC and supported them with facts. In any case, even the people whose jobs depend on the succes of the SC agree that peace and free movement are viewed as equally important. Lastly what the quote says is that the Euro is viewed favorably. But the statement is from 2008! We believe that people may have a different view. But even if they don't, aren't we supposed to ignore what is popular in favor of what is proven to be good?
A Single currency defeats the purpose of fiscal responsability
Let's look at what recently happened with Greece and the subsequent bailout by the Germans, but in the perspective of both stakeholders. If you are a German citizen, you've had it hard: you've paid taxes, worked hard all your life, retired late, [[http://ind.pn/bui6E7]] elected only officials that wouldn't drag your country into debt. And then your government decided, in order to ensure the continuation of a common currency, to bailout a government who wasn't been as wise. We believe that to be the ultimate injustice. And german citizens should decry those actions.
From the point of view of the Greeks let's look into the future. You had a crisis, a moment of being unsure. Now you know that you aren't alone and since your mistakes affect other nations they will try to save you to save themselves. So the current government complies with what the EU wants you to do. But nothing has change in the mentality of your citizens.[[http://ind.pn/bui6E7]] They will still ask for governmental money and will vote for those that shower them with it. If you had gotten to the depth of the crisis, the citizens would have the experience of what happens when public spending is irresponsible. And a change of thinking would occur.
Some Unasur members manage their economies responsibly and others don't. Chile, Colombia and Brazil, just to mention a few, lowered their inflation rates and control government expenditures. However, other countries like Argentina and Venezuela behave in the opposite way. If they all share the same currency, the misbehaving countries would have even more incentives to act improperly because others will pay for the actions. If the currency loses value, all will suffer the consequences (even those that acted responsibly). Furthemore, if abuses are to extreme crises could put in jeopardy the economies of all the members, like Greece and Ireland in the EU.
The opposition tells us that there are more responsible countries with increasing their economies than others, and they give us as an example Colombia, Chile and Brazil; and they affirm that these countries should not support the economical problems from other countries because they are more responsible. We have to say that they are making a wrong generalization when they affirm that the cause of the lack of increase on the economies of other countries is because they are not responsible, there could be other causes in each particular countries that makes the improvement of their economy a little bit harder, so there could be another causes that makes it more difficult such as geographic causes in the case of Bolivia, that is in desventage giving the fact that do not have direct access to the ocean, for examples, or countries like Argentina[[http://www.indexmundi.com/argentina/gdp_real_growth_rate.html]]
that deserve the consideration of the strong economic crisis it suffered between 1998-2002, and that keeps trying to overcome. And even if other countries haven't been able to have efficient measurements to improve their economies, this is the point that we want to defend, that in fact one of the objectives and reason that inspired the countries of UNASUR was that they will have common purposes, such as “advance sustainable development and welfare of our peoples and to help solve the problems that still afflict the region, such as poverty, exclusion and persistent social inequality”[[http://www.comunidadandina.org/unasur/tratado_constitutivo.htm]]; also try to stop depending from other countries and solve of their problems with this union. So is not injustice that countries with better economies help the others, because this is one of the things that would have to be done to accomplish these common objectives that concert the entire region, this integration process implies common values and no an scenery where each country has an individual finality.
A single currency doesn't satisfy every country's need: loss of flexibility.
A unique monetary policy does not benefit all members all the time. Lets talk about External shocks: these are changes outside your monetary union, for example a crisis in another continent. A paper published in the National Bureau for Economic Research:
This si very relevant to UNASUR because many member states produce mostly commodities. Two examples are Venezuela (oil producer) and Chile (copper producer). When commodity prices go high, countries that export these commodities would not like an expansive monetary policy because the economy could go beyond the production capacities of these countries, this would mean a rise of prices without a rise in production. In the other hand, countries that import these commodities (say Argentina) would need a boost to be able to pay the new prices and, therefore, they will need and expansive policy.
To illustrate: if the price of oil goes up, Venezuela would want to maximize the amount of Bolívares per Petrodollars by devaluating the currency thus having more money for expansive public expenditures. But for Honduras, that imports oil, a better policy is to let their currency apreciate so their citizens can use their salaries to buy gasoline and pay for heat. In conclusion, no monetary policy will satisfy all the members. Some will always lose in the process.
They said that a single currency doesn't satisfy every country's need; because does not benefit all members all the time; and they refer to the especific case of uncombenient for the different original products from some countries.
We want to remember that UNASUR, is an organization that has colective objetives and in these case a sinlge currency will beneficit this countries they talk us about in a long term, because as their principal product is a certaind one, they need that the offer has a demand, and that demand (other countries from South America) can not responde if continues in that undevelopment state, so this process of a single currency has a clear porpuse and it is to reduce the undevelop levels of the countries that has weak economies, and solve problems that afflict the region, such as poverty, exclusion and persistent social inequality; because this wants a fortalecimiento of the economies, from the facility of the international commerce and the markets of every country; for example: This measure try to put end to internal currency instability and a reduction of external currency instability would enable exporters to project future markets with greater certainty. This will unleash a greater potential for growth; ass the BBC express[[http://news.bbc.co.uk/2/hi/special_report/single_currency/66473.stm]]. A fact of the previous afirmation its that in EU: "single monetary policy combined with national
but coordinated fiscal policies has fostered macroeconomic stability" [[http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0238:FIN:EN:PDF]]
UNASUR is not accountable to the people:
The Prop team did not define how would the single currency be administered so we'll asume Prop meant UNASUR should define its monetary policy.
Now, we love UNASUR as a forum where heads of state meet to talk things over. It's all very win-win, since decisions come from a consensus. Unfortunately, consensus takes a lot of time. Like it happened when electing the first Secretary General: "While key social and economic issues have not yet been considered, decision by consensus has already proven a challenge by delaying the selection of the first Secretary General of UNASUR. " [[http://1.usa.gov/qH59t3]]
Countries define their monetary policy through their central banks (as opposed to parliaments or other political councils) because those are the kind of decisions that can't be delayed. To be efficient, UNASUR would end up establishing its own central banking authority and taking measures without the need for consensus.
We are very opposed to the notion of democratic nations ceding binding powers to an undemocratic entity. The secretary general is elected by heads of state, and the presidency pro tempore is exercised by national heads of state in one year turns, instead of being elected by people.
Furthermore, the South American Parliament and its attributions haven't been defined yet, so no elected parliament either. But even if the parliament were defined, elected and convened; it may end up being nothing but a ceremonial waste of money. This has been the case with previous South American multilateral bodies such as Mercosur and the Andean Community, whose parliaments aren't meant to scrutinize authorities, appoint officials or enact legislation, but rather to approve self congratulatory resolutions, and issue non consequential opinions on international matters.
1. In this point, the affirm that UNASUR for the implementation of this single currency will create a central bank, that will be conform by members elected by nation heads of the states and not by the citizens of the countries part of UNASUR, so they don't agree that democratic nations should leave this function to an undemocratic entity. But they don't explain us why is not problematic, and we must remember that in a democracy no all organs, institutions and public servers are elected by the citizens, in fact in these cases concerning monetary policy is a function of the nations heads and the executive in order to make these process more efficient, in these case we must remember that in the EU [[http://www.ecb.int/ecb/html/indexen.html]] this was he system, and nowadays it works like the Commission to the European Parliament, the Council, The European Economic and Social Committee, The Committee of the Regions and the European Central Bank show us. [[http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0238:FIN:EN:PDF]] . Also we must say that this organ not necessarily will be a wasted of money because others in the past haven't done they labor; as we could see in the EU the central black works, and we must have a stronger system to control the fulfillment of the functions, and this is a very important labor so the states will be more committed with this regulation, because it will be supply one of their important labor in their countries, that is defining the monetary policy.
All the countries in the same basket is very dangerous for all citizents
Prop acknowledged on their first point "the current problems they have in europe because of the euro". They gave a reason why this wouldn't happen in UNASUR and we explained that not only it could happen, but it's even more likely to happen.
So if a generalized sinking of the economy would happen the consequences would affect the whole of the continent. This is obvious but this would also mean that people from Argentina woudn't have a spanish speaking, Carlos Gardel-loving, steak eating, telenovela-watching , petrodollar rich country like Venezuela as they had when there was a crisis in the 80's and they came in droves to this country. All countries would be in the same basket.
All countries will be in the “same basket” economically, that might have bad consequences but also might have a lot of good consequences (more good consequences than bad consequences). For example, if all the countries are emerge into a only currency, the next logical step will be having no migratory boundaries for the South American citizens and also some of the conditions of equity and inequity might change for good in some counties, so all the countries in the same basket is not a bad thing.
A single currency to integration is like twigs to a house: you could build walls for a house with them, but its not the only or the best way.
This point is about balancing the possible benefits and the potencial harms of implementing a SC. It's very important to consider that, when in the balance, the dangers are greater than the benefits, you should consider other ways to get what you want. Prop has given us some benefits like social integration and cultural integration. We definitely agree that a SC may provide a feeling of unity, but at a terrible cost. We believe that 1st, there're treaties that take care of those integration needs and secondly we are in favor that social and cultural treaties could be agreed upon. These treaties can achieve it and they don't have the terrible consequences that a body not elected by the people could choose to bailout the govs in UNASUR that aren't responsible.
In the same order of ideas we would remind Prop that not having an access to the sea hasn't stopped switzerland and Austria from having prosperity and that Bolivia has engaged in irresponsible spending, which if stopped would greatly improve it's situation.
In their rebuttal they quote the BBC as saying
and first we want to point out the collolary is first, not part of their model and not a feasible feat in S America and 2nd, again, the evidence is from 2008.
The debate dealt with mainly 3 issues
== What's the best way to create closer cultural, social and commercial ties among UNASUR members? ==
Props case can be summarized as: A single currency will bring closer cultural, social and commercial integration among UNASUR member nations. They see monetary union as a means of further integration, since they didn't focus on any of the things unique to monetary policy (inflation, interest, etc). Instead they tried to convince the audience that the Euro (1999) is responsible for much of the integration in other areas, when it fact that other integration mostly preceded the Euro, beginning after WWII, and depends on different European treaties.
We believe that the best way to achieve cultural, social and commercial integration is signing treaties in those specific areas, just like Europe did. Things like college credit units portability, student exchange programs, a common market, free movement of people, etc. are feasible now. The UK and Sweden prove that countries can participate in major integration efforts without adopting a single currency.
== Is a single currency beneficial for all members? ==
In the 1st yes point, we explained how single currencies encourage fiscal irresponsibility: Germans got the message that if you don't spend your money, someone else will; and Greeks got that if their public spending gets out of control, they can always count on someone else's public spending. Prop answered that well off countries should help the weaker economies develop. But there's hardly going to be any benefit in encouraging South American countries to be more like Greece and less like Germany,
In our 2nd point we showed how the same event calls for opposite policies in UNASUR countries. When oil prices are up Venezuela and Ecuador will want contractionary policies, and Uruguay and Paraguay will want expansionary policies, whatever UNASUR does will be suboptimal. Prop says that in the long term countries can benefit from a stable internal and external exchange rate, that will help them better predict the market. Even though the Euro inherited the credibility of the Deutsche Mark, it is increasingly being judged on the performance of Portugal, Italy, Greece and Spain. There's not much stability for the future if that is what investors will be using as reference.
Finally, it is better to see yet another Argentinian crisis, than finding ourselves in an all out South American "Crack".
== Should UNASUR be in charge of monetary policy? ==
Consent of the governed is a major theme in defining a just form of govenment. People give their consent to national governments, through elections, and so they have legitimacy to conduct monetary policy. National governments have the ability to disscuss with other nations and reach consensus, but not the ability to give up decision making power to an institution that lacks the consent of the governed and thus the legitimacy to make such decisions.
What do you think?