But the new international division of labor has changed all that If we stimulate consumer purchasing power here in Greece, we create jobs in Italy and Germany. Since we are members of the European Common Market and can't protect ourselves, our consumers buy Italian shoes of the best German cars, and cause a balance of payments problem for Greece. The United States has the same problem. For whatever reason, the product basket of American goods is not as appealing to the American consumer as the basket produced by Japan. Despite the steep devaluation of the dollar, the US trade deficit has not budged.
Perception is very important.
In Greece, we don't even think of buying an American radio or tape recorder. We look elsewhere, usually to Japan. To keep up today, a country would have to produce goods that not only have a domestic market, but an international market. Without minimal global economic coordination Keynesian stimulation is like banging your head against the waft. Europe as a whole recognizes this problem and realizes it must pull together to form an effective competitive unit, particularly in the new high-value added technologies.