Because if you do not become better and your neighbor does, then the currency will appreciate (or depreciate too slowly for you, which comes to the same thing). It does not matter what sector of industry your neighbor is in: The private sector will, under a floating currency regime, be competing for a (from the point of view of the individual export firm) fixed export revenue set by the volume of imports. If your productivity drops, then someone else can grab your share of the export revenues.

Of course, the entire society could, in principle, decide that they want to not work so hard and just import less instead. But why is that not an acceptable policy decision? Sucks to be a rentier under that policy, but fuck the rentiers.

- Jake

Friends come and go. Enemies accumulate.