Suppose that the proposed changes in the Social Security Contribution are a success, namely, that prices go down, investment goes up, unemployment goes down and global external competitiveness increases, all by large margins. Portugal would provide a new view for economic policy for the whole world, and fully confirm the theoretical approaches developed in the last decade or so. We would have visits from economists and politicians to study locally the phenomenon. But... If that happens, what would stop Spain from taking the same measure? And then France, and then Italy... Maybe the final outcome would be some sort of European wage union, replicating the euro, which was created, among other things, to stop competitive devaluations... The fact that no one is really worried about this form of competitive devaluation, however, may be a good indicator of its potential.
Source | The Portuguese Economy | http://theportugueseeconomy.blogspot.com/2012/09/thou-shalt-not-beggar-thy-neighbour.html
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