It’s not about making them “competitive”. This is a power play. The EU’s economy is the social market economy by treaty.
I mostly agree. First, though, it has to be sold on the purported benefits. Those are fiscal responsibility, immediately through German financial obligations, and longer-term through control of the other countries. So, in effect it is pan-European socialism by treaty, as you say.
However, without crunching authoritarian control, this arrangement will have the Germans footing the bill for the continued lackadaisical behavior of the debtor states. It will be a long-term unstable situation, but for different reasons. The Germans will eventually rebel against higher taxes; so will the Greeks, the Spaniards, and the Italians, and moreover, against taxes imposed from outside.