Maybe it is, maybe it isn't. But the one thing that is sure is that their previous model didn't work. Everybody cheated the state. The state itself cheated and lied to the EU.
And it ended up with Greece defaulting on its public debt.
It may be yet another disaster but let's not downplay what created an actual disaster.
>It may be yet another disaster but let's not downplay what created an actual disaster
What created the "actual disaster" is a totally different set of events, to go into here, but the start is the gradual de-inudstrialization through EU imposed mandates and "five year plans", imposed across the periphery, for the benefit of German and (to a lesser degree) French exports.
The EU development was akin to putting two dozen of sardines or so into a tank along with a couple of sharks and hopping for the best. Oh, and they all get their vote so it's all democratic, who cares if the shardines can be unilaterally economically and politically bullied to vote in favor of the shark'?
Hasn’t Germany deindustrialized itself? I heard that Bayer moved manufacturing out to China as they were worried that they wouldn’t have enough power during the previous winter.
That pain is coming in earnest next year. Ukraine is still transiting Russian gas to the EU, but the deal is expiring at the end of this year. Germany will deindustrialize much more in the next few years until they turn on the only intact Nord Stream 2 gas pipeline
Nah. That is due to US bombing Nordstream pipelines and Germany having no plan-B on emergy dependency.
The real problem is Germany got a very comfortable market within EU by bullying all the Southern Europe into submission (even France!) and killing their production. This got German companies complacent. Their auto industry is dying a slow death and all they do is more protectionist regulations. Stuff like dieselgate is a direct result of this.
Flogging an aging population is only going to cause the small amount of talent you have to leave.
The same thing happens with companies - good people have options, crappy people don’t. If you make the conditions worse the good people leave and you get stuck with a bunch of dead weight.
And while it’s true that “the previous model didn’t work” that’s not justification for making another terrible decision - bad decisions are net negative, unlimited in magnitude and numerous, so sticking with a broken model while you come up with a better plan is better than taking an enormous step downwards
Drastic, but if you literally cannot pay your labor, maybe a country that can annex you can.
If it's not that drastic yet, you attract more bees with honey instead of smoke. Apparently a big problem is that Greece is a great tourist spot but awful to live in. So change that. You can make a stricter tax regime to make sure people pay, but the first step to recovering is making sude your labor can love in your country to begin with.
As I said in my response - Even if one doesn't have an ideal answer, the next best thing is to keep searching for a good solution - rather than make an immediate terrible decision that is going to cause all of your best talent to leave - In this case even doing nothing is a better option than doing something terrible.
Like what is their thought process? "We have to DO something, so lets do something destructive" ? It's moronic.
You're parroting the EU Commission/IMF/ECB line, and not looking at it any deeper.
The Greek economy wasn't good enough to join the Euro, but the EU wanted them in anyway, and pretended to not notice. Why? Probably because German banks lobbied the German government, because joining the common currency meant a lot of security, and the German banks could loan to them knowing if the debts go bad, the ECB/other Euro economies would have to bail them out, i.e. it's "privatize the wins, socialize the losses" for the banks.
So Greece joined the Euro, all the banks offered loans, the Greeks all thought "Wahey, booming economy, let's spend, spend, spend!" (and don't say "Those greedy lazy Greeks!", this is a natural reaction, just look at the subprime mortgage times of the US before it blew up and almost brought down the world economy), and when it all went bad, the German government fought hard to bail them out (with EU taxpayer money) because it was bailing out German banks, despite them offering irresponsible loans.
The Greek Syriza government and Yanis Varoufakis fought hard against the measures, e.g. austerity (proven to be bullshit, just look at Tory Britain), wanting a loan haircut to punish the irresponsible banks and the bureaucrats in Brussels preferred a government that would just take their "punishment" quietly...
It was funnier when Cyprus also had a crisis. Their banks had a lot of Russian money, so it was Brussels bailing out rich Russians with EU taxpayer money.
Great comment, excellent retelling of the historical event. If you want to see what the alternative looks like, look what Iceland did to its banks during their banking crises. Icelandic depositors had priority claims, haircuts for everyone else (in opposition to intense pressure for Iceland to make foreign investors and depositors whole).
Importantly, notice near the end of the Wikipedia article an about how it talks about using currency devaluations for economic recovery versus labor policies and negotiations (ie austerity). This isn’t possible in the EU due to their shared currency. A monetary union binds.
Yeah, I read a lot/too much about the crisis when it was going on... a monetary union without a fiscal union was just/is trouble, because every bailout had to be voted in by 28 national parliaments. The US states have a fiscal union so "bailouts" of states in deficit happen quietly and automatically, and federal benefits for citizens are guaranteed.
And indeed, having one's own currency means there's a natural way to recover the economy without pissing off many of the locals, if your currency devalues (e.g. compared to USD), your labor is now cheaper (in USD), and your countries products can be sold for cheaper. The Euro was very beneficial to Germany because it could continue growing without making its currency go up in value relative to other European ones and making its products less affordable. But it messed up a lot of other European countries...
This is like saying 2008 crash was because of the people defaulted on their mortgages, not because of the banks getting greedy and pushing bad loans that they knew is not payable. Same stuff happened with German banks and Greece. One difference is that in this case the German banks sent their political muscle (the Troika) put a bullet in the knee-cap to extract the loan with interest. Now people need to work for 6 days a week. What a world.
Pity that the article doesn't discuss the effect of the reform on the informal economy. To me, this (or any) reform should bring more employment into the taxpaying, insured part of the economy, and whether it does what it IMO should is an important thing to discuss.
I don't always agree with the Jacobin but I absolutely agree with them about this policy change.
It's just window dressing while the underlying issues around professionalizing the Greek shadow economy remain.
Greece's low productivity continues to persist despite being a 6 day workweek, and it's not like Greece is trying to compete with ASEAN or India for low value manufacturing so the 6 day workweek doesn't make any sense.
Even Malaysia, Romania, Mexico, and Turkiye - countries with a similar median household income - tend to follow a 5 day workweek for businesses that are above-the-table
It seems Greece has absolutely regressed to developing country standards (or maybe it never actually developed despite the metrics)
Edit: Based on Greece's exports it's basically a petrostate - almost 40% of it's entire exports are ONG related. It seems that Greece's dependence on ONG exports and Shipping has severely skewed it's GDP per Capita ($20,000) compared to it's median household disposable income (~$10,000 [0])
24 comments
[ 1.9 ms ] story [ 57.0 ms ] threadAnd it ended up with Greece defaulting on its public debt.
It may be yet another disaster but let's not downplay what created an actual disaster.
What created the "actual disaster" is a totally different set of events, to go into here, but the start is the gradual de-inudstrialization through EU imposed mandates and "five year plans", imposed across the periphery, for the benefit of German and (to a lesser degree) French exports.
This tells parts of the story going back:
https://www.taylorfrancis.com/books/edit/10.4324/97813155429...
If you know what to look for, you can find tons of sources on various aspects of the process, e.g:
https://www.robert-schuman.eu/en/european-issues/750-europe-...
or:
https://www.politico.eu/article/european-central-bank-nepoti...
The real problem is Germany got a very comfortable market within EU by bullying all the Southern Europe into submission (even France!) and killing their production. This got German companies complacent. Their auto industry is dying a slow death and all they do is more protectionist regulations. Stuff like dieselgate is a direct result of this.
https://cen.acs.org/business/Germanys-chemical-industry-surv...
The same thing happens with companies - good people have options, crappy people don’t. If you make the conditions worse the good people leave and you get stuck with a bunch of dead weight.
And while it’s true that “the previous model didn’t work” that’s not justification for making another terrible decision - bad decisions are net negative, unlimited in magnitude and numerous, so sticking with a broken model while you come up with a better plan is better than taking an enormous step downwards
If it's not that drastic yet, you attract more bees with honey instead of smoke. Apparently a big problem is that Greece is a great tourist spot but awful to live in. So change that. You can make a stricter tax regime to make sure people pay, but the first step to recovering is making sude your labor can love in your country to begin with.
Like what is their thought process? "We have to DO something, so lets do something destructive" ? It's moronic.
The Greek economy wasn't good enough to join the Euro, but the EU wanted them in anyway, and pretended to not notice. Why? Probably because German banks lobbied the German government, because joining the common currency meant a lot of security, and the German banks could loan to them knowing if the debts go bad, the ECB/other Euro economies would have to bail them out, i.e. it's "privatize the wins, socialize the losses" for the banks.
So Greece joined the Euro, all the banks offered loans, the Greeks all thought "Wahey, booming economy, let's spend, spend, spend!" (and don't say "Those greedy lazy Greeks!", this is a natural reaction, just look at the subprime mortgage times of the US before it blew up and almost brought down the world economy), and when it all went bad, the German government fought hard to bail them out (with EU taxpayer money) because it was bailing out German banks, despite them offering irresponsible loans.
The Greek Syriza government and Yanis Varoufakis fought hard against the measures, e.g. austerity (proven to be bullshit, just look at Tory Britain), wanting a loan haircut to punish the irresponsible banks and the bureaucrats in Brussels preferred a government that would just take their "punishment" quietly...
https://en.wikipedia.org/wiki/2012–2013_Cypriot_financial_cr...
Importantly, notice near the end of the Wikipedia article an about how it talks about using currency devaluations for economic recovery versus labor policies and negotiations (ie austerity). This isn’t possible in the EU due to their shared currency. A monetary union binds.
https://en.m.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_...
And indeed, having one's own currency means there's a natural way to recover the economy without pissing off many of the locals, if your currency devalues (e.g. compared to USD), your labor is now cheaper (in USD), and your countries products can be sold for cheaper. The Euro was very beneficial to Germany because it could continue growing without making its currency go up in value relative to other European ones and making its products less affordable. But it messed up a lot of other European countries...
It's just window dressing while the underlying issues around professionalizing the Greek shadow economy remain.
Greece's low productivity continues to persist despite being a 6 day workweek, and it's not like Greece is trying to compete with ASEAN or India for low value manufacturing so the 6 day workweek doesn't make any sense.
Even Malaysia, Romania, Mexico, and Turkiye - countries with a similar median household income - tend to follow a 5 day workweek for businesses that are above-the-table
It seems Greece has absolutely regressed to developing country standards (or maybe it never actually developed despite the metrics)
Edit: Based on Greece's exports it's basically a petrostate - almost 40% of it's entire exports are ONG related. It seems that Greece's dependence on ONG exports and Shipping has severely skewed it's GDP per Capita ($20,000) compared to it's median household disposable income (~$10,000 [0])
[0] - https://www.statistics.gr/documents/20181/89686396-5d14-f1c5...