“LOLGreece”, eh? I think I’ll take the word of the OECD over some random blog post with two replies. Even if we agree that the Greeks are lying liars who fudge their stats and reduce the hours worked by 25%, they’d STILL be working more than the Germans.
Greece’s fundamental problem is that their workers are much less productive than German workers. Normally this would resolve itself through currency flows and changes in the exchange rate, so that eventually Greek workers would become a better bargain than German workers despite their lower productivity. But that can’t happen if Greece and Germany share the same currency. And since Germany is unwilling to write off its bad bank investments and insists on maintaining a balance of payments surplus at the expense of their neighbors, we’re left with Greece and the Euro periphery being subjected to grinding austerity, which does.not.work.
I did read the blog post, btw. His point about the problems in trying to compare the data of two countries is well taken. But that doesn’t make the comparison worthless.
And his second point is pretty picayune. Who cares if more Germans work part time than Greeks? If I had an agenda, I might conclude that this proved that German workers were slackers.
MOIDALIZE you linked to some statistics that even the OECD in the report you got the statistics from told you not to trust in absolute comparisons between countries, yet here you are. I mean for Christ’s sake, do you really think it’s likely that the average Greek is working more hours than the average American, which is what the OECD claims to show, using an absolute comparison?
Nobody accused them of lying. The numbers appear inflated because Greece uses a different method of recording hours worked per worker than most other countries, a method that happens to consistently make overestimates according to the US Department of Labour study linked to in the blog. Further, there’s the problems with OECD pooling part time and full time workers and the peculiarities of part time work in the Greek economy.
It really isn’t. Greece’s fundamental problem is a culture of tax evasion, an outlandishly large public sector, and intransigent unions, like pretty much all of Southern Europe. They’d still have major problems if they were outside the Euro, as an average inflation rate of 20% during the 1980s and a tripling of the debt-to-GDP ratio can attest.
A conclusion you draw with no basis. I might as well argue that Britain’s recession is the result of the British being slovenly and more interested in bluster than reasoned discussion.
Check out this map showing debt as a percentage of GDP. Check out Belgium in 2000. Check out France, Germany, and Britain today. See where Ireland, Spain, and Portugal were ten years ago and consider the problems they’re facing today.
Yeah, the Greek government spent a lot of money in the 80s it didn’t have. So? The argument isn’t that the Greeks are virtuous. The argument is that austerity is counterproductive. If Europe hopes to drag itself out of this mess, it’s not going to accomplish that by ruining the economies of its constituent states.
With no basis? Are you seriously disputing that there’s a culture of tax evasion within Greece? Or that Greece’s public sector is mammoth, employing 25% of the population of 11 million? Do you think a public sector that size is sustainable, or even wise?
I have no idea what point you’re trying to get at. Blair and Brown went on a spending spree, they were subsequently thrown out of office in favour of a party who promised to clean up their mess (and appear to be doing so, see today’s news about the British surplus). This is analogous to the situation in Greece in which universe?
Nice line. Where’s the extra money going to come from for Greece to spend? Out of your pocket?
You did not limit your criticism to Greece, you extended it to all of southern Europe.
My point is if you’re going to criticize southern Europe for being a bunch of heavily indebted spendthrifts, why not criticize Britain, France, Belgium, and Germany as well? Their debt situations are worse than Spain, yet I don’t see you arrogantly demanding that France and Germany should experience austerity to bring their debt into line.
Assuming Greece doesn’t do the right thing and default, it should come out of Germany’s pocket. They’re the ones benefiting from the current Euro setup. They seem to want all of the benefits of a single currency with none of the costs.
I said “pretty much all”. And yes, there’s a sizeable problem with tax evasion amongst pretty much all of southern Europe, Italy especially. For instance, in a series of raids this week in Naples, it was found that nearly four out of five businesses were dodging taxes. See here for some statistics.
If Germany and France appear unable to service their debt any time in the near future, like Greece presently, or as Italy was a whisker away from doing a few months ago, I’ll make sure to PM you calling for an austerity budget like we’re now seeing in Greece. But, as Germany appears to have manageable debt levels, and is enjoying unparalleled (in the Eurozone) investor confidence, allowing them to borrow at negative rates (i.e. they’re being paid to borrow money), why would I do that now?
A ridiculous accusation. The Germans are almost singlehandedly keeping the likes of Greece and Italy afloat. Do you understand what would happen to the average Greek if Greece defaulted? It would make the current austerity budget look like heaven.
If by “well” you mean inflation ran at 20%, the government raided private pension pots, price controls were brought in to contain the prices of everyday goods causing mass shortages, riots and battles in the streets with armed police were common, crime shot up especially kidnaps, government assets abroad were confiscated by enraged creditors and Argentina has still not fully returned to the sovereign debt market a decade later, I guess you could class that as “turning out well”. But then I think your mileage really does vary.
You forget to mention the part where Argentina maintained its sovereignty and told the IMF to piss off, began recovering after one quarter of contraction, and returned to their pre-default trend-level of growth by 2007, despite being denied access to that precious, precious foreign capital.
And inflation, in and of itself, isn’t necessarily good or bad.
Out of the Euro, back to the Drachma, devalue, suffer a lot, come out stronger.
In Peru’s “Fujishock” (1990), food prices went up 100% -300% in one day, gasoline 3000%, dollar 800%. You hve to understand that we were alwready running 30-50% monthly inflation rate.
Terrible, horrible, but the only solution. 20 years later inflation is under 4%, GNP is up 6% for the last 15 years.
Bailouts for Greece won’t work because bailout don’t solve structural problems.
I didn’t “forget to mention” anything. I pointed out that citing a country where crime shot up, pensions were raided, riots and street battles were common, private companies went bankrupt en masse, foreign capital fled, 30,000 people became “cardboard collectors” scavenging out on the streets and price controls were brought in causing mass shortages, etc. etc. etc. as “turning out well” is a bit of a stretch.
If Greece mimiced Argintina’s economic performance post-default, they’d end up three times richer then they were in 2000 by 2020. That’s a pretty good deal.
Iceland, by comparison, is about as well off now as it was in 2005 and almost twice as well off as it was in 2000.
In general, it seems like countries that have a growth bubble that bursts do pretty well after default, bouncing back to their pre-burst GDP within a decade, so that over the entire period their average growth rate is still pretty stellar, despite a year or two of very large contractions.
Just to expand a little on my previous point, joining the EU led to pretty huge growth rates in peripheral countries. Irelands GDP more then doubled since 2000. Ditto Portugals. Greece’s has tripled. Even if they give back a lot of these gains during the recession, the average Greek or Irishman is much wealthier then he was in 2000, and will probably continue to be so.
And the experience of Argentina and Iceland suggests that if they default, after contraction they’ll gain back what they loose pretty quickly. In which case the average citizen will be much richer then he was a decade ago.
Argentina is a commodity exporter, though, isn’t it? Does the Greek economy have anything to offer the rest of the world, i.e., to build a recovery on? My recollection is that a big chunk of its economy is tourism, which I guess would become a lot cheaper after a default, but the social unrest may discourage a lot of travelers.
Seriously give it a go, it’s fun and educational. Essentially the outcomes range from horrible to terrible, there’s no realistic way where Greece can come out of this mess without massive economic upheavels.