Saturday, October 27, 2012

A Growth Model for Greece - Post Scriptum

I have made a total of 13 posts in this series of "A Growth Model for Greece" (see links below). The posts summarize the Greece Ten Years Ahead Report published by the Athens office of McKinsey in mid-2011. Why did I do that?

Least of all, to advertise McKinsey & Company. I have had many dealings with international consultants in my business career and I know that some of the criticism about 'consultants' speak' is valid. However, consultants are generally very intelligent people and they can have very intelligent ideas (albeit some of them useless in practice). Particularly in times of crises, one cannot have too many intelligent ideas for solving the crisis in order to pick and chose from them those which work in practice.

Furthermore, the impression should not come across that McKinsey are the only ones who have come up with intelligent proposals to solve the problems of the Greek economy. There are undoubtedly many others, including from Greek authors. They just haven't come to the forefront like those of McKinsey (at least not to me).

I accuse that, irresponsibly, virtually no attention is given to the practical issue of how to get the real Greek economy into shape! No question about it: the EU would be challenged to come up with proposals but, above all, it is Greek brainpower and Greek leadership that should focus on this issue!

I follow Greek blogs, twitters, media reports, politicians' statements, etc. There is an obsession with debt negotiations, Troika-measures and the likes of that. I have seen next to nothing as regards practical proposals for the real economy. It is not understood that the debt is the 'derivative' while the economy is the 'underlying'. One can't solve the underlying by only playing around with the derivative!

It is not sufficient to implement new measures allegedly increasing competitiveness and hoping that the individual economic agents will act accordingly! Despite all my nearly unlimited belief in the powers and creativity of the individual, the Greek individual is overcharged when he is only told to 'help himself'. That doesn't help a million unemployed who see no way how they can help themselves and who are totally disillusioned about the future.

It is a question of leadership and, I hasten to add, by far not only political leadership. Perhaps, in the case of Greece, political leadership is the least capable of all to bring about change. Instead, it is a question of leadership on the part of all those who are capable and in a position to demonstrate leadership. That would be Greek brainpower from all walks of life; from the academia, from the media, from the business world, etc. Even from the Church.

Who has given Greeks a vision of a better future? Alexis Tsipras might be a notable exception but his proposals would, in my view, not achieve the desirable objectives. Who has told Greeks something very simple like the following:

We make only few products which the rest of the world needs but we want a lot of those products which the rest of the world makes. We have the benfit of tourism which brings us some money to buy the products which the rest of the world makes but tourism is not enough. So, if we don't do anything else, we will have to adjust our living standard downwards to the level which corresponds to the level of our productive capacity. We will, therefore, have to make more products ourselves instead of importing them; we will have to make more products for export; we will have to attract foreign investment because we don't have enough resources by ourselves (and for that we need to become a good place to do business); and we have to shape up our public adminstration (possibly with the help of foreign experts) so that we can run our country efficiently.

GTYA proposes the introduction of an Economic Development & Reform Unit as an institution under the Prime Minister to support the government in coordinating, facilitating and monitoring the implementation of growth reforms. The activities and the progress of that unit should cover the front pages of newspapers, the contents of blogs and twitters every day. A case in point: about a year ago, there was much talk about 10-20 BEUR being available from EU Structural Funds for new projects in Geece, and about 180 projects in process. Has anyone heard about progress with those projects?

Such an Economic Development & Reform Unit would appear to be a most sensible idea.  The million unemployed should not be left alone to come up with their own 'potato movements', their own decisions to return to the countryside to support themselves as farmers, etc. Instead, they should be shown how they can contribute to the rebuilding of their country and be given realistic opportunities to contribute.

Just like the individual Greeks should not be left alone, Greece as a country should not be left alone by the EU. As a believer in a Europe of shared values, I also believe that the EU would not leave Greece alone if it only had the sense that it is contributing to a better future for Greece.

I spent most of the 1980s living first in Chile and then in Argentina. I could witness how two economies responded to the challenge of having failed. The Chileans made it because the country could get its act together and marshal resources for a better future. The Argentines could not get their act together and their mess is getting bigger with every passing year (except that they are very rich in terms of natural resources). Greeks have the choice of acting like the Chileans did then or like the Argentines.

I return to my point: it is a question of leadership on the part of all those in society who either by position, by capability or by charisma can contribute to getting the country's act together and to marshall the resources of its people for a better future. Sitting on the sidelines and watching how things play out (and criticizing everything that happens) is no responsible behavior for any country's elite!

Happy National Day!

Measures to unleash growth

Production Sectors Rising Stars
Tourism Generic pharmaceuticals
Energy Aquaculture
Manufacturing Medical tourism
Agriculture Elderly care
Retail and wholesale Regional cargo hubs

Waste management


  1. Thank you for this Post Scriptum. Really a warmhearted and clear, brilliant message (feels like a speech to the world), on this National Day in Greece.
    May your words and wishes come true.

    It fits here to add the Greek National Anthem

    The lyrics:
    I shall always recognize you
    by the dreadful sword you hold
    as the Earth with searching vision
    you survey with spirit bold
    From the Greeks of old whose dying
    brought to life and spirit free
    now with ancient valour rising
    let us hail you, oh Liberty!

  2. Sorry, but, Chile didn't have a military dictatorship back then? Honestly, is this really the answer?

    1. I was talking economics, not politics.

  3. Why would anyone set up a factory in Greece when they can set up in Bulgaria???? - OpEd Daily