Friday, August 31, 2012

The tale of a Greek village

My wife comes from a village in Northern Greece of about 2.000-3.000 people.

When I first visited there in 1977, excitement was under way because an entrepreneur had started a new company to produce textiles. This generated enormous impulse to economic activity in the village which, until then, seemed to have lived primarily on tobacco farming and services. I would guess that the company employed several hundred people. My wife would say, with a bit of Greek exaggeration, that they employed all the people from the village (and many from neighboring villages).

Several years later, I don't recall whether it was before or after the Euro, the company was closed because the owner decided to move his production to Bulgaria. That's when the villagers learned how nice it had been to have entrepreneurs around. For many years, the building sat there empty. More recently, a new entrepreneur has come and I guess he is producing some kind of furniture, albeit with a lot less staff than the textile producer had employed. How it is going since the crisis, I don't know.

Just imagine what would happen to the Greek economy if only one out of every two villages of that size were blessed with an entrepreneur who starts up a new business employing, say, 25-100 people! What should those businesses produce? I haven't got the faintest idea and no "planner" should worry about that too much! I am confident, however, that if each such village were to create special business conditions which make it attractive for an entrepreneur to invest, that entrepreneur would on his own come up with ideas as to what he should invest in.

Suppose Greece implemented a law allowing villages to offer special business conditions to entrepreneurs who create jobs. Call that law "Law 1830" to commemorate Greece's independence. Start a marketing campaign with the motto: "Every village should have at least one 1830-company!"

What should those "special business conditions" be? Well, if I were such an entrepreneur, I would like to know that I can start my business in a hurry, without much red tape, and that I only have to talk with one person, say the mayor of the village, about all that. I would like to know that I can hire (and, when necessary, fire) staff at my own discretion. I would like to know that I can negotiate my wages/salaries completely independently with my staff. If the mayor offered my a nice property at a favorable price, it wouldn't hurt but I wouldn't make it a condition (unless neighboring villages offered me such a deal; then I would have to negotiate). If the government allowed me to defer some taxes/levies during the start-up time, that would be a welcome action. It wouldn't cost the government anything because the new taxes generated by my business would by far exceed that.

And, of course, I would ask myself how I could make money through my investment. To figure that out, however, I would consider as my own, proprietory responsibility and, as an entrepreneur, I would feel totally capable of handling that.

I repeat what I have already said above: "Just imagine what would happen to the Greek economy if only one out of every two villages of that size were blessed with an entrepreneuer who starts up a new business employing, say, 25-100 people!"

My brother-in-law started his own small business in the village about 30 years ago. With his savings from various hard-labor jobs, he purchased his first equipment for earthmoving. The business expanded into the supply of construction materials. As the Greek recycling of foreign debt into domestic liquidity/demand accelerated, his business expanded accordingly: everybody - particularly villages and other public institutions - had plenty of cash and could place a lot of orders for earthmoving and construction. Particularly the 2000s were a Golden Age for my brother-in-law.

When the crisis hit, his Golden Age came to a sudden halt. Luckily, he had always saved and invested (and never borrowed money) so that he could keep his business going, albeit it at a rock-bottom level and, more often than not, he is rewarded with losses for his efforts instead of profits.

My nephew, not even 25 years old, is a bright kid; a real "doer". He doesn't see the tragedy in all of this. Instead, he sees the opportunity.

With energy costs exploding, people in the area have to cut down, among many others, on heating expenses. It gets very cold during the winters in Northern Greece!

My nephew has come up with the idea of marketing in his entire area wood as a source of heat instead of gas/oil. He can either sell fireplaces or build them for customers. And he even sells the wood to them.

There is only one problem with this. The wood he sells, he imports from Bulgaria. The next time I see him, I will have to tell him that he should figure out a way how he could source that supply from within Greece. Maybe he will also expand into the forestry business...

And, then, a lot of people - including the country as a whole - will have benefited from his entrepreneurial intitiative!


  1. As your nephew will tell you the main reason he needs to import wood for Bulgaria is that in order to get a license for cutting wood in Greece you need a mountain of paperwork and several different government's agencies permissions And if he tries to obtain them you will understand why entrepreneurship in Greece is considered more of a crime:-(
    Peter Lazos

    1. One more reason to give the mayor of the village the authority to approve everything that is within its boundaries...

      Seriously, I am not blind to all the hinderances for doing business which exist in Greece. It just seems that I always hear explanations that this is so and I don't hear that many calls for changing it. Those who wait for the calls to come top-down may have to wait a long time. Thus, I always favor movements from the bottom-up.

    2. If the mayor gets the authority you describe the Forestry Dpt will protest Along with the Archeological Dpt and the Area Fire Dpt and then some others:-)For losing their own authority and being "degraded" (The real reason being they'll lose the bribes)
      You don't hear any voices for change because, simply, are tired bored and sick of hollering about it and nothing being done.... or even being punished in some cases
      I've never thought of you as "blind" to Greek matters But it is obvious that while you carry extensive experience in the country you haven't had the chance to meet certain aspects of its life.
      In the stage things are in Greece either change will have to come from the top or it won't come at all It is that simple Reason: the authority for change is completely centralized in order to maintain control and not lose a dash of power:-(
      Peter Lazos