Thursday, October 17, 2013

The Key to Greece's Recovery

This is a very interesting and balanced article from the Harvard Business Review where the author outlines what he thinks the key to Greece's recovery is. What I particularly like about the article is the positive and constructive tone to it. A sort of can-do approach. My reaction to the article can be found among the comments to it.

Speaking of positives, here is some really positive prose from Invest in Greece. I have a bit of a problem, though, taking the prose for face value.
A couple of years ago, I decided to check out IIG and approached them with a foreign investment issue. I never even got a response. The Italian investor Dr. Piero Giardrossi was "looking to acquire a couple of abandoned structures on an uninhabited islet off the coast of Kastellorizo in the Dodecanese. But after spending two-and-a-half years chasing the investment, he is about to give up". Apparently, he didn't get a response from IIG, either.

Again, prose is important, too, but it has to be supported with facts and actions. Otherwise, it's like the prose of George Papandreou when he kept saying that Greece was making a lot of progress with reforms.


  1. I dispute that. This is exactly the kind of article that brainwashes people into believing that somehow the crisis was our fault. It wasn't.

    Many years ago, Greece had a small industrial base which was mainly orientated towards the needs of the domestic economy. We bought Greek fridges, we wore Greek clothes, consumed Greek toys etc. Stuff was made in Greece. That worked. What hasn't worked (and not only in Greece) is globalization.

    Of course the euro has made everything worse. Firstly, the loss of sovereign monetary policy has forced us to accept capital inflows whether we liked them or not (thank you ECB). Secondly, the loss of sovereign fiscal policy has forced us to apply restrictionary fiscal measures during a depression (thank you Germany and allies). Thirdly, the loss of our currency has forced us out of business thanks to Germany's (and like-minded countries') savings glut. Fourthly, the ECB is doing it's best to sabotage the banking system of the periphery.

    This is disgusting and I am really glad that the French are waking up to these realities by voting in favor of Le Pen, and against dwarves like Sarkozy and Hollande.

    1. I don’t know which of the articles which I linked you dispute but I would agree with what you are saying above.

      In retrospect, Greece would have been better off if it hadn’t joined the EU and, particularly, the Eurozone, thereby not being exposed to globalization. A Drachma-Greece would have had to live with continuous devaluations and the living standard would have been much lower than the artificially high living standard during the EU/Euro-party. However, the system might have fit Greek culture better than globalization.

      I would, however, dispute your general criticism of globalization. Yes, globalization threw a wrench into our saturated and comfy European way of life. But one of the reasons why we could have a saturated and comfy way of life is that many others were not allowed to compete with us. Now they are competing with us and, hell, they are making our lives painful. But one has to bear in mind how many hundreds of millions elsewhere could improve their standard of living because of that.

    2. Klaus
      I admire the optimism expressed by you, Harvard Business Review and Invest in Greece. You see a glimmer of hope and change; I see a w2illful applied politic. The politic is best described by Giuseppe Tomasi di Lampedusa in his book The Leopard. "If we want things to remain the way they are, they must appear to change", very mezzogiorno.
      I also admire the courage of all the people who will save this nation by introducing new economies and politics. It is a tall order to save a nation who proclaims that "we are not nationalists, only born with better DNA and genes, and brought up by parents and teachers with higher morals and knowledge".
      PS. You describe the paper in IIG as prose, in the formal way it is, as it is not in verse. However, the qualities in it are pure poesy, only.
      Lennard Schorlemmer

    3. If you read the comment I posted in the HBR article, you will not that my positivism has taken a huge dive from previous heights.

      PS: there is another comment to the article which you will have no trouble agreeing with...

    4. "But one has to bear in mind how many hundreds of millions elsewhere could improve their standard of living because of that."

      Klaus, I don't see it.

      Sure, globalization allowed for western capital to be invested in Asia and elsewhere. Capital got their big returns, Asia got know-how, and labor got the leftovers (as usual).

      Labor now is squeezed everywhere in the name of "competition", making the problem of overcapacity even worse.

      Only a return to domestic full-employment policies, and a shift towards pro-labor and anti-capital will remedy the situation. This will require capital controls. If not, then we'll continue reliving the 30's, and we all know how the 30's ended.

    5. You don't see it? Have you not taken note that, for example, something has happened in China in the last decades due to China opening its economy and its borders? I don't think millions, instead, hundreds of millions could improve their lot. Take other Asian countries. Take the PIIGS. Closer to home, just look at what has been happening in Eastern Europe!

      In the process, world-wide poverty could be reduced significantly. I know that here we are dealing with statistics: when someone was 'poor' because he was earning less than 1 dollar per month and now he is no longer poor because he is earning 3 dollars per month, that doesn't make him 'rich'. But it is an improvement, nevertheless.

      Now, I agree that a lot of negatives can be said about globalization. One good example to me is environmental costs because the environment affects the entire world and not just one country. So when one country is cheap because they don't have to spend any money on environmental protection, that is not right. Etc, etc. A few years ago, a former SPIEGEL reporter wrote a book titled "Die Globalisierungsfalle". If you want to read bad things about globalization, read that.

      I would agree with you that, for some time now, the 4 major dependencies of corporate behavior have run quite a bit amok. They should be more or less equally treated: owners (through dividends and stock appreciation); employees (though salaries and wages); customers (through good products and good prices) and society in general (through taxes). It seems that nowadays only one of the four counts (owners). That, I agree, is wrong and, if not corrected, will cause severe damage in the longer term.

      No government in the world can decided 'to return to full employment policies'. The creation of jobs cannot be mandated. Job can only 'come into existence' when there is a pro-enterprise economic framework. There simply is no such thing as a free lunch!

      Let me quote Churchill in closing:

      "Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon".

  2. Yes Klaus, I have noted your faltering trust in the "recovery" (it takes one to know one). No Klaus, you can not transfer knowledge to a society that is omniscient, that is also why the EU Task Force fail. And please do not compare Greece to Chile, Chile is "american", it takes them 3 days to find out that you are willing to give them advise FREE OF CHARGE. From that moment they are self motivating, they will ask your opinion for a while, thereafter they will tell you what they have decided to do.
    Yes, I suppose I agree to the other comment, but am not yet able to go down that road, I shall get there if Keep Talking Greece continue publishing. I have invested a lot of emotions in this nation, I have envied them, despised them, loved them, felt exasperation, admired them, and even hated them sometimes. However, the adjective that comes to my mind nowadays is irrelevance, when that becomes the prevailing feeling in Europe, Greece has become a failed country.
    Lennard Schorlemmer

    1. You probably don't know this but probably THE ONE THING which got me started writing about Greece was my experience in Chile from 1980-83. I have lived in 8 countries but Chile (and the Chileans!) has got to be very close to the number 1 spot should I ever have to chose a number 1 spot.

      As I guess you know, Chileans are an open-minded and enlightened people. They strive to improve themselves and they are almost addicted to learn from others (foreigners!). They consider it as a distinction when foreigners decide to invest in their country. When there are problems, they make an objective analysis, list strengths and weaknesses and put together a strategy based on that.

      My mistake was to think that Greeks would be like Chileans and/or would behave like them. Had they done so, the current crisis would be long past. As I learned since then, Greeks, in many respects, are almost the opposite of Chileans. Unsure whether they belong to the Western economic philosophy. Suspicious about everything foreign. Suspicious about everything capitalistic. Absolutely resistant to any advice (the world's worst place for a consultant to work in because Greeks have all the answers to begin with). In short: Nikos-Dimou-country.

      I had set out believing that if the Chileans could recover their country from near-total economic devastation, the Greeks would do that in a jiffy. I once even wrote the article linked below.

      Well, I guess I have learned a lot about Greece and Greeks in the last 3 years (things which my Greek wife had never told me...). Some Greeks (particularly those who are vocal in the media) leave the impression on me that they can't wait to really see the country go to pieces just to prove the point that 'the others' have destroyed their country.

      PS: I can really associate with you excellent description of your emotions!