[np] Austerity is not Greece's Problem (Ricardo Hausmann)

[John Bailey]

An amazingly fun analysis of the language of economists, by an
economist, if anyone cares to read (it's very long and slightly
Australia-centric):

http://www.themonthly.com.au/issue/2015/july/1435672800/richard-denniss/clowns-and-treasurers

On Mon, Jul 6, 2015 at 11:16 PM, David Morris <fqmorris at gmail.com> wrote:
> https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff
>
> Thomas Piketty: “Germany has never repaid.”
>
> On Sat, Jul 4, 2015 at 2:36 PM, David Morris <fqmorris at gmail.com> wrote:
>>
>> I think the difference between the US and the Euro is obvious:  one is a
>> country, the other is a currency.  Currency, like Corporations, aren't
>> people. A Country is made of people.
>>
>> The EU was never a sincere Union.  It was a bankers deal, pure and simple.
>>
>> David Morris
>>
>>
>> On Saturday, July 4, 2015, David Morris <fqmorris at gmail.com> wrote:
>>>
>>> Blame is the name of this game.  Greasy Greece needs Reform School Marm
>>> Urkle. Meanwhile a nation is indentured, and the banks aren't
>>> inconvenienced.
>>>
>>> Bravo Euro!
>>>
>>> David Morris
>>>
>>> On Saturday, July 4, 2015, Kai Frederik Lorentzen <lorentzen at hotmail.de>
>>> wrote:
>>>>
>>>>
>>>> When looking out a window, it is easy to be fooled by your own
>>>> reflection and see more of yourself than the outside world. This seems to be
>>>> the case when US observers, influenced by their own country's fiscal debate,
>>>> look at Greece.
>>>>
>>>> For example, Joseph Stiglitz regards austerity in Greece as a matter of
>>>> ideological choice or bad economics, just like in the US. According to this
>>>> view, those who favor austerity must be obsessed with the theory, given the
>>>> availability of a kinder, gentler alternative. Why would you ever vote for
>>>> austerity when parties like Greece's Syriza or Spain's Podemos offer a
>>>> pain-free path?
>>>>
>>>> The question reflects a lamentable tendency to conflate two very
>>>> different situations. In the US, the issue was whether a government that
>>>> could borrow at record-low interest rates, in the middle of a recession,
>>>> should do so. By contrast, Greece piled up an enormous fiscal and external
>>>> debt in boom times, until markets said “enough" in 2009.
>>>>
>>>> Greece was then given unprecedented amounts of highly subsidized finance
>>>> to enable it to reduce gradually its excessive spending. But now, after so
>>>> much European and global generosity, Stiglitz and other economists  argue
>>>> that some of Greece's debt must be forgiven to make room for more spending.
>>>>
>>>> But the truth is that the recession in Greece has little to do with an
>>>> excessive debt burden. Until 2014, the country did not pay, in net terms, a
>>>> single euro in interest: it borrowed enough from official sources at
>>>> subsidized rates to pay 100% of its interest bill and then some. This
>>>> situation supposedly changed a bit in 2014, the first year that the country
>>>> made a small contribution to its interest bill, having run a primary surplus
>>>> of barely 0.8% of GDP (or 0.5% of its debt of 170% of GDP).
>>>>
>>>> Greece's experience highlights a truth about macroeconomic policy that
>>>> is too often overlooked: The world is not dominated by austerians; on the
>>>> contrary, most countries have trouble balancing their books.
>>>>
>>>> Recent advances in behavioral economics show that we all have enormous
>>>> problems with self-control. And game theory explains why we act even more
>>>> irresponsibly when making group decisions (owing to the so-called common
>>>> pool problem). Fiscal deficits, like unwanted pregnancies, are the
>>>> unintended consequence of actions taken by more than one person who had
>>>> other objectives in mind. And lack of fiscal control is what got Greece into
>>>> trouble in the first place (...)
>>>>
>>>> The problem is that Greece produces very little of what the world wants
>>>> to consume. Its exports of goods  comprise mainly fruits, olive oil, raw
>>>> cotton, tobacco, and some refined petroleum products. Germany, which many
>>>> argue should spend more, imports just 0,2 % of its goods from Greece.
>>>> Tourism is a mature industry with plenty of regional competitors. The
>>>> country produces no machines, electronics, or chemicals. Of every $10 of
>>>> world trade in information technology, Greece accounts for $0.01.
>>>>
>>>> Greece never had the productive structure to be as rich as it was: its
>>>> income was inflated by massive amounts of borrowed money that was not used
>>>> to upgrade its productive capacity. According to the Atlas of Economic
>>>> Complexity, which I co-authored, in 2008 the gap between Greece's income and
>>>> the knowledge content of its exports was the largest among a sample of 128
>>>> countries (...)
>>>>
>>>>
>>>>
>>>> http://www.project-syndicate.org/commentary/greece-export-problem-by-ricardo-hausmann-2015-03
>>>>
>>>>
>
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