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

[David Morris]

http://www.washingtonmonthly.com/political-animal-a/2015_07/and_i_shall_wear_the_creditors056421.php

"And I shall wear the creditors’ loathing with pride."

On Mon, Jul 6, 2015 at 8:33 AM, John Bailey <sundayjb at gmail.com> wrote:

> 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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