Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece
bloomberg.com
bloomberg.com
"There is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And yet, quite paradoxically, firms can be thought of as market-free zones. Within their realm, firms (like societies) allocate scarce resources (between different productive activities and processes). Nevertheless they do so by means of some non-price, more often than not hierarchical, mechanism!
...
Many enlightened corporations do a song and dance about their readiness to let employees allocate 10% or even 20% of their working time on projects of their choosing. Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing. 100% is a radical number! It means that Valve operates without a system of command. In other words, it seeks to achieve order not via fiat, command or hierarchy but, instead, spontaneously."
[1] http://blogs.valvesoftware.com/economics/why-valve-or-what-d...
When someone tells you there's no hierarchy in their company, there is, you're just not high up on it and no one's bothered writing the hierarchy down for a number of reasons - most commonly for Cool Startup Culture Points or because if the hierarchy was drawn out on paper it would scare the bejeezus out of anyone watching.
Unspoken or undefined hierarchies don't mean you don't have one, it just means there's a covert one that isn't subject to scrutiny or accountability.
Which isn't an endorsement for documenting every minutiae of rank and hierarchy, but rather an acknowledgment that hierarchy exists regardless of how badly you want it to not exist.
(BTW, I didn't downvote you. I appreciate you offering your perspective. I just find it hard to follow.)
I wonder how an even more radically free-market organization would look like - where people are literally trading services for money within a company. I think that several industries already operate in a similar manner, where you have "rain-makers" who bring in the money, and "support staff" (everybody else). For example, traders/portfolio managers in hedge funds, and partners (who bring in new clients) in law and private equity firms. But there still is a lot of hierarchy and no transparent market within the company.
Sometimes, the "support department" starts selling to external clients as well. Lufthansa Sky Chefs, for example, now delivers food to many airlines. I believe their maintenance operation works similarly.
The opposite also happens – where some department chooses an external supplier over the internal one, because the latter is too expensive (low-quality/inflexible/whatever).
Didn't work out too well. Some units needed to work together for the organization as a whole to function -- but being forced to compete against each other for corporate resources gave them incentives to sabotage each other instead, and the overall bottom line suffered greatly.
This is why command economies tend to be less efficient, because any given market and corporate structure is only most efficient for very specific economic conditions. Heavy regulation of companies, markets and things like employment law tends to freeze their structure in place, so they are unable to adapt as conditions change.
So markets are only one aspect of an efficient economy. A flexible corporate, finance and employment environment is the other. Hence the economic flexibility and strength of the USA. Something as a Brit I'm perfectly willing to admit to. I'm not saying economic strength is the be-all and end-all of civil society. I firmly believe regulation plays an important part in ensuring markets are fair and laws are equitable, but all these things are not mutualy exclusive.
In that kind of environment - which is not too dissimilar to the one we're in - corporations simply hoard money to no great end, and markets crash unless they're propped up by public subsidies and hand-outs.
This distorts the wider economy and makes real efficiency less likely.
Of course if by 'efficient' you mean 'providing the greatest possible benefit to the greatest number of people' that would be a very unusual aim in orthodox economics.
Partially it's because that goal is far more difficult and complex than the simple aspirations of Greater Taylorism: to increase shareholder value. It's much easier to increase a stock price than it is to actually provide value for a large number of people, which leads to cases like IBM who spends billions buying back their stock while the actual value of their products declines to near zero.
Such economic priesthood stories conveniently omit world hegemons which send vast armies of uniformed killers across the world against anyone trying out their own systems. (Like overthrowing Iran's secular parliamentary democracy for daring to be vaguely "socialist", installing the Shah.) Or their police who literally strangle people in broad daylight, and violently attack people like the Occupy movement who imaginatively discuss alternatives to the economic order.
as the saying goes - the larger the company, the more socialism there.
Mr. Varoufakis has been my favorite economist for many years now, and I think he has brilliant insights as to reasons for the Eurocrisis. Whether he can translate his genius into government policy is another matter, but I wish him the best luck.
I've heard him tell the story about how he became Valve's economist. Mr. Varoufakis is a regular guest on the popular left-wing podcast, Doug Henwood's Behind the News. I imagine that Gabe Newell first heard of Yanis through this podcast, but I can't confirm that. Anyway, Gabe sent Yanis a cold email explaining to him what Valve is, and asking him to join the team. Mr. Varoufakis was a long-time economics professor at the University of Athens, but he was in the process of moving to the University of Texas-Austin. Once he learned more about Valve and its virtual economy (and I imagine the fat salary), he accepted the position.
It should be noted that Mr Varfakis is a communist. Part of Gabe's pitch to Yanis was that he runs Valve on what he calls anarcho-syndicalist principles. Although I don't know anything about Gabe's politics, I suspect that his sympathies are not too far from Mr. Varafakis'.
If you want to hear some of his recent thoughts on the Eurocrisis, check out this interview from a couple months ago. IMO, no one does a better job of plainly explaining the malaise in Europe better than this dude:
http://yanisvaroufakis.eu/2014/11/24/taking-stock-of-the-eur...
Side effects of closing some of the nearly 500 military and releasing troops is not having jobs for them.
http://www.zerohedge.com/news/greece-spends-bailout-cash-eur...
...is against everything Syriza stands for.
Even intelligent people for some reason don't grok history, and always assume "this time is different" and "wars cannot happen anymore because ..." (of course this is exactly what they said in Europe just before the first world war).
Ref: http://marginalrevolution.com/marginalrevolution/2015/01/the...
Greece's biggest problems are not high debt payments, they are 25% unemployment, and GDP having dropped 27% from its peak.
[0] http://www.vanityfair.com/business/features/2010/10/greeks-b...
The whole problem is that Greece doesn't have money to do both, and hiring people to mess around with boats doesn't actually contribute to economic growth and prosperity...
Nevertheless, if you've got potential candidates who make stuff that the rest of the world is willing to pay for, maybe you should hire them either way. They'll pay for themselves after all.
And if you're going to hire them either way, why fire the sailor? (Unless of course it's the sailor you want to hire for a more productive endeavor...)
If the greeks were putting scarce resources into the military, e.g. using metal that could build productive machines to build useless ships and aeroplanes, then that would be a deadweight loss. But in Greece right now, labour is the opposite of scarce. It does very little harm to keep them employed.
While an army is a useful insurance policy in a variety of situations, the best case scenario is really that these people do nothing. Believe it or not, it does not make the Greek people any more prosperous to have many people standing around doing nothing, unless the money you pay them to do it comes from somewhere other than Greece and isn't ever going to be paid back.
-- which, to be fair, is a tactic that works once every few generations! One could make a case that it is a simplified version the story of Greece the past decade. You see these debt renegotiation promises in the news now.
More broadly, though, the economy is about producing valuable things (or services), not about money. It is trivially obvious that an idle soldier is not producing much of value at his post and cannot assist the economy in any way. Even middle-management at IBM at least pretends that they're helping accomplish something worth money to someone.
And nowhere in the history of the world has ever been able to fix economic stagnation or crisis by spending more money on the military, though it has run great empires into the ground.
Sure, but a person needs food and clothing whether they're serving in the army or sitting around unemployed. Arguably the army can feed n people (who have to follow orders, show up at the mess hall at the same time and so on) more cheaply than those n people would by themselves.
> More broadly, though, the economy is about producing valuable things (or services), not about money. It is trivially obvious that an idle soldier is not producing much of value at his post and cannot assist the economy in any way.
Sure. But what would the soldier be doing if they weren't in the army? As I said, if labour in Greece were scarce then I'd be worried about the army wasting it. But 25% unemployment.
> And nowhere in the history of the world has ever been able to fix economic stagnation or crisis by spending more money on the military
What about the New Deal / WPA? I mean sure, they built some bridges and so on, but that was a pretty marginal benefit; the big value of the programme came from the Keynesian stimulus effect of giving money to those who were otherwise unemployed.
But Varoufakis still blogs at http://yanisvaroufakis.eu/
Here's a great talk he did on the problems of Maastricht.
https://www.youtube.com/watch?v=ytXgMnm9tHs
Note that he is a mathematical economist with a PhD (focusing on game theory), and also a self-proclaimed Marxist. So his ideas and perspectives are very interesting, to say the least, and at times very unique.
http://yanisvaroufakis.eu/2013/12/10/confessions-of-an-errat...
What Greece actually needs is growth in the real economy, where there are businesses where people make things and do things and ship things around and otherwise trade with the rest of the world efficiently, but the current economy is insanely overregulated. The classic story of oliveshop.com comes to mind, where company shareholders were expected to submit lung x-rays and stool samples to the health department before the company could sell pre-bottled olive oil online. (Greek shipping is actually one sector which has escaped this, but it's had its own issues because of reduced global trade in the wake of the recession.)
Of course, half the reason for the overregulation is so that people in the government can collect bribes to expedite your permit processing. (The rest is classic special-interest stuff). So real reform in these areas probably isn't going to happen, and the Greeks are unwilling to countenance that their previous economic gains were illusory.
Which means Germany gets to be the bad guys, asking them to actually pay for what they borrowed (gasp!) and Greece is at extreme risk of doing something incredibly stupid and not just stagnating at 1995 levels but running the economy further into the ground.
They assumed that reduced government spending would somehow (magic?) increase private sector investment and result in economic growth. The forecast for the WORST unemployment would get was around 12%, and by this point the recession was supposed to be a distant memory. They were so, so, so wrong.
Greece probably made mistakes, but don't pretend the Germans are innocent and being painted as the "bad guys" unfairly. The Germans ignored all reasonable economic logic and forced austerity on Greece for ideological reasons. That's exactly the kind of thing "bad guys" do and the Greeks are justified in their anger.
http://www.amazon.com/Austerity-The-History-Dangerous-Idea/d...
http://www.theguardian.com/business/2013/jun/05/imf-underest...
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/03/a...
But what exactly would you have the Germans do? Say "no bailout" and oversee the exit of Greece from the Euro? Still the bad guys, and it wouldn't have made Greece any better off today. Try to demand substantial economic reforms to actually grow the economy? Sure, that's totally going to happen, never mind that pesky "sovereignty" business and upcoming elections (which are now past elections). And they're the bad guys again.
Or maybe they should have just asked German citizens to sacrifice instead, and committed to throwing bad money after good for the next N decades, subsidizing things like a socialist healthcare system where you actually have to bribe the doctor to get an appointment.
And I do think the Germans should be asked to help clean up the mess they were (partially) complicit in creating. There is plenty of blame to go around, no one is innocent. For every euro someone borrowed that they couldn't afford to pay back, someone lent a euro to someone who couldn't afford to pay it back. It was pretty clear we were in a terrible bubble years before it burst, but the market apparently assumed there would be a bailout, so things got much worse than they needed to.
Also keep in mind that the reason Greece (and Ireland, and Spain...) had so much government debt is that they transferred private sector debt onto their balance sheets. So what I would really would have preferred is to just let the owners of all those underwater banks take the hit and keep the government out of it except for making sure no one ended up starving to death (the usual social safety net stuff). I guess you could put me in the "bail out Main Street, not Wall Street" camp. But Germany didn't want that, because ultimately the money came from German banks, so...
While they were violating Greek sovereignty they could have asked for much more productive changes than they did (like the mis-regulation problems you mentioned, which I agree with). But they didn't. So who gets the blame? Germany, the ECB, the EC, and the IMF. The IMF has already admitted their terrible mistake (we'll see if they learn their lesson, doubtful), the others can apologize by working with the new Government to slash the debt so that the Greek people can at least start trying to fix the other problems we've identified.
Greece wants more spending and the debt to be forgiven (like in a bankruptcy).
Germany wants austerity and the new Greek party that won the election wants more spending hence the protests and disagreements.
Disclosure: casual observer's opinion not a professional opinion.
Personally, I can find some understanding of both sides to this. On one hand, if I were greek I'd be utterly and totally committed to replacing every member of the government that so royally screwed me and I'd be insulted by the entities who are offering bail outs at the expense of my quality of life (I don't fully understand the details of how this impacted people on individual levels, this is only my attempt to epathize). On the other hand, if I had a lot of money to help people in need, and someone came to me asking to pay their loan sharks after an epic binge I would certainly have a number of stipulations placed on this and would in no way consider handing them a check without some extensive scaffolding around that exchange.
As I learn more about this situation I might feel differently about either side, so please understand I'm just sharing my opinion given what little I know about it so far.
Austerity measures hit workers the hardest -- the people most responsible for creating economic wealth. To them, the EU is trying to take wealth and opportunity from the already-suffering average person to balance for mistakes and losses made by leaders and other nations. And the punishments have been pretty severe. I'm confident the level of austerity measures, if they faced the American people, would not go over peacefully (assuming we had much of a social net left to give up at this point).
Germany, unfortunately, is seen as the arch-enemy along with Brussels in Greece. After 6 years of austerity measures and governments who followed policies dictated by the troika (ECB, IMF, EU but mainly it's Germany) we rank #1 in Europe in suicides, the economy is worse then ever and the public debt has gone up instead of down. At this point many Greeks don't care what a Grexit would bring because they already trespassed the point X of "caring". They are already poor by all means.
That said, it's true again that Germany flushed billions of EU in saving the Greek economy. But almost all of that money was used to keep foreign banks happy by paying high yield Greek bonds owned by German and French banks mainly. The rest of the money was flushed to Greek banks owned by heavily corrupted bankers (e.g. Latsis - Eurobank). Even in situations of small banks like ProtonBank[2] were kept because declared of "national interest" (Ev. Venizelou - Leader of PASOK former Finance Minister and Vice-President) and thus bailed-out in the sound of millions while some pensions went as down as 350 EUR/month at the same time.
So to make a long story half-long: The German government is an extreme supporter of the old, highly corrupt, heavily bribed (by many german corporations) Greek government which doesn't make sense. Merkel is crying home for the Greman tax-payer when indirectly the only thing she really did was just handing money indirectly from the German taxpayer to the German banks via Greece (with huge interests). Truth is that given the results, Germans were more than happy to vote Merkel, so in a strictly political her policy was extremely successful. The only problem is that now all over Europe there is a strong anti-German feeling: Italy (M5S), Spain (Podemos), UKIP (Farage), France (LePen). So give it another ~ 2 years and Greece will be the least of Germany's problem.
Now the real problem Germany and EU is facing is this: If they bailout Greece, they must bail-out Italy and Spain too. Maybe France will follow. But the Greek debt is small so it can be done, if there's political will and a sort of promise that Greeks won't fuck up their economy again anytime soon! But for Italy it's a different matter, if Italy and Spain require a cut oh well... I'm not sure it's even possible mathematically speaking. On the other hand mathematics was never a part of economics, it's mostly politics. There are logistical ways (e.g. the EU buys bonds from failed states and hides them in a locker room for eternity at a very low rate which the countries could start paying God-knows-when...) to bypass this, but the problems are at the level of politics mostly. If Merkel concedes now, the opposition inside Germany will literally trash her and she will not be able to come up with answers, since the story of the poor Greek who spends more than he could afford is the one she choose a couple of years ago.
Sorry the long answer! Jesus I didn't realise I produced so many chars :-P
[1] http://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal
[2] http://www.reuters.com/article/2012/01/12/us-greece-proton-i...
[3] https://anestis.quora.com/Links-to-credible-sources-about-Gr... <-- link shared by user @realunreal a couple of posts up. Summaries very well my points in the first paragraph!
https://anestis.quora.com/Links-to-credible-sources-about-Gr...
A large source of currency fluctuations are trade imbalances. If a country exports more than it imports, its currency appreciates. If it imports more than it exports, it depreciates. For example, if USA imports from the UK are bigger than it's exports to the UK, then USA will be buying GBP with USD (on average), so the value of GBP will go up relative to USD. This would in turn make UK products more expensive to Americans, so they would buy them less, correcting the trade imbalance.
If Greece, Italy, Spain etc. still had their own currencies, they could simply depreciate them (actually, it would happen naturally, as a consequence of trade imbalance) and so reduce their debt in real terms (similar to what has happened to Iceland). If Greece's currency would depreciate, imports would be more expensive for Greeks, so they would import (spend) less, while Greek exports would be cheaper worldwide, so they would export (earn) more.
Conversely, Germany's currency would appreciate, again because of trade imbalances (they export more than they import).
Because of EURO, this hasn't happened, and won't happen - the trade balances are averaged, making Germany's currency (EUR) less valuable than it should be, and Greece's currency (again EUR) more valuable than it should be. This benefits Germany, because it can sell its cars cheaper, but isn't helping Greece, because Greek olive oil and tourism experiences are more expensive than they should be.
The short-term solution is for Germany to admit this advantage and help the under-performing countries (by giving them money, not just loans, and correcting the trade imbalances this way). In the long term, a single currency should lead to a single fiscal government (like in the US).
Countries really only have two valves to throttle their economies. Interest rates (which Greece now has the highest in the European Union), and printing more money.
Right now because the Greek economy is in a log jam, they're suffering from deflation and a shrinking economy. Interest rates have to be high so that the government can continue to borrow money to keep the country running, but that means companies aren't leveraging capital to expand.
If Greece weren't part of the Euro, it could simply print more cash, which would reverse the deflationary pressure and allow the government to bring down interest rates. It would also mean the flow of trade from Germany to Greece would probably balance out more because the domestic economy in Greece would be cheaper than importing German goods.
I read this a lot but I don't quite understand why--How does a unified currency prevent the domestic economy in Greece from being cheaper than importing German goods?
Why can't the local Greece industry lower prices (as it would effectively with a falling local currency), thus driving more domestic purchasing and exports since it would be comparably cheap to neighbouring countries?
The only thing I can think of is that it's hard to synchronize the discount of an entire industry, and nobody wants to go first. Having a local currency and printing more money allows you to do that across the board.
That's exactly right. The key point is time.
If you have to wait for your economy to contract, you're still borrowing tons of money to keep the country afloat. You're paying high interest rates on that debt, while at the same time you're losing tax receipts as more and more people are no longer paying taxes but instead are on the dole.
Not only that, but if you want to "lower the prices in Greece" (i.e. deflation), you would have to lower the wages of everyone at the same time. That is politically very hard to do.
The averaged interest rates are actually fairly low for Greece as a lot of its bonds are held by European institutions with very good conditions. The effective interest rate is at 2.4%, slightly lower than even Germanys effective rate. The more interesting value is the debt-service burden, but even though that's higher for Greece, it's still in the same ballpark (it's about the level that the US have).
Still, the debt is horribly high and I don't see a way to repay it. I also don't see a way that Greece can meaningfully default without leaving the EU. That's impossible to sell to Spain, Italy, Portugal, Ireland or might trigger a landslide. Maybe a unified fiscal policy could help. We live in interesting times.
see http://www.socialeurope.eu/wp-content/uploads/2015/01/OP6.pd...
In the medium to long term, it's Eurozone breakup (either partial or complete) or fiscal (and thus political) integration.
I estimate the chance of the Germans ever admitting that the current system is skewed in their favor and actually taking real steps to raise their inflation rate (to counter deflation elsewhere in the Eurozone) and reduce their trade advantages at very close to zero. They're still scared of becoming the Weimar republic, even though they're staring Japan-style deflation in the face.
On the whole, Germans view Club Med as lazy, indolent, irresponsible, and deserving of their fate.
Bring on the Eurozone exits. The sooner the better. Currency unification without fiscal and political unification is a disaster and has plunged half of Europe into a depression as bad as the 30s.
But why enter in a trade union in the first place? Right, the oligarchs made Greece do it. However borrowing from the Deutsche Bank and expecting them to be nice and fair about it sounds naive to me.
Many people don't get it, but the EU is mainly about trade. Not so much about democracy or social equality. That being said, there is some redistribution of wealth between countries:
http://en.wikipedia.org/wiki/Budget_of_the_European_Union#Ne...
In short, the EU and the IMF demanded savage spending cuts from the Greek government. Turns out that cutting in a depressed economy makes the depression worse (despite the wildly optimistic predictions by EU officials, who decided to ignore textbook economics). As a result, Greece now has enormous unemployment, a vastly shrunken economy, and a debt-to-GDP ratio that is only going up despite the huge spending cuts. This is clearly an unsustainable course, something now recognized by the Greek voters. Unfortunately, there appears zero chance that EC and German politicians are going to acknowledge that austerity doesn't work.
Let's also mention WHY those spending cuts were demanded: Because Greece was on the verge of bankruptcy, the interest rates for their bonds were exploding and the EU and IMF had to pump more than 300 billion € into this 11 million people country.
That, while true, leaves out the quite important fact that Greece was only on the verge of bankruptcy because they bailed out their banks. One can nicely see that on charts displaying the debt/GDP ratio: While high for quite a few years, it was more or less constant. The bailout was the one factor that created the explosive dept growth. Now it gets interesting: Whose money was in these banks, invested in high risk/ high yield projects? Mostly investments of european upper class/upper middle class (because small Greece had an even smaller upper class). That's why so many German banks like Commerzbank, Deutsche Bank and the now defunct Hypo Real Estate hold so many Greek government bonds. By bailing out the Greek (and Spanish, Irish etc.) banks the European population indirectly subsidises the risky investments of its own upper class. That's also the reason why the austerity measures are so inconsequential: While pensions get cut and hospitals closed, profiteers like Germany have no qualms to sell German tanks and submarines worth billions of € to Greece (the German submarines alone cost 3 billion) [1].
[1]: http://www.theguardian.com/world/2012/apr/19/greece-military...
edit:typo
Sure, if you are insolvent but you can still get a hold on some borrowed money your situation is obviously going to get better in the short run. But you are just killing the goose that laid the golden egg, since your economy is dependent on borrowing money.
It's not black or white. On the one hand you have the economist that say that Greece must stop running a public deficit since it may risk a default if creditors believe that the Greek Government will never be able to repay the debt. On the other hand, you have the (neo)keynesian economists that believe that cutting spending during a crisis is a suicide, and therefore paying off the debt is not a priority. Which ones are right? Well, only time will tell.
> As a result, Greece now has enormous unemployment, a vastly shrunken economy, and a debt-to-GDP ratio that is only going up despite the huge spending cuts.
It's not clear how much of these is caused by the austerity measures. If you remember, at the beginning of the crisis most European governments launched public spending programs in order to reactivate the economy. It only made things worse: it did not create long lasting jobs and it only increased public deficit, which in turned also increased their debt obligations.
>This is clearly an unsustainable course, something now recognized by the Greek voters.
Actually, the only "clear" unsustainable course is to keep the economy afloat by increasing their debt. If this is the new normal, they will not be able to keep borrowing forever.
>Unfortunately, there appears zero chance that EC and German politicians are going to acknowledge that austerity doesn't work.
You have to understand that they are choosing the lesser evil. Even if austerity did not work, it still might be better than increasing their debt.
One can ask Yanis Varoufakis the same question.
The reason why they don't is quite easy and also very unpleasant for them.
ps. Varoufakis definitely needs to revisit Bitcoin though[2]
[1] http://www.amazon.com/Future-Back--More-than-Prophecies-eboo...
http://singularityhub.com/2011/05/17/eight-out-of-chinas-top...
;)
"She spent the final moribund decade of the G.D.R. as a quantum chemist at the East German Academy of Sciences, a gloomy research facility, across from a Stasi barracks, in southeastern Berlin. She co-authored a paper titled “Vibrational Properties of Surface Hydroxyls: Nonempirical Model Calculations Including Anharmonicities.” She was the only woman in the theoretical-chemistry section — a keen observer of others, intensely curious about the world."
[1] http://www.newyorker.com/magazine/2014/12/01/quiet-german
[1] http://en.wikipedia.org/wiki/Matthias_Platzeck [2] http://scienceblogs.de/frischer-wind/2011/03/21/wissenschaft...
A couple of points he made are:
* He believes that the BTC market can be manipulated by big players easily. * Having a central bank regulating your economy is a good thing, because you know to whom point the finger when shit hits the fan. * He understands that liberals like the perception of freedom that bitcoin gives but it's ultimately false.
All points which I share and believe although I have bought and sold BTC in the past. These are not insights really, these are elementary economics. It's strange that programmers who understand algorithms and cryptography can not wrap their around these things. It always amazed me, I can't explain it :-/
Not an especially new idea, especially in a Greek context. Plato, in Republic:
"The society we have described can never grow into a reality or see the light of day, and there will be no end to the troubles of states, or indeed, my dear Glaucon, of humanity itself, till philosophers become rulers in this world, or till those we now call kings and rulers really and truly become philosophers, and political power and philosophy thus come into the same hands."
I didn't claim it to be one. Of course Plato and his thoughts are behind it and if you give the book I mentioned a shot you'll find out that he is heavily mentioned in it.
Greek did take part of a fund destined to boost their economy, like Western european countries with the US's Marshall Plan. Whether the investments made with this money were profitable or not it's up to debate, but the end game (as for Spain, Portugal and Italy) always were to improve the greek economy and middle class in order to strenghten the overall euro economy.
Now that the "southern" euro countries are in deep financial troubles, Euro bons were lended to them, not donated. Thoses bonds has to be repayed fully, but without sucking dry the Greek economy or burdening it for too long (western countries have a rap sheet of taking advantage of African countries in debt).
Please do not mistake Greeks for their representatives.
[1] http://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_G...
http://www.spiegel.de/international/europe/greek-debt-crisis...
Greece is pretty corrupt though.
The real fun starts when Greece defaults and Italy/France/Spain/Ireland/etc. go...
If them, why not us?
Why they do it is another matter. Theories I've heard:
* (like you said) They want Greece to be an example for the other periphery countries. * It is used as a pretext to chip away at Greek sovereignty and give the (unlected) European commission additional powers over the country. * The core banks' insolvency becomes totally apparent if Greece defaults, so they pressure the ECB to keep up the charade that it's all necessary. * It's used as an excuse to sell off valuable Greek state assets on the cheap to politically connected individuals and companies. * Or all of the above.
*may not apply to the elites who actually bankrupted the country, who don't rely on government services and can keep their money in Swiss accounts
Surely these all have to be set at a level that is actually sustainable by the Greek economy?
Additionally, if you don't pay for pensions, social services and create jobs then people don't have any money. If they don't have any money they don't spend. And not spending isn't sustainable for any economy.
Government spending should be countercyclical - and smart creditors (which, sure, a government beholden to populism can't always be) would realize that. Prop up the economy now, get growth up again, and then cream off some "repayments" when times are good - I'm sure a contract could be structured to specify that they'd repay their bonds in proportion to e.g. growth above 3%. Running Greece into the ground benefits noone, not even Germany. But sadly, decades on, politicians are still ignoring Keynes.
Or they could have simply defaulted. It's worked out pretty well for Iceland. The argument as I understand it for every nation being perpetually indebted is that it ensures outsiders have an interest in that country being successful - if you own Greek bonds you're less likely to invade Greece. But if your bondholders are forcing a lot of suffering on your country, maybe the costs outweigh the benefits.
What do you expect - full pardon on all mistakes? It won't happen next time, we promise? You know, one of life's lessons is - you pay for all your mistakes, and youth is no excuse for them. Sometimes, in a very hard way.
We all have crappy politicians in one or other way, but guess what - unless vote was rigged, they were elected by majority. I do agree with notion that in democracy nation has leaders that it deserves, exceptions will even out in broader average (either location or time based).
One generic example - when there was massive tax evasion, people should have outsted it's government for closing an eye on it. They didn't. Now they face consequences for what every sane moral person must have felt is wrong.
Everybody is guilt here. Man up.
This isn't true though. The people with the most direct responsibility for crashing the world economy, like those with the most direct responsibility for bankrupting Greece, haven't paid at all.
Also, I think the "citizens of democracies are responsible for the crimes of their leaders" moral principle is one you probably don't want to consistently apply. To try a reductio ad absurdum, I assume you're not in agreement with Bin Laden's reasoning for the WTC attacks, for example.
[1] we had a major slashing of social services with the Hartz4-laws. Things are certainly not as ugly as in Greece, but Germany has the highest percentage of low-wage labor in Europe. Germany as a country is rich, but a lot of Germans pay the price.
Every periphery economy suffered from the same economic malaise caused by a housing boom, a crash, a bailout of their banking sectors and austerity imposed from above (all actions ordered by Brussels).
Yet Greece was the only one that played silly games with Goldman Sachs to get accepted (for which nobody has been punished except the Greek people).
If you're talking about the bailout, then no, it was never meant to be a Marshall Plan sort of deal. More or less, it was meant to give money to an insolvent country so it could save its insolvent banks and pay off their creditors. The vast majority of the bailout money did not stay in the country and put to productive use, but instead left the country to pay off its debt.
Unless I'm mistaken, you are very mistaken, and confusing things.
"Greek debt" has nothing to do with the EU Cohesion fund (which is open to all member states which meet the criteria) or Euro Bonds (which , to this date, do not exist), but with a large number of national bonds that have been bought by the ECB and IMF specifically.
So yes, basically Greece took Euro money and now is planning not to repay it.
I agree though that saying that every Greek is responsible for this situation, or that the conditions for repayment are fair, are other matters entirely.
However, and leaving out the current bailout, the reason for Greece to be in the situation it is is because successive governments have provided lavish benefits that they couldn't pay for.
I think Marcus Brigstocke says it best: https://www.youtube.com/watch?v=GsaKgz1v-f8
For example, when the money was obviously not going to be repaid, but the Troika continued to lend them more -- at what point does the lender become at least partially responsible? Obviously I don't advocate irresponsible borrowing, but certainly irresponsible lending is also bad.
Ultimately, the bond holders are going to have to take a hair cut, or have their Euros devalued, because the Greek economy cannot possibly hope to repay its current debts. To think otherwise is to hope foolishly for the impossible (all questions of right or wrong aside).
But that isn't the cause of their issues, that is just the latest symptom. The cause is electing a series of governments that promised benefits that they couldn't afford. EG [1] letting trombonists retire at 50 because their work is "hazardous".
[1] http://www.independent.co.uk/news/world/europe/greece-to-cal...
I feel like this is some form of victim blaming.
Edit: It seems Bloomberg has the most substantive article that isn't behind a paywall, so we've changed to that from http://www.ibtimes.co.in/valve-economist-yanis-varoufakis-ap....