Margaret Thatcher: Her Master’s Voice

Illustration by Manos Symeonakis for Cartoon Movement http://www.cartoonmovement.com/p/6035

Illustration by Manos Symeonakis for Cartoon Movement http://www.cartoonmovement.com/p/6035

More than the bouffant hair, the handbags, the power suits and pussybow blouses, it was the voice that lingered.

For anyone growing up in the UK in the Eighties, Margaret Thatcher’s voice was unforgettable. Proceedings in the House of Commons were not televised until 1989 and, until then, TV news had to make to with displaying pictures of Parliament and playing audio of the debates, which often consisted of Thatcher swatting away her opponents with her polished vowels.

That memorable voice, though, was the product of elocution lessons, which were part of a wider effort to make Thatcher more appealing. This was not the only illusion of the Conservative leader’s time in power.

One cannot question that when she became prime minister in 1979, Thatcher took over a country in a steep decline. The economy was tanking, inflation was rising, industrial relations were mired and a general post-colonial malaise had descended over the UK. Getting out of this mess was an immense challenge.

Legend has it that guided by her guru Keith Joseph and the monetarist principles of Milton Friedman, Thatcher blazed a trail to recovery and transformed Britain. That she changed the country beyond recognition is without doubt. That it was the result of a concerted plan which ultimately paid dividends is certainly debatable.

The reality is that there was a good deal of opportunism and luck to Thatcher’s early years. There were tax rises before tax cuts became de rigueur. There was a desire for closer union in Europe before Euroskepticism was born. There was pampering of unions before they became the enemy.

Then came victory in the Falklands and the Big Bang in the City of London: bold moves that reaped large rewards for Thatcher and, many would argue, for the UK. Britain gained an international role again, as “Maggie” became an interlocutor for Ronald Reagan and Mikhail Gorbachev. Market forces, meanwhile, were creating new prosperity that blew away the cobwebs of the 1970s. Shareholders and consumers became the driving forces of a new economy. It is perhaps what Austrian economist Joseph Schumpeter had in mind when he spoke of “creative destruction.”

It came at a huge cost, though. The emasculation of unionism in order to create a flexible labor market left communities with an emptiness that would never be filled. The unprecedented privatization drive spawned a new industry of stockbrokers, investment bankers, lawyers and PR executives who were able to strike it rich as inequality grew. While she claimed sell-off success, Thatcher also laid the track for the disastrous railway privatization, which set the industry back years and caused untold misery for passengers. Ultimately, Thatcher left a society divided, less just and bearing significant scars from the dogmatism that defined her later years.

The Conservative leader recalibrated the relationship between the public and private, between the collective and the individual, between the state and the investor. It is a philosophy that was also adopted by New Labour under Tony Blair and Gordon Brown and has set the tone of debate throughout Europe over the past couple of decades.

However it also provided a set of beliefs that regarded the market as close to faultless: Self-correcting and self-regulating, certainly. This thinking provided the underpinning for much of the dramatic downfall of the past few years. A financial industry that pursued profit rather than a role as facilitator in a healthy and balanced economy is perhaps a fitting culmination for the era of “individual men and women” that Thatcherism ushered in.

As the UK and the eurozone seek to recover from this crisis (which in some countries, such as Greece, also has much to do with the public sector), Thatcher’s creed is serving as a manual for some leaders. Rolling back the role of the state and making labor markets supple are at the heart of policymaking.

As we look back on Thatcher’s legacy and ahead to what might be in store for the UK and Europe, there is one aspect that is not up for debate. Whether you believe in creative destruction or think it is a fallacy, the only way you can truly judge it is to assess what has been destroyed and to evaluate what has been created. In this respect, the Thatcher transformation seems far from glorious and, like her voice, more of a deception.

Nick Malkoutzis

136 responses to “Margaret Thatcher: Her Master’s Voice

  1. Margaret Thatcher may have got a lot wrong. But one thing she got absolutely right was her No! No! No! to the single currency and European Union:

  2. The paradox of the years in power of Margaret Thatcher and her alter-ego Ronald Reagan was that despite the forceful rhetoric about “rolling back the frontiers of the state”, the state actually got bigger. The focus on shareholder capitalism nurtured an industrial culture whose horizon reached only as far as next quarter’s results announcement. Consumerism led to over-leverage and asset bubbles. Still, the ethos of self-reliance that characterised Margaret Thatcher was a great leadership trait – Greece would benefit from having such a “conviction politician” right now.

  3. I spent one month and a half in Cambridge at the beginning of her government, and I still remember not being able to use the railways every weekend due to strikes.
    UK before Maggie was not a funny place to be, the feeling of being taken hostage by the unions, and the impression of a country in decadence, was overbearing.

    • And you think it got better under Thatcher??!! You display your extreme rightwing political views with this comment.

  4. I don’t think that displays extreme right, it just explains fed up with strikes which is how most of us feel here especially now we are begining our tourist season. Apart from her NO NO NO I think at this time in Greece also relevant was her ‘If you want something said ask a man, if you want something done ask a woman’.

    • Thatcher was the most evil woman ever to enter politics, so I think your praise of her raises questions about your own values.

      As far as strikes are concerned, I suffered those too. The unions were struggling to keep up the living standards of declining industrial workers, and wanted nothing to change. They made the mistake of confronting Labour, who had made the mistake of putting an idiot (Callaghan) as PM — something like a Papandreou in terms of stupidity. That does not make Thatcher acceptable, considering that her aim was to destroy the 20th century achievements of the UK — which largely has now been accomplished. Sod all else has been achieved.

  5. Yes Xenos, I do think that the UK was a much better place after her. She was a game changer.

    • I lived through both phases and I can assure you that my country became Hell under Thatcher, and remains in a very bad way now — socially, economically and politically.

  6. everygoodboydeservesfavour

    I lived and grew up in the UK in the pre-Thatcher period. As I have written elsewhere it was going to hell in a handcart, IMF bailout n’ all. The unions were running the country and both Wilson and Jenkins were hostage to them. She opened up a quasi-statist economy to a more balanced market driven mixed-economy and the UK became a much more affluent country for the vast majority subsequently. My (lower middle class) mates from those days of yore affirm this. Yes, the mining industry disappeared and consequently the north suffered disproportionately. It wasn’t viable and in any event it wouldn’t be around now anyway because of better cleaner options, . She had a set, shall we say and was the catalyst that put the UK on an upward path of growth. Three overwhelming voting majorities attested to the vast majority of UK residents sharing her vision at that time. She made mistakes… the poll tax was a dog’s watsits for sure, but on balance she will go down as a political giant on the landscape of UK post-war history. Oh for someone with those cojones right now here in Greece!

  7. everygoodboydeservesfavour

    Error…Callaghan not Jenkins.

    • The UK became a pioneer of neoliberal degulated capitalism — with a stinking rich banking and insurance sector, a collapsed industry and a new working class mentality that thought it was middle class, but was paid crap wages and had crap jobs. There was nothing balanced about the economy or the society, and the situation got worse under Blair;s neoliberal warmongering mentality, and now even worse again under the rule of the stinking rich Oxbridge and expensive private school crowd. The UK economy is non-viable at this time.

      Anyone who insists that Thatcher did something positive for Britain is a right wing apologist for market forces and exploitation of working people. Latterly, we also start to see how much corruption was involved as well — maybe not at the level of Greece, but even Bangladesh and Pakistan struggle to outdo Greece in that area!

  8. everygoodboydeservesfavour

    As a point of interest, were you there during the 70’s?
    For my part I’m neither right wing nor an apologist for anyone, having been part of the ‘working class’ all of my working life. The failure of the out-of-control finance sector in the UK is down to a patent lack of checks and balances, as you say, primarily under that so-called socialist PM and his Scottish flunky, and continues, sadly, to this day. Failure to reign in this malfeasance by successive governments should not be ascribed to MT. Maybe at the upcoming G8 there will be some consensus to clean up the banking sector, together with the demise of tax havens. I note that today Luxembourg has started to buckle and France is making some positive noise in this direction

    • I first went to uni in 1976 (Manchester) where I had the strange experience of my essays being read back to me by candlelight, and in my hall of residence I had to buy a powerful battery lamp in order to see to do my work at night when there were powercuts. We often dined by candlelight!!

      I am from a middle class politically active family (Liberals), but shifted slightly to the left after reading Friedman and understanding exactly what it was that Thatcher intended. Of course, nobody liked the chaos of the 1970s: perhaps it was more easily tolerated by students than by others, though. For my part, at that time was rather non-political, and pursuing a career in artistic directions. The only positive thing I have to say about Thatcher is that she forced me to read a lot of political economy in the late 1970s and early 1980s, and then return to university to read for a degree in economics with politics. (I was appointed a lecturer, a few years later)

      As far as your comments about the banking sector are concerned, you are right. The gap between popular opinion and the reality of banking is too great to be sustained within democratic countries: either banking has to change or democracy collapses, in the medium/long run. The former is more likely, I think. The only big questions are how long it will take for serious reforms (or maybe they will try with non-serious ones, first) and how much money will mysteriously “disappear” before proper controls are established. I fear that most of global capital will go into a black hole, and we will just carry on with the same mess for decades.

  9. everygoodboydeservesfavour

    Just noticed that you have stated you were there pre-Thatcher. Clearly we have a different take on the situ at that time. My folks were on short time (2 days a week) due to power strikes. The unions were out of control and making outrageous demands. The UK improved under her watch, notwithstanding her divisive legacy.

    • Yes, but read my later post. Your class is the key here: the working class was the most affected by Thatcher, who seemed to offer a solution. IN reality, she offered a solution that was in the interests of the rich, but it didn’t look like that to working class people in the late 70s and early 80s.

  10. Of course Thatcher was positive for the UK we were virtually bankrupt and sick to death of strikes, the country was a shambles. Obviously from your past remarks you are a strong union man, but unions also have responsibilities. Here in Greece now we are experiencing the same problems, the political left is controlling the unions and every other day we have one union or another calling for strikes, this is at a time when we are desperate for tourism and the last thing we need is the adverse media coverage which deters foreigners from holidaying here. One point I have always thought most relevant and that is that the working man will never benefit from a bankrupt country, only a country that has growth. Growth can only be achieved by the private sector not a wasteful public sector.

    • Very right wing. The world is far more complex than you describe, which explains why you keep on making these outrageously simplistic comments on Kathimerini. There are no simple solutions, and we cannot survive with a bankrupt state or no state at all: that is where Thatcher wanted to go.

      Economic growth is a big issue, which again has no simple discussion. Are there limits to growth? Maybe. Is redistribution as important? Maybe. Can we achieve the effects of growth by efficiency gains, by more ecologically sound policies? rather likely.

      • Guest (xenos)

        One further comment: all of my early adult life I disliked unions, and warmed to them only after realising their important historical and social role in mediating between powerful economic interests and ordinary people. My personal background is not favourable to trade unions and it took some education for me to shift from that position.

      • another_greekboy

        It’s the joy that comes from seeing the world in black and white. Union – bad No Union – good; left – bad right – good.

        If only life was that simple.

      • Estevao Veiga

        Hi Guest,
        Who on earth told you that you have the right to disparage who disagrees with you? Who on earth told you that you are the standard bearer of what is right or wrong? It is always ironic that the ones who pretend to see the world in other colors than black and white are the ones who allows themselves to use terms like “outrageous”, phrases like “Thatcher was the most evil woman ever to enter politics, so I think your praise of her raises questions about your own values.” etc.. etc…
        Where are the shades of grey in this kind of phrase? How can you ask others to behave in a way that you don’t behave yourself? Give the example first, show that you are able to respect who disagree with you before lecturing others in how they should see the world.
        Because through my eyes, your world is a very dark one, one where I will not like to live.

      • Guest (xenos)

        Estevao
        You have no right to an opinion on a country where you stayed a few months, but where I as a citizen of that country lived and suffered the political and economic realities for decades. Your right wing arrogance is very clear, now. It is not about just Greece that you have such extreme views, but doubtless every country of the world.

      • Estevao Veiga

        People who disagree with you have no right to have an opinion? Apart from dark, not very liberal your way of seeing the world, isn’t it? Maggie at least was elected, three times, by the British, contrarily to you when you are asking others to consider your opinions, at the same time that you show an utterly disrespect for the rest of the humankind.

      • Guest (xenos)

        Thatcher was an evil woman. Hitler was also elected and very popular with the Germans. Your ideas of morality are completely unacceptable to all decent people: the fact that uneducated people are easily tricked, or that there is no real political alternative to vote for, does not bother you. After all, all you care about is that your right wing opinions should prevail and any opposition destroyed. Why exactly that should be, I do not know: presumably either financial self-interest — that you make money out of other people’s misfortunes — or some personal psychological problems, perhaps.

        Whatever it is, those of us who try to do what is right and benefit the world rather than ourselves are sick to the back teeth of scum playing games with politics and on the web.

  11. Xenos: I have no comment except that the ideas are interesting and certainly show an ongoing divisiveness. And one comment about your method of confrontation.

    Estevao Veiga, was not, in the 10:30 a.m. blog, expressing an opinion about British politics (which you imply she has no right to do!). The criticism was about your attitude to those who disagree with you.

    You gave no answer to this charge.

    • Yes, I gave no answer. I consider it to be none of his or her business.

    • @Rosemary: It is true that I have no patience with idiots who think they are smart. Jeffrey Papandreou is one notable such case (although my contact with him was thankfully rather limited). On the other hand, I have always had infinite patience with (and respect for) less clever people who really want to learn and improve their abilities: for such students, or even others, I am always prepared to make a lot of effort and provide help.

  12. I don’t think Guest that people such as you can benefit the world as you cannot see another persons point of view. Three times she was elected by the majority in England, nobody says that during that time she didn’t make mistakes but she did do exactly what she promised. I have read here how she was to blame for our out of control banking systems, our materialistic life styles etc etc. This is all rubbish, she certainly didn’t promote tax evasion using off shore bank accounts. She was a capitalist agreed, but that didn’t make her a corrupt politician. Blair andAndreas Papandreou were voted into power as socialists whereas in fact they were both guilty of fermenting corruption simply by allowing it to happen.

  13. I hope that you didn’t mean that because we disagree with you we are scum, that’s not acceptable from a man with your education

    • Quite right Ann. I almost added to my comment that Xenos’s attitude to others opinions does not do him credit.

    • It’s not a simple matter of disagreement. If you want to hold different opinions on how to run the world, feel free to do so and I will not insult you for it. That does not entitle you to claim your opinion as being the truth, however: it allows you to have a differing opinion.

      However, there are two very different cases. The first is people who engage in propaganda for their personal and professional financial gain. This would include people involved in banking and certain other business activities. They are all over the internet, pushing the right wing views on uneducated people, in order to ensure that the current terrible mess is perpetuated in favour of the finance fraction of capital.

      The second category consists of people who are professionally employed (either politically or by business interests) to engage in mass propaganda of various sorts across the internet. This is a widespread and very serious problem.

      I do not know if you fit into either of these categories. It is possible that you do not, and simply insist on your personal opinion as being the truth. If so, then kindly allow me to tell you are that talking out of your arse. Thatcher started the whole deregulation of banking in the early 1980s, with a clear stated policy that the only economic future of the UK was in banking. She destroyed the manufacturing sector of the UK with a high pound caused by foolish and obsessive monetary policy. These are not my personal opinions: this is a standard conclusion of economists and economic historians of the left, right and centre.

      If you want to continue with your ridiculous delusions about Thatcher, feel free to do so. Do not expect others to take this nonsense seriously: it is an insult to educated and intelligent people everywhere.

  14. Hi Xenos,
    Had you ever heard about projection? This is the beginning of the article about it in Wikipedia:

    Quote
    Psychological projection was first conceptualized by Sigmund Freud as a defense mechanism in which a person unconsciously rejects his or her own unacceptable attributes by ascribing them to objects or persons in the outside world instead
    Unquote

    I think you are doing it when you write things like:

    Quote

    After all, all you care about is that your opinions should prevail and any opposition destroyed.

    Unquote

    And also, seeing ourselves as savior of the world to the point of writing

    Quote
    Whatever it is, those of us who try to do what is right and benefit the world rather than ourselves are sick to the back teeth of scum playing games with politics and on the web.
    Unquote

    Is also a sign that you aren’t able to conceive that different opinions may appear not because people are evil, but because they have a different perspective than yours.

    In the meantime, I ask you, once again, to stop disparaging who disagrees with you.

  15. Another explanation for projection in the same article of Wikipedia:

    According to Sigmund Freud, “projection” is a psychological defense mechanism whereby one “projects” undesirable or unacceptable thoughts, motivations, desires, and feelings onto someone else

    • Not interested in silly quotations from a children’s online site called wikipedia. I read the complete works of Freud in my 20s, along with much of Jung and others.

  16. another_greekboy

    Welcome to the one-dimentional, single mindset of intellectual orthodoxy. There is a “right” answer and you will learn to love it!

    Think of it like chicken in the chicken coop. They think the sun came out because they made noise together.

  17. Quote
    On the other hand, I have always had infinite patience with (and respect for) less clever people who really want to learn and improve their abilities: for such students, or even others, I am always prepared to make a lot of effort and provide help.
    Unquote

    For this one, I think it the Wikipedia article concerned is the one about “Narcissism”🙂

    • No, it’s about being a good teacher and not focusing solely on the most brilliant students. It’s also about being pissed off with the arrogance of most in the teaching profession who are concerned with maximising their career development by doing this. You really don’t have a clue about what is going in the world, do you?

  18. A good teacher is good for all his pupils, the brilliant ones, the argumentative ones, and the less endowed ones.
    A teacher who only feel comfortable with the ones who admire and respect him, is one with a Narcissist personality, who will not stand any attack to his most fragile ego.

    • I am getting tired of your behaviour. You have no knowledge of my personal conduct, no information about my teaching, no knowledge of my research and publications… yet feel entitled to make personal attacks based on wikipedia (for Christ’s sake) and your own dubious personal opinions. My ego is quite strong enough to cope with personal attacks, which are very common in the academic and the real world. Frankly, I don’t give a fuck for people’s opinions unless they can back them up with evidence and analysis.

      If you think that you are entitled to do this, because I made some apposite comments on Ann Baker’s persistent, insistent, dogmatic and factually incorrect point of view, then this is just a childish response.

      • another_greekboy

        There are two types of students I find particularly annoying. The “know-it-all” who loudly proclaims to the world that he(she) already has all the answer and who spends his (her) time trying to prove that you know nothing and that s(he) should be doing your job. And the “but-its-my-opinion” student who feels that you should respect and accept his or her subjective opinion as the correct and definitive answer to anything and everything since, as everyone knows, we need to be respectful of everyone’s opinion and every opinion carries the same weight.

        It doesn’t matter how much you try to work with them, it doesn’t matter how much patience you have, they will persist on loudly disrupting the class in an effort to make it revolve around themselves and their deluded sense of ego. And the worst part is that they always find a supporting cast of clucking chickens to stroke that ego and keep the circus going.

      • The academic world is not the real world. I live here in Greece run a business and have the right and the experience to state the facts as I see them. You have the right to state your ideas but not the right to insult everybody that disagrees with you nor to use vulgar language.

      • Guest (xenos)

        @Ann: I work in the real world, and also publish some academic papers and I used to run a Masters course here. It is my job to explain to policy-makers and governments what is happening, and what the possible solutions are to problems. The real world is my world. If you think that you know it better, from running one business and writing to online newspapers, then you are incorrect.

        As I told you before, you can state your opinion but when it is based on wrong “facts” and zero analysis, do not expect others to respect it. You merely repeat your opinions ad infinitum and think that others should listen to them. Why? I have no idea: perhaps like that evil Thatcher you have some sense that you know better, without any education or intellectual superiority. The commonsense idea of the world, that has badly damaged everything in the last few decades.

        You can carry on writing your opinion, but others will carry on telling you when it is wrong.

      • Guest (xenos)

        @greekboy: yes, these two types are terrible to cope with. We can see some examples of them here, as well. One of the problems in modern times is that these two types, who used to be not very employable, have now taken senior jobs all over the EU and North America as well as occupying political posts: we no longer have even a pretence of meritocracy, and are therefore incapable of getting out of the political mess that Europe is now in.

    • In my experience, and as a teacher;
      1). A good teacher is one who respects his pupils and is respected in return
      2). He or she does not aim to be popular, and is not egocentric.
      3). A good teacher inspires the best and draws on the best in her pupils in a way which will enable them to develop intellectually, socially and emotionally, with the best human attributes, including respect and understanding for each other and for others’ ideas and good intentions.

      There are other points which may occur to you.

  19. The only knowledge of your behavior that I need is the one that you show in this blog. And the one that you are showing in this blog is of a big Narcissist with a “false self” of certitudes and insults hiding a deep insecurity under all this attacks.
    Show yourself open to others opinions without disparaging them, and I will immediately stop to expose the origin of this insults, your so fragile narcissist ego.

    • I suggest you grow up and stop the ad hominem attacks. These are not acceptable and I did not make such attacks: I attacked the opinions and incorrect statements of fact of others. You are just a malicious right wing troll.

      • Estevao Veiga

        Marvelous! let’s go the facts

        Quote
        You are just a malicious right wing troll.
        Unquote
        Quote
        I think your praise of her raises questions about your own values.
        Unquote
        Quote
        Whatever it is, those of us who try to do what is right and benefit the world rather than ourselves are sick to the back teeth of scum playing games with politics and on the web.
        Unquote
        Quote
        I have no idea: perhaps like that evil Thatcher you have some sense that you know better, without any education or intellectual superiority.
        Unquote

        And after this (sample) of your writings, this pearl!

        Quote
        These are not acceptable and I did not make such attacks: I attacked the opinions and incorrect statements of fact of others.
        Unquote

        Are you aware that “troll”, “scum” “evil” or attacking the values of somebody can be construed as personal attacks? Or you are blind to your own writings?
        And if that is the case, I will make a single attack on your behavior. Person who behave in this way suffer from “Narcissist personality”.

      • Guest (xenos)

        Just cut it, Veiga. You have nothing to say.

  20. Guest there is no point to this as it is simply personal and is not related to the article. I’m signing off you can have the last word, but it is meaningless as people have their own views and their own political opinions which is why we have Democracy. Blogging about their views is acceptable, but insults and swearing is not.

    • Every time you make a post on all the blogs and news sites, you insist on your personal uninformed point of view and refuse to engage in serious discussion. You present nonsense as facts and refuse to admit it. You do not accept the superior expert knowledge of anyone at all. There is no other word for this than propaganda, which is why you were accused of being a Turkish troll. If you cannot understand that, then you understand nothing.

  21. I think much more important than the analysis of Margaret Thatcher and the exchange of insults in the comments is, for Greece, what Nick Malkoutzis writes in today’s Ekathimerini about the export of agricultural products. That is one of the issues which the public debate should be about.

    Greece simply must learn to export more. Whenever I suggest this, I get discussion stoppers like ‘Greece has no export culture’ or ‘the import lobby is far stronger than the export lobby’ or ‘Greece doen’t have any products to export’, etc. May all be true but the point is not to analyze the problem to death but, instead, focus on solutions. What I read in Nick’s article is a beautiful focus on solutions.

    I think the Greek media, blogo- and twittersphere should be full of articles/proposals like the one by Nick. There is nothing to write about because the Greek economy has no potential? C’on! Whoever believes that should stop participating in a debate and emigrate as soon as possible. There is plenty of potential in the Greek economy; one only has to identify and raise it. And the most important thing is: endless talk about Troika-austerity kills the spirits of Greeks. Enthusiastic talk about opportunities could rekindle such spirits.

    I enlose a link below which explains what McKinsey said about Greece’s potential in the agricultural sector.

    http://klauskastner.blogspot.gr/2012/10/a-growth-model-for-greece-agriculture.html

    • Klaus; By coincidence I was going through my Facebook pages this afternoon, deleting old stuff etc and I came across a piece I had found about Greek farming and the return to the land. From a farming family (most of us have other careers now) I am always interested and I made the point that Greece should develop its agricultural produce for export. For a vegetarian (I’m semi-veg), Greece is a paradise.

      • Guest (xenos)

        Yes, I have been lamenting this for years — well before the crisis. I agree that policy proposals are needed — even if the current macroenomic setting does not support them. That is because such approaches are missing from Greek economic history, and need to be in place when an economic upturn is feasible. Of all products, high quality and high value agricultural ones are eminently marketable now and the future, and the best of the Greek things used to outclass the rest of Europe and the Middle East. I mean non-meat products too, because this is where Greece shines.

    • Today, Friday April 12th Nick Malkoutzis has an article in the “LIFE” section. Here is his final paragraph:
      “While good food and wine are undoubtedly paramount for living well, in Greece’s predicament, finding new markets, exploiting comparative advantages and changing conceptions are also vital to a good life.”

      There is hope!

  22. Exactly, why do we have one article after the other relating to Greece leaving the Euro. or the collapse of the Euro. Let’s have more articles relating to growth and export campaigns. At the moment the whole of Greece is rushing here and there to prepare for the tourist seson. Painting, gardening re-furbishing shops, bars, family hotels, and we should be supporting them.

  23. another_greekboy

    “At the moment the whole of Greece is rushing here and there to prepare for the tourist seson.”

    Does that include the 27.2% unemployed and their family? How about the homeless now living in caves on Philoppapos? Or, the kid looking for food in the trash in Crete? Let’s not ruin the happy, bucolic scenery with them. Better to photoshop them out of existence.

    The whole of Greece indeed. A giant happy taverna…

    • Yes, if you read the older economic history of Greece (which I have done, back to 1832) you see that a subsistence economy reliant on agriculture and tourism could not sustain itself without continuous foreign aid. The islands in particular, owing to the seasonality of tourism were in abject poverty for all of Greek modern history. One of the planks of government policy in the 19th and early 20th century was to create employment for the residents of the islands — this initially was construction work (see the illegal houses put up for themselves by the workers in the area called Anafiotika) and later extended to the police. Most of the latter were uneducated islanders, and the police jobs were nothing more than employment creation without training. Moreover, with foreign ownership of the little industry (such as the silver mines) there was no benefit to Greece or the Greek people: it was simple exploitation by Italy and France.

      The whole idea of EU membership was for Greece to have a route into developed core capitalism, with capital inflows and investment and economic development. This did not happen and will not happen until most of the serious structural problems of the country are addressed. In my judgement, it is primarily the legal system and the taxation system: I see nothing being done for the former, and sod all (so far) for the latter.

      By all means, Klaus, push for positive efforts. But we do have to take account of the national and European economic conditions: optimism should not supplant realism.

      • You are quite right regarding the taxation and legal system. The first is being addressed with the new system which will at last be transparent as all tax offices throughout Greece will be able to check on any particular citizaen. Actually I think a bigger problem is the lack of survey maps showing ownership of land and properties, we don’t even have this for Athens. We know from one small investigqation in Mykonos that there are many wealthy Greeks with undeclared properties especially on the islands.
        I saw an article today that there are now three hundred thousand cases awaiting trial. I have always thought that our legal system is the biggest problem, it simply doesn’t work, cases take far too long, too many appeals, delays and perhaps more local courts for less serious cases could be the answer.

      • Guest (xenos)

        @Ann: I am glad that we can agree on some things, and also have some dialogue. Confrontation does not contribute to progress, unless it is a temporary situation that is quickly resolved. I am sure that we all have similar goals for Greece, but differ somewhat in how to achieve them.

  24. I read a blog from a tourist a month ago who said that he was very surprised when he came to Greece as he expected to find homeless people laying around the streets and the people all desperate. This is the image that is portrayed and yes we do have problems and yes some of our citizens are in a desperate state but we do have charities helping them with aid, there are associations for pensioners in every area, ours has two and they are also distributing food and aid together with comfortable lounges with TV’s central heated from early morning to late evenings. The government has banned banks from re-pocessing properties due to non payment of mortgages whereas I know that in boith the USA and UK many have lost their homes. Electricity and gas bills for power can be paid in installments and in fact as long as you pay Euro 50 to the electricity board they will not cut your power. The kid was looking for food, or looking for something to sell or exchange for cash like tins and bottles. My office is in a very poor area and although in the past we had immigrants searching the rubbish bin, maybe 6 or 7 in a day, we never had Greeks and definitely never children. Even the immigrants were searching for rubbish to sell for recycling not food. Have you looked around other European cities, there are homeless in the UK even with our welfare system, there are definitely homess in New York and I have seen homeless in boith Hamburg and Frankfurt. Many of us here are helping each other, and tourism is most important as the funds spread throughout the community, supermarkets, chemists, taxis, beach bars, boats, etc. As for the 27% unemployed, Greece has always been guilty of having a high sector of the public ‘moonlighting’. Many as they received pensions in their 50s welcomed extra cash and of course employers don’t have to pay insurance which is very high. We have well over 500,000 immigrants working here, in positions Greeks didn’t want. Again in general they aren’t covered by insurance, kitchen staff in tavernas, bars, cleaners, child minders, carers for elderly citizens, nurses, security guards and night watchmen, thousands of farm workers. As the immigrants are leaving Greeks are taking their positions, but it won’t show as employed. We always had a percentage of our citizens without funds, usually elderly that had cared for their parents and grandparents and others that had worked as farm labourers or on building sites. They received a small sum from the state but only around Euro200 a month. Nobody ever mentioned these people in the past

    • It’s true that we don’t know very well what is happening in the Greek economy, with substitution effects and mass emigration of Albanians back to Albania, along with new Asian kids who don’t fit into anything…😦

      Some of the employment gaps are being filled by Greeks. But from anecdotal evidence (not reliable, sorry) I have the impression that these are jobs under the minimum wage and without social insurance. If so, this means that Greeks are now taking the bad jobs that Albanians and others used to occupy — illegal and underpaid. This is a terrible situation.

      As far as homelessness is concerned, it is a developed country and city problem. It should not happen and it does, in advanced capitalism; on the contrary, in less developed economies the societies are more cohesive and more caring. We are in the centre of a sort of theatre — involving the entire world — where personal and political values are being tested and displayed. It is very painful. I have to say, though, that the city of Athens is doing more than any northern city in trying to help its homeless. All kudos to Kaminis for this humanitarian effort when Athens has no cash and capacity but still manages, somehow.

    • another_greekboy

      You know, I have to congratulate you. I didn’t think you could shock me anymore with your habitual callous, cold-hearted tirades, but you have just outdone yourself with this one and my jaw is on the floor in disbelief. I have rarely read a post that is at once so lacking in compassion and empathy for anyone and so full of raw ideological claptrap presented as commonsensical “wisdom” that somehow we (that ubiquitous “we” that you use and abuse) all share in and identify with.

      I don’t know what part of Greece your tourist visited (and once again, let’s not be afraid of generalizing from a single source) or where you live in Athens, but it certainly isn’t the same Greece or Athens where I hang my hat – of that I am quite sure.

      Everyone, whether it’s news organizations, the Hellenic Red Cross, NGO, or the Church, talks about an humanitarian catastrophe in Greece and gives estimates of homelessness ranging anywhere from 40,000 to 50,000 homeless in the country (and we don’t know for sure because the government prefers not to keep accurate statistics on this). According to EU figures, a large percentage of Greece’s households are currently “materially deprived”, with slightly more than 11% living in “extreme material deprivation.” EU data from 2011 reveal that 31.4% of the Greek population (3.4 million people) lived on an income lower than 60% of the national median disposable income and those numbers have certainly gotten worse since then (we don’t have the 2012 data yet).

      But none of these people exist because YOU haven’t seen them in your neighborhood. In your neighborhood, there’s a Club Med atmosphere for the few unfortunate souls who are going through a temporary bad patch. In your neighborhood, they get together in well-heated “comfortable lounges” to sit around, eat and watch TV. Wow! I almost feel like resigning my job and coming over to hang out with them. And since you haven’t seen anyone eating out of trash bins, then no one is. Well…that’s a load off my shoulders I must say. I was starting to worry.

      I won’t even comment on the rest of the rubbish you spread around nice and thick except to note that, yet again (une fois n’est pas coutume), in your rambling rant you manage to both blame unemployment in Greece on the public sector and moralistically judge the Greeks (all of them mind you) to be lazy – thank God for all these immigrants who are doing the jobs those lazy Greeks won’t do (except your daughter of course who will wash dishes from here to eternity with a smile on her face and a song in her heart)!

      Like I said though… wow! You’ve outdone yourself. This post really takes the cake.

    • Since when ‘Ann Baker’ can you pay 50 EUR to DEH and they won’t cut the electricity? This is totally UNTRUE. If this were so, tens of thousands of greeks would still be connected to the grid and PPE would not have surplus problems.
      And do please tell me the exact location (addresses, telephone numbers) of the heated ‘lounges’ with TV for the homeless and pensioners! I must pass this exciting news on to the homeless /and/ pensioners that I work with.

  25. @ another_greekboy
    re: ‘Ann Baker’…I know just how you feel. If she weren’t so repellant and time-wasting to read (I now skip most thing ‘she’ posts) it would be interesting to do a study of this ‘woman”s character.
    For many reasons I do not think she is real – despite her facebook page – (and lo, these can be faked), nor do I believe she lives within 1000 miles of Athens.

    • Although Nick Malkoutzis writes some interesting articles I cannot think why anyone would go to the trouble of become a forger of a facebook page simply to blog comments. I’m sorry but I do find this laughable. I was just as shocked to find that somebody could consider,that the comments from a very ordinary lady living in Athens that simply wanted to present to others the problems facing the small business sector here in greece , reason to stalk her to her facebook page. Does this realy seem logical behaviour to you. Do you seriously think that everything in Greece has come to a standstill, that none of us are working and running to try to pay bills etc. These conspiracy theories belong in books and TV films.
      I actually think that Nick’s blog on our agricultural products was the best article in Kathimerini this year. For once it was positive. These are the articles that we want to see those that show the Greeks fighting their way out of this depression instead of wailing, especially when they aren’t even the ones suffering.

  26. I live here in Greece, I am quite sure that many of you don’t. I am well aware of the fact that life here is very difficult, but we do not have people starving on the streets. Again I repeat we are desperate for tourism, and don’t want negative blogs that deter foreigners from holidaying here. If they read that people are starving, anti Northern European blogs especially aimed at Germans, continued talks of riots why to visit for family holidays. I explained on another blog that I have offered for friends and friends of friends to stay with us and have a couple with four young teens and another with 2 babies coming this summer, simply because they felt safer to stay with us. Please try to understand this isn’t political we are in need of tourism, it will give work and wages to many Greeks, this income spreads through the market not into the pocket of a minister or government official. True Guest, sadly it will mean in some cases low wages (mostly because the taverna, shop, guest house has low profits) and some no insurance, but better than nothing at all. We are hoping that by the end of the summer there will be development programs moving forward, we hear that they will recommence work on the motorways (Corinth/Patras), a sale of Ellinikon for development would also be a boost and hopefully we can work through this.
    Eleni, DEH electric I heard from a Greek in Peristeri and somebody also put this in a blog on Kathimerini. On Monday a Greek friend was visiting me at the office when she got a call from a married friend with a small child that had electricity cut. He came to us and needed Euro 200 to reconnect but was told that if he had gone to the office and explained when he received the bill they wouldn’t have cut the electricity but he could have paid a small sum. He lives somewhere on Leoforas Alexandras. Two of my friends are paying their DEH bills in installments, one couldn’t pay in full the last one so they gave her another extension (she is a widow living in a property built thirty years ago which is now deemed luxary area).
    They had a program on TV showing a KAPI (civic centre for pensioners)which had these facilities . I live in an area not at all luxuriant 20 mins from centre two KAPI centres within walking distance . Both have central heating and one a friend told me organising trip to bulgaria next month. How many of the homeless are Greeks and how many are immigrants especially from ex soviet block countries that had Greek relations and returned here. Repeat from 74% to 85% Greeks own their own homes, that does not include the number that have properties built without planning consent and now over 200,000 are on the market .
    Why scream at me, I have one home am also living under the poverty line and my Daughter helps, I bought funds into Greece, have not called Greeks lazy and had 24 workers that never went on strike and were treated with respect. Your comments full of rage against people such as myself that have worked here for years, am noit an ex pat, supported the community and Greek friends, had opened up an export market for Greek hi tech products only to see hard work laid to rest due to coruption and incompetent and worthless government and public officials. At the same time why pick on Germans, Northern Europeans and not the Greek patriots that sent their 92 Billion Euro out of Greece.
    Yes I’m angry too, because you don’t see the wood for the trees.. How can you lead a communist party and own so many properties, joke. Show me a true left wing politician that cares about this country and not his own image. I don’t care if he is left right or in the middle, but I want to see changes here and I do not see one Greek politician at this time that will acheive this. My personal view. This country does not have a fair system, the constitution needs to be changed, Tsipras lost the minute he welcomed the ex PASOK garbage.

  27. Eleni:
    Athens is a very large city and one person can not know what conditions and projects are like in every part. You may have someone trusty who can check out what Ann says.
    Eleni, I really do not understand this confrontation.
    As ‘elenits’, I think you tried to draw out a comment from a blogger who had nothing good to recommend him. Thank you for that, even if it did not work.
    As I have nothing else to add which would be helpful to Greece, I shall concentrate on my family here and will blog only in response to any useful ideas; but I’ll continue to check out the news in Ekathimerini.

    I find a lot of what I can only describe as useless twaddle in these blogs. And that is a polite description.

    • another_greekboy

      “Athens is a very large city and one person can not know what conditions and projects are like in every part. You may have someone trusty who can check out what Ann says.”

      Oh great. But Ann can generalize about conditions applicable to all of Greece and to all Greeks from an observation made in her neighborhood or from a post on a blog.

      • dendrolivanos

        So?
        I wrote my PRECISE opinion about the standard of discussion here!
        Does that bother you?

      • another_greekboy

        To dendrolivanos.

        Yes it does actually. You and others on this blog constantly like to hold others to “standards” (and I’m using this term with maximum sarcasm) others than the ones you hold for yourselves.

  28. A point of information about DEH bills: there is a serious problem that DEH cannot automatically record that you have paid the non-property tax component, so you have to go to the DEH office to arrange that the supply is not cut off. If you don’t have enough money to pay even the electricity component, then you should go to the DEH office to discuss payment terms. My information (from poverty stricken friends) is that it is typically a minimum of about 100 euros needed for the first payment, but this is variable.

    Many Greek people have made the mistake of just not paying the bill or paying a part of it, without going to the DEH office to sort it out. I had a bill of over 1000 euros last year that was a problem to pay, and found them very helpful, although there were long queues to wait in😦

  29. My friend paid only Euro 50 but as we all know in Greece it is often if you are lucky enough to find a sympathetic ear. Definitely though I heard from friends that you have to go to the DEH office before the date expires. The gas company is also allowing consumers to pay in installments of three monthly payments and they will allow this for the following bill as well. I know as this is how I am paying my bill.

    • Oh dear; another_greekboy | April 13, 2013 at 5:40 pm is upset.

      • another_greekboy

        Upset? No. But I find it amusing (in an albeit irritating manner) how you and a couple of others have nominated themselves as guardians and custodians of “appropriate standards” (which by some entirely fortuitous circumstances happen to be the ones you hold) for the rest of us.

        Feel free to start your own blog and upload whatever standards you wish there. But in the meantime do try to curb your overbearing and peremptory tendency to try to set them on this one.

      • another_greekboy

        that’s “uphold”

      • Guest (xenos)

        It is correct that only the blog owner can determine a code of conduct for the blog. Anything else is just personal opinion, and can be disregarded.

  30. Dear Nick, there was no comments section after your agricultural article which I thought was a pity. One thing that should annoy all of us whether we live here or not is this ridiculous importing of products from abroad. How many of us have voiced our disgust at finding supermarkets full of lemons from South America, avocados from South Africa and Israel and even potatoes from Cyprus and Egypt. Do you remember back in the 80’s we had TV advertising to promote Greek products. One advert I recall very well was a typical neuvo riche Greek lady on an escalator in Selfridges (didn’t state the store but we knew it was) saying as how she was going to buy a sweater and in the end the purchase she made was MADE IN GREECE. Sorry can’t remember the exact phrases but we all advertised our products with the Greek flag and as you have relationship with SKY channel, how about a similar promotion scheme. It is so very sad as we had so many small manufacturers of clothing (Top shop sold Greek t-shirts and blouses) and our shoes were unbeatable for quality. We could start with agriculture and then promote other products, it’s high time we took care of own trades.

    • I am far from expert on trading of goods, but my understanding of EU law is that it would be illegal to promote Greek products in preference to those from other EU countries. Moreover, since the principle of free trade of goods is a central component of the Rome (and later)Treaties and a Common External Tariff is negotiated with third countries, it is also possible that it would be illegal to comment adversely on goods from outside the EU (provided that they are legally imported).

      The only thing that could easily be done, is advertise Greek products on Greek tv. But I am not sure that it would make a difference. I agree completely that it is ridiculous to import so many of these things — especially Mediterranean agricultural products — and this is one of the things that the ecology lobby is angry about. It is far better to eat locally produced seasonal produce — better for our health, the quality of the food, and for the local economy. The world has been seduced by commercial propaganda into wanting fruit and vegetables out of season (all year round) and importing everything, with refrigerated trucks at great expense.

      There are so many things that Greece used to be self-sufficient in, and now hardly produces and imports. This is partly the result of the euro — since it fixed the exchange rate (to a high level, pegged to the old Deutschmark) and until 2008 allowed Greek companies, the state and individuals to borrow at German interest rates. It is also partly the result of the structure of the Greek economy, with far too many very small businesses (many not really viable, but surviving on late payment of taxes and bills, along with illegal immigrant labour) and far too few medium and large businesses that could compete with northern Europe or Asia. Successive Greek governments over the decades did nothing to encourage and facilitate the necessary modernisation of the Greek economy: their sole interest was in pushing their political party forward and stealing money from EU and other sources.

      Sorry not to be more positive on this point, but Greece is really in a bind. By joining a club (since 1981 !) whose rules and raison d’etre were incompatible with traditional Greek habits, and refusing to change anything at all to fit in, Greek governments and Greek businesses have dug their own graves. This was inevitable: the only questions were “when” and “how”. We now have the answers to these.

  31. It’s not a matter of competing with other European countries as most of them like us, including the UK have seen their factories closing one after another. Our problem is from the Far East and in particular China which is impossible to compete with. I disagree with you regarding employment of illegal immigrants, in the past this was not common in factories this is a recent development due to trying to keep costs down and occurs mostly in the clothing sector. The other point is that many small and medium factories have in fact borrowed from banks simply to purchase modern technology, they also spent far more on IT and have better computerised data basis than the public sector. Without government support they couldn’t survive and as you say some are simply hanging on by the skin of their teeth hoping for better days. The private sector are second class citizens, they have endured bureaucracy which is on par with most African countries, corruption especially atx officials and government ministries for commissions, high insurances, 65 earliest retirement with a lower pension than most employees and the worst health system, no unemployment benefits, useless trade departments, faulty legal system for claiming on non pqayment of bills, cheques etc., and very high bank interest compared to other EU countries. Don’t know where you found the bank interest rates to our favour, 10% plus additional charges makes 11.5% and that was for an export company.
    I still say we could use the media to promote Greek products, we don’t have to say the exact words don’t buy Chinese, all we have to do is promote our own. We have just had to pay again the board of trade to register our factories, this is a joke itself, how they manage to bill us every year I don’t know if they haven’t registered us in their system.
    This isn’t for our business, it’s too late, this I am suggesting for all the other companies here in Greece, agricultural and manufacturers, while they are quarelling over 2,000 corrupt public workers to be dismissed, over private workers are losing their positions daily.

    • Well, the west cannot compete with China — at least, not on price. Germany and some other advanced countries manage on quality.

      On bank loan interest rates: yes, the Greek banks have never supported capital venture. They lend only for property development and such nonsense. The private sector banks are actually worse than the National Bank, I think: so it is not only a state sector problem. Greek capitalism does not support capitalism: it pursues safe profit and is very conservative. This means that Greece cannot progress.

      As far as factory workers are concerned, you are correct. The factories never used illegal immigrant labour (the same in Italy and Spain). It was family retail shops and suchlike that used the illegal immigrants, for basic survival in many cases. Many of these shops have now closed, and in a sense the effect of the Troika has been to force rather rapidly what economic development required. The problem is that is has been done too quickly, too aggressively and without humanity.

      On Greek products, I agree with you. It needs some sort of national pride (as opposed to the childish nationalism that irritates me) and a concerted government effort. I will not hold my breath on that one…

  32. I am delighted to see that the debate about Margaret Thatcher seems to have landed where it matters for Greece! Yes, the answer to Greece’s future can only be found in more domestic value creation (be that for import substitution and/or export expansion). In my opinion, the Greek economy is not quite ready yet for two out of the four EU-freedoms — the free movement of goods/services and the free movement of capital are great for Greece in good times but extreme hurdles in bad times. Nevertheless, that problem can be solved, at least temporarily, without having to violate treaties.

    If it weren’t so sad, I would find it amusing that the ‘Greece Ten Years Ahead’ report was first published almost 2 years ago and got about 2 minutes’ worth of attention in Greece. As far as I am concerned, just about everything that should be done in Greece is in that report. To sum it up: it recommends over 100 projects which could generate about 500.000 new jobs over 10 years and add about 50 BEUR to Greece’s GDP. More details below.

    http://klauskastner.blogspot.gr/2012/10/a-growth-model-for-greece-post-scriptum_27.html

    • Yes, the McKinsey report is probably the best set of proposals I have seen. It did not fit with any political agenda, so the Greeks just ignored it. Typical, really, and rather sad (as you say). My view is that until Greeks come to terms with the idea that politics cannot solve problems, but is able to create massive ones, there will be no progress. This is not to advocate free markets (God help us) but a judicious combination of state intervention for the purpose of promoting economic development. I know of not one period in Greek history when this occurred, so one might conclude that it is alien to the culture.

      However, membership of the eurozone remains the biggest impediment to progress. I am inclining now to the view (if the Germans do not shift their arrogant position) that all of southern Europe should quit the euro. The short term cost would be high, but it could be the only way out.

      • What you are suggesting is identical to what the German Hans-Olaf Henkel has been saying for amost 3 years now: split the Euro into a Northern and a Southern one so that North and South have currencies which fit their economies. I can’t tell off-hand how many currencies there presently are in the EU but there are at least half a dozen. One more or less wouldn’t make all that much of a difference.

        As regards Greece, I would still argue that Greece can make it within the Euro (and it would be better off doing that) but on a temporary basis measures have to be implemented which simulate as though Greece had returned to the Drachma (special import taxes; special export incentives; special investment incentives; perhaps even capital controls; etc.). But there is one condition precedent for that: GREEKS WILL HAVE TO REALLY WANT THAT! If Greeks cannot excite themselves about import substitution, export promotion, foreign investment, the EU Task Force, etc. – then a return to the Drachma will become unavoidable.

      • Guest (xenos)

        Yes, Klaus, I agree. But the EU will never accept that its pet project be divided. This is really the kernel of the problem — that political ideology (in this case, empire building) has taken priority over common sense and sound economic management, while at the same time the constituent countries do not accept the principle of the “empire” and its common currency institutional management. It is not only Germany that opposes the correct management of the eurozone…

        So given the choices: that is,
        (1) a malfunctioning eurozone that the Germans want to remain in stasis, with minimal recycling of their surpluses
        (2) a federal system with eurobonds and a properly functioning ECB and Parliament with a federal budget
        (3) division of the eurozone into a weaker zone (south) and a northern German-dominated one
        (4) dissolution of the eurozone

        Well, my view is that the Germans are determined to continue with plan 1. The European Commission and Parliament want plan 2, but can tolerate plan 1 a a sort of stepping stone to plan 2 (ha!). Nobody seems interested in plan 3, although logically southern europe should be pushing for this…

        In the end, for political reasons, it may come down to a choice between (1) and (4). My own preference would be for (3) with a strategy to morph into (2), but I don’t see these assholes in Europe doing that. Therefore, I recommend (4) — which could give the European politicians a much-needed kick in the backside to put our economic health before their own stupidities. Otherwise, back to national currencies.

  33. I can’t see the point of considering 1 to 4 until we put our house in order especially our legal system with three hundred thousand cases to be tried, this has always been one of our ‘weakest links’. An effective legal system would have eradicated much of the corruption here by acting as a deterent. I still believe that slowly as this happens then I growth will return with foreign investment. I also agree that we are better off in the Euro the return to the Drachma scenario would have worked three years ago but now when our assets have lost so much value it would be chaotic.

    • The monetary arrangements that Greece is in are not irrelevant to economic recovery, therefore should be seen as an integral part of a programme. This mistake everyone continues to make, to think that it is an either-or situation. Greece has to think for itself, and that requires strong analysis and informed policy-making — a novelty here. I now believe the line of many Greeks, that Papandreou was acting on instructions from the USA and elsewhere, and this is why he did nothing to minimise the damage to the country. He was known in diplomatic circles for his disinterest in Greece and determination to be appointed Secretary General of the United Nations: that requires tremendous support from the USA and northern Europe. Basically, this is high treason.

      As far as recovery within the eurozone is concerned, I agree with Klaus that emergency measures are needed. As far as I can see, this will not happen because the Germans and the European Commission will not allow it. In that case, I doubt that Greece has a future other than as a replica of its earlier past — that is, as a subsistence economy with high unemployment and a low quality of living.

      Nor do I expect to see much foreign investment unless Greece massively cuts and improves the taxation system, reforms entire swathes of the state structures (especially the legal system, as well as the political parties) and can provide a stable environment for production. Don’t forget that the whole of Europe is in crisis, and Greece actually has to compete directly with every other country of the eurozone when it cannot devalue and has completely free circulation of goods and capital. Germany has been cutting wages and social expenditure for two decades, in order to compete globally.

  34. I agree with you on all of this and would like to see some concerted effort regarding imports. Today was in Galaxia supermarket and complained loudlyas they had 10 kgs of charcoal for Euro 9.80 imported from Argentina. This isn’t that cheap as local garage has for Euro 4 for 5 kgs but I didn’t check where from. I bought from AB 5kgs for Euro 5.10 which is Greek.
    Imports from EU ok but why South America.
    For sure none of us in Europe will have the life style we had in the past 20 years, however, a fairer organised system could compensate for the loss of commodities. In the 80’s we didn’t all pay for private lessons, we only had one car per family (I know families now with 4 Mum, Dad and the two children) most of us then spent holiday’s with family in the village or if a good year a few days in a small hotel on the beach, I have noticed many neighbours helping each othergiving lifts with cars, sharing meals etc., I still think we can do this but must make changes as you say especially with our legal system.

    • Let me suggest this thought: when a Greek resident purchases charcoal from outside of Greece (be that the EU or Argentina), he is automatically increasing the foreign debt of ALL Greeks. That is also the case if that Greek resident is using his own hard-earned Euros for that and if he has no personal debt at all.

      All clear?

      Apart from the fact that he is facilitating jobs elsewhere (in the EU or in Argentina) which jobs could just as easily be in Greece.

      • Estevao Veiga

        When a Greek buy charcoal from Argentina he is also creating demand for Argentinean Pesos. This demand can only be satisfied by somebody who exports to Argentina. So, when you are not importing, you are also not exporting, destroying jobs in what is probably the most efficient and dynamic part of your economy.

      • I guess you misunderstood me. My point was not to criticize international trade. Since Adam Smith we know that trade increases the wealth of nations (specialization, division of labor, economies of scale, etc.). Over long periods, this objective is only reached when trade is structurally more or less balanced.

        My point was to show what happens when a country (as a country) spends more abroad on imports than it earns abroad from exports and services (current account deficit). Then that country must, by definition, import capital; either in the form of loans, of EU-grants, of remittances of nationals working abroad, of foreign investment, etc.

        While the state does not function like a family, a country (i. e. a national economy) functions exactly like a family. If the family spends more than it earns, it needs to get money from someone; be that a bank, a relative or whatever. If the family reaches the point where no one wants to give it money any longer, it either needs to increase its income (exports, services) or reduce its expenses (imports). That’s mathematics and not economics.

      • Guest (xenos)

        You are quite right, Klaus. The principle of free trade as a device to improve wealth is true but completely disregards balance of payments and public debt issues. Since Greece has terrible problems with both, and cannot devalue to discourage imports and encourage exports, the principle of free trade is nothing more than a dogma.

        Again, it raises the issue of the need for temporary measures in Greece to give limited protection to the economy. Greece cannot carry on importing things that it used to produce and exporting very little: the whole economy is unsustainable without massive subsidies that incur either public sector debt (as governments did in the last decade) or massive transfers from Germany (which everyone is objecting to).

        The right wing ideas of Veiga do not make sense — regardless of any ideological differences. Greece simply cannot carry on like this. The much-needed reduction in public sector employment is not happening (whatever the Troika says) and the private sector continues to collapse, and unemployment continues to escalate out of control.

  35. But is exactly when you don’t have credit anymore that exports and imports are more linked, because all imports have to be compensated by an entry from exports, because, if not, there is no Euros to pay for the imports.

    • another_greekboy

      You really do live in fantasy land… just saying.

    • The lack of state sector credit in Europe is unique to now, and is caused entirely by the banking system. Instead of allowing banks to fail, right wing governments and stupid economists (and the IMF) decided that it was a good idea to save the failed banks with state assets and commitment. Klaus can tell you much more about the banking problem than I could ever hope to know.

      Since the only major country with surplus and good credit in the EU is Germany, that is why Germany either makes massive transfers to the “South” or explicitly backs through the ECB the debts of all eurozone countries. It refuses to do either, and the resulting disaster you can see.

      In this context, a country like Greece is in a position similar to a hundred years ago. It imports a lot, exports little, has no global credit and an economy so weak that it cannot even feed the people of the country. At least, a hundred years ago the agricultural sector was strong enough to feed the people and export quite a bit. Over the last decade, owing to a fixed over-valued (for Greece) exchange rate, domestic production declined and imported goods replaced them: this substitution effect was financed from the ability of Greek banks and the Greek state to raise money on international markets, implictly backed by eurozone membership. Until 2008, that is.

      Now, Greece needs to cut imports and stimulate new industry to export. This cannot happen without many factors coming into play — including an expansionary fiscal policy. Since this is not allowed by the Troika, Greece cannot recover without FDI — which is probably not going to happen, at least for a very long time. Ergo, Greece cannot recover in the medium run, and will be locked into a subsistence economy/debt cycle — which will benefit Germany, of course. The solution to inability to devalue is not “internal devaluation” — this is malakia that the Troika invented, meaning cutting all wages and other costs — but emergency measures to limit free trade (and really, they should also have limited capital flows at the beginning of the crisis). It is not too late to try to minimise the damage that Europe has done to Greece, but there seems to be no interest either in Greece or in northern Europe in so doing. Like you, Veiga, they are all caught up in dogma and nonsensical scenarios that have nothing to do with economic and social reality. Europe is managed by idiots, although the Germans are surviving ok for the moment.

    • Estevao
      I just read that ‘all imports have to be compensated by an entry from exports because, if not, there are no Euros to pay for the imports’.

      If you don’t mind, please put your text book on economics aside for a moment and consider the real world. If it were like you say, i. e. that for every import Euro debit there must be an export Euro credit, then Greece would have no problems at all today.

      In the real world, you don’t need one single Euro of exports and you can still import. How can you do that? If someone lends you the money to do so. As I explained further down, Greece could not import so much because it had generated so much foreign currency from exports but, instead, because it could borrow so much from abroad. Greece could increase its foreign funding, i. e. its foreign debt, by about 30 BEUR per year (!) from 2001-10. Consider that as suppliers’ credit. With that kind of suppliers’ credit from offshore suppliers, one obviously neglects domestic production entirely.

      • Estevão Veiga

        Sorry Klaus,
        I didn’t answer to you because I didn’t saw it. On my opinion you mention again the past but not the present. As for the past, it is a direct and classic consequence of a State borrowing foreign funds in order to finance consumption and rents instead of investments and infrastructure. But this is a product of the local culture and the culture only changes when it is too late.

  36. Closing an economy who is already sick destroy any hope that the more dynamic, export oriented side will thrive. It increases the cost for it to function, decreases the demand for the foreign currency that they bring, close the minds and allow the monopolistic and monopsonic inefficient sector to perpetuate themselves with no competition from the outside.

    • Excuse me, what are you qualifications in economics? I was an assistant professor of economics in the uk in the early 1990s, and have published on political economy since 1989. I have advised multinational companies on investment conditions, most of the international agencies (UN, OECD, EU) and four EU governments.

      First of all, I did not suggest closing an economy. There is a whole range of degree of openness; the EU is now rather open, which is why too much is being imported into the weaker economies of the eurozone. Moreover, even the limited protection that I recommend would be temporary, allowing Greece to find an exit route from the terrible mess that eurozone membership has placed it in. In the long run, I support free trade as an idea.

      Secondly, oligopoly has thrived under the neoliberal policies of the last decades. Far from achieving what the propaganda suggests, the policies have resulted in concentration of capital and less competition in most national markets. Monopsony has also done well, with whole public services privatised, such as prison and deportation services in the UK. Of course, right wing poliicians try to provide an illusion of competition, but there is effectively none.

      Thirdly, the only person here with a closed mind is you. You have swallowed wholesale the poison of new-right economic dogma and vomit it at very opportunity. Kindly, do not vomit over me.

    • I am afraid you don’t understand the impact which nearly unlimited and cheap imports had on the Greek economy: it did not thrive with competition from the outside; instead, it was brought to its needs. From 2001-10, Greece imported 446 BEUR, that was exactly 300 BEUR MORE (!!!) than it exported. Put differently, for every 1.000 Euro which Greece exported, it imported 3.054 Euro! You can’t have a clearer indication than that that the country’s economy was uncompetitive internationally. When the Greek Euro has the same international purchasing power as the German Euro, then obviously Greeks will buy cheaper products in Germany & Co., even if that means letting domestic production collapse. It might have worked differently if Greece hadn’t received almost unlimited credit to fund those imports. Then, the Greek economy would have been pressured to try harder to satisfy the needs of Greek consumers out of its own strength. But with unlimited credit to finance cheap products manufactured elsewhere, no one is going to try hard to manufacture on his own.

      This is like sending a very talented regional soccer player to Real Madrid to compete with the stars there and once he has gotten used to the way of life there, he is told to improve his game or to leave the team. Instead, he should have first been sent to Athens so that he could become a star with a large club there and once he is a star, you can send him elsewhere to compete with stars. I think even a blind person might be able to see that the Greek economy simply wasn’t ready to compete as quickly with other EU-countries as the treaties would have called for.

      • Guest (xenos)

        Thank you, Klaus. Yours is the old infant-industry argument, which I also still subscribe to. Neoliberals believe that rapidly opening up to competition will create stronger industry and stronger economies — when all the empirical evidence shows that they are wrong. In fact, the problem with the infant industry policy is a political one, of getting governments to pursue a difficult incremental policy instead of just doing something once and then ignoring it.

        As far as economics textbooks are concerned, only first (maybe second) year undergraduate texts from the USA contain such simplistic nonsense. One of the most challenging courses I ever had to teach (with very little background in it) was European economic history. Preparing my students for these classes — which I tutored and somebody else lectured — was very helpful: I had to research the economy of the Third Reich, for example. For my own earlier research on Greece, I had studied the literature on peripheral and semi-peripheral economies, mostly Latin America and southern Europe.

        The problem is that many people adore the simple-minded theories of economics as expounded in US college textbooks, and think that they understand real-life economics after reading them. In Manchester, we took the view that students with no knowledge of economics performed better than those who had studied at school, and skills in physics, chemistry, mathematics, languages, literature, history etc were preferred over social sciences. My own background was natural sciences and classical music.

  37. Dear Klaus,
    You write it yourself:
    “It might have worked differently if Greece hadn’t received almost unlimited credit to fund those imports.”
    But this is finished, there is no credit anymore, so if there is a moment where the Greek economy should not be closed is right now. What you should mention too is that this level of credit and imports allowed the society to get used to a level of consumption incompatible with it productivity, and a subsequent demand, now that credit dried, for Germany to subsidize a continuation of it.

    • Estevao
      Ok, your point is well taken. But you overlook the following: Greece still DOES have nearly unlimited credit for imports, albeit from a different source than before. Short of bringing the Eurozone’s payment system to a screeching halt, through target-2, Greece could even today finance all the imports it wants to buy. The significant reduction in imports is NOT the result of structural changes in the Greek economy. Instead, the collapse of domestic demand caused that. If, by some miracle, domestic demand exploded, imports would explode 1 to 1.

      Greece will ONLY be able to improve the employment situation if it succeeds in bringing more value creation into the country. Exports would do the trick but an export expansion takes time. Import substitution (and by that I mean things which are simply silly for Greece to import) can be done virtually overnight.

      You mention Chile. Well, let me tell you that I was the manager of a US bank in Chile from 1980-83. Due to my position, I was on very close terms with the Chicago-Boys from the Finance Minister down the hierarchy. What is often overlooked is that the Chicago-Boys failed in their ‘first round’. They had opted for a sort of Euro-solution by fixing the peso to the dollar. When tremendous external imbalances occured (not quite unsimilar to the imbalances of Greece), they went for the purist academic approach: let the free market forces take care of the adjustment; there may be enormous destruction but it will be ‘creative destruction’; and at the end of the excercise, assets will be revalued and new investors will invest at a new fair price. What they totally overlooked (or could not believe in) is that, in the real world, the profits may go to the private sector but the losses, when push comes to shove, go to the public. I suppose you would agree with me that Pinochet was not really a sissy. And yet, there was a grand total of 4 weeks between Pinochet’s announcement that the exchange rate would remain fixed and that public sector salaries would be cut by 10% and — Chile gave up the peso/dollar fixing. Only in the ‘second round’ were the laboratory ideas of the Chicago-Boys adapted to the real world and that is what became the basis of Chile’s long-term turn-around.

      Incidentally, the Chilean model only worked because it fit the mentality of Chilean society. Chileans are an extremely open minded and rational people. They welcome everything that comes from abroad. They like to show that they have fun competing with the world. They look at their national competitive advantages/disadvantages and build a business model around it. They don’t lament and blame others. Instead, they are forward-looking with a can-do attitude. I invite you to ponder to what extent that compares with the Greek mentality.

      • Guest (xenos)

        Yes, spot-on Klaus.

        One of the strange things in Greece is the paradox that historically Greeks used to be very innovative, very creative in making money, in trading — although not skilled in management or public institution building. If you compare Greek diaspora with Greeks in Greece, you can see a big difference. This is largely because the institutional (and perhaps cultural, now) framework of the country suppresses innovation and obliges people to conform to the structures around them. Why this is so, is open to debate. Diamandouros has argued from a cultural perspective, and attached a certain blame to the Orthodox Church. This is indeed plausible, especially as there was no Reformation in the Eastern Orthodox countries. I have also suggested that the 1922 exchange of populations was a seminal time for policies and atttitudes — fixing certain characteristics such as serious segmentation of the labour market in order to exploit newcomers, and also to privilege those in power.

        Whatever the causes, the reality is that Greece needs some direction, some guidance and some hope. That will most certainly not come from free markets; but it could come from a structured programme encouraging innovation and production, return to agricultural production, and general avoidance of imported goods. So far, the Troika has achieved nothing other than destruction of retail outlets and a concomitant destruction of domestic production that sold its goods through them. They make the same crude and ignorant mistake as Veiga in believing that all economies are the same and all policy solutions are identical: the Germans have even had the temerity to tell Cyprus to make itself more like Germany! With such idiots in power, Europe itself has a bleak future.

    • Estevao
      In case you are wondering what I meant by silly imports, below is an article from the Ekathimerini which lists some of the silliest ones (follow also the link at the bottom). Other than that, I would suggest that you go to a Gran Masoutis with a pad of paper and pencil. Write down every imported product you see where you think this is something which could be made in Greee just as well. I promise that you will end up with quite a long list! If you go to Lidl, you might as well take their entire product list. Do the same thing with places like Praktiker, etc. At the end of this exercise, you will end up with a very positive feeling about Greece’s potential if only Greece did more or the value creation with products which Greek consumers like to buy (and where Greece should have no problem doing the value creation).

      http://www.ekathimerini.com/4dcgi/_w_articles_wsite6_1_14/03/2012_432976

      • Estevao Veiga

        Dear Klaus,
        I did read what you wrote about Chile, and I presume you know much better than me the strong regulations and measures the Central Bank of Chile took concerning their banks after they were rescued. The same about issuing foreign debt, with the huge deposit on the Central Bank that was asked afterward. I will also not talk about the courageous stabilization fund concerning their cooper exports, but it is also a show of people able to look on the long term.
        This said, the economy stayed opened and the Brazilians were always surprised by the amount of imported products on their supermarkets as well as their cars. They were simply not used to it in a closed economy as was Brazil in the 80’s.
        It is also not clear to me how you see Greece importing unlimited quantities since you recognize that demand has collapsed. It collapsed because even the Greeks were unable to find this “magic” window.
        As for the Greek mentality of lamenting and blaming that you mention, it is only by reading what followed what you wrote, that I got the insight that in reality this is a very perverted way of asking to be rescued. What an unfortunate way of asking for it!
        I think that in this concern the only way to change that, as sad it can be for the individuals, is by leaving the Greeks live as fully as possible the consequences of their behavior. It seems to be happening, if we are to believe the last article of Nick. For the old generation it is probably too late to change it, but for the new, the huge cognitive dissonance between the discourse and the reality, if it last long enough, will probably open their minds to other ways to see life.
        On that aspect, kudos to Angela Merkel and the Germans! What an extraordinary capacity to endure insults without reacting! I must admit of not being as successful, and hope to learn it more from this country that I so admire.

      • Estevao
        Two responses to what you wrote:

        First, I am not sure you really read what I was saying.
        Second, the graveyards of the world are full of people who had noble intentions to change/improve societies and their mentalities. Still, success is only achieved if models/systems adapt themselves to the cultures/mentalities of the societies which they are meant to serve. If you force cultures/mentalities into a model/system which doesn’t fit, you often get the opposite result. When I started my blog about 3 years ago, I was influenced by my Chilean experience and felt sure that all Greece would have to do was to copy the ‘Chilean recipe’ and everything would be fine soon (see link below). The longer I concern myself with the subject, I come around to thinking that the ‘Chilean recipe’ would not work in Greece.

        http://klauskastner.blogspot.gr/2011/06/many-people-look-at-things-how-they-are.html

      • Estevao Veiga

        Dear Klaus,
        If what you mention as not reading is the article of Ekathimerini and import substitution, I did read it and made an indirect answers with the supermarkets of Chile. I only disagreed, for me if the supermarket decides that the imported product makes more sense, they know it better than me and they are creating demand for exporters. On my side, I am still curious to know how you see Greece importing unlimited quantities without constrains, as you wrote on one of your previous entries.
        As for your doubts about a “Chilean solution” for Greece, and your article about Chile, I read both, as well as the article about German defaults of the past.
        As I wrote, as unfortunate as it may be, before a Chile solution or any other workable solution, it seems that Greece has to pass by a huge “trauma”, like the one the Germans had after WW2, where the self esteem is wiped out and the country is obliged to rethink their way of life.

      • Guest (xenos)

        @Veiga: kudos to Merkel and the Germans?? Clearly you are either an idiot or a paid German troll.

        Germany is acting entirely in its own short-term interests and doing Greece no favours at all. There are no significant improvements in the Greek economy, largely because neither the Troika nor the Greek politicians care to do s. How this relates to ordinarty Greek people, do you think? Or is the answer that you cannot think? You simply continue with these amateur right wing economic assertions, with no understanding of how things work. You have the same small mindset as some of the worst people in hte Troika.

      • Guest (xenos)

        @Veiga

        And how dare you compare the Greek management of the economy with Germany after the Nazi atrocities were fought and defeated at great cost by the Allied forces! Your insults and arrogance are quite beyond the pale. Clearly, you are a German-paid troll.

      • Guest (xenos)

        @Klaus: if I may offer a word of advice. Clearly, you treat this Veiga as a normal person who wants to discuss what is going on. In my view, you are being used — either by a right wing propagandist or someone employed by the Germans to troll the internet. It is not possible that someone can be so stupid, yet have a reasonable degree of information.

        We know from certain other websites about organised trolling, much of it coming from state finances of countries engaged in online propaganda. My advice to everyone here is to discontinue debate with this internet persona; it is clearly going nowhere anyway.

  38. another_greekboy

    “The problem is that many people adore the simple-minded theories of economics as expounded in US college textbooks, and think that they understand real-life economics after reading them.”

    It’s not just expounded in textbooks. Have you heard the pundits on television and seen what is written in OP/ED pages lately? And I’m not even touching the lunacy of the Tea Partiers and other loonies…

    • You’re right: it’s just so depressing. The only good thing is that you can find anything on the internet, and that includes most of the world’s most brilliant thinkers and creators. The problem is that you probably have to be equally brilliant to know what is worth listening to and what is not.

      A hint for less brilliant people: ignore economics textbooks, ignore CNN and the BBC, ignore the Financial Times and the Economist (not everything, but you have to know what is crap and what is not)…

  39. It seems that some of the people in this blog are tempted to propose to Greece the industrialization thesis defended by Prebish-Singer, and the UN commission known in spanish as CEPAL, that was very popular in Latin America between the 50’s and the 80’s know as substitution of imports. For the ones who don’t know about it, what you need to know is that it failed. And the Latin America country with the biggest compound growth for the last 30 years is Chile who in Pinochet times bringed the “Chicago boys” to the helm. At first, their coming resulted in a deep depression with negative growth rates of up to -10%, and unemployment of 30% because all the uncompetitive industries were exposed to the world markets and went bankrupt.
    But afterward, this exposure to the world market allowed Chile to concentrate to what it does best and the result shows.

    • OK, this is just right wing propaganda. Nobody is suggesting a replication of Latin American policies here, and your interpretation of what happened in those cases is so superficial that it is meaningless.

      Basically, you think that free markets and free trade are wonderful solutions to all problems. Basically, you are completely wrong. The fact is that you continue to insist on how superior your knowledge of economics is when clearly it is inadequate (I asked you to specify your training or possibly publications in this area, and you did not respond). Even if you have several PhDs doesnt alter the fact that what you are writing is rubbish and propagandistic.

      As I previously requested, stop vomiting this neoliberal bile over me. You have nothing to suggest concerning Greece’s economic situation, other than right wing nonsense about markets.

  40. This was blogged on Kathimerini and is just one of the many tales (no smoke without fire) that have been circulating in Greece for years. This is the very reason why so many of us are so tolerant of the demands by the TROIKA as we know just how corrupt this system is and consider this the only way that Greece will ever clean up our public structure. Whether we are in Euro, Drachma or beads unless we can put a stop to the corruption culture that has destroyed our economy we have no hope. No foreign company will invest in Greece with our legal system which does not deter graft but with long delays and bribery condones it. Don’t forget Akis was virtually accused by the Greek press after his million dollar French wedding and yet nothing was pursued. Rumours involving Papakonstantinou were common since his involvement in OTE and connections with Intracom. Another company which was on the lips of every Greek involved in high tech field.
    In 2003 TVX Hellas gave back the minig rights in the Skouries area to the Greek state for 11million Euro. The Greek state sold it the same day, without a public tender, for the same amount to Hellas Gold. Hellas Gold was just founded 3 days before, and belonged to the Bobolas Clan. 95% of Hellas Gold went later to European Goldfields of which also 20% belonged to Ellaktor (Bobolas). Suddenly the value of the company was declared as 400Million Euro. 400 Million Euro for a company that did not even put a single shovel into the ground because there was still no okay for the project from the Environmental Ministry.
    Mrs. Birbili from the Environmental Ministry was pushed out in 2011 and replaced by Papakonstantinou. The first thing he did was to give the environmental okay (Birbili blocked that okay for years), and just shortly after Hellas Gold was sold to Eldorado for 2,2 Billion Euro!

    Did you get that? Someone turned 11 Million Euro into 2,2 Billion Euro! Without even doing a single piece of work.

    The Greek state gave away Gold worth of aproximately more than 20 Billion Euro for 11 Million, without a public tender which could have brought billions in revenue. One of the most important persons in Greece filled his pockets with money and again well known polticians paved his way.
    The Greek media is supporting this actions with flash bangs like this Reparation Issue to hide how the same circle of people keeps on robbing the country off.

  41. @Ann: are you not aware of the corruption that caused the global crisis in the first place — involving US and other banks, and nothing at all to do with Greeks?

    I am as critical of the mess and corruption here as you, but you simply have no grip on reality. Corruption is all over the world and is out of control. It involves politicians in every developed country, and usually the prime ministers or presidents. So just stop with the attacks on Greeks: it is inappropriate when you make no mention of the much larger corruption in more developed coutnries, including Germany and France.

  42. That is up to the Germans and the French and when their economy is in the state that ours is.

  43. Estevao
    Regarding your question about the ‘unlimited capacity to import’. If a country has a local currency, the financial limit on imports is the banking sector’s availability of foreign currency. This is totally different in the common curreny union.

    Target-2 is the cash management system which settles all transfers within the Eurozone. If a Greek wants to import 10 MEUR worth of products and if he has the money in his account with a Greek bank, he can simply give transfer instructions. The Greek banks does not use its own liquidity for that. Instead, it simply routs the transfer through target-2. At the end of the day, and if this was the only cross-border transaction, the Greek bank has increased its target-2 liabilities to the ECB. Put differently, target-2 works for national banking sectors like an unlimited card issued by the ECB. Thus, the only constraint on imports is domestic demand for imports. There are no financial constraints. Since you don’t seem to be familiar with target-2, I attach a link below.

    It DOES matter whether the Greek supermarket sells Greek or Dutch tomatoes. The jobs are always where the value creation is. The entire value creation for Greek tomatoes is in Greece; thus all related jobs are in Greece. With Dutch tomatoes, only the last part of the value creation chain is in Greece (the local distribution). So only the jobs of import companies and supermarket employees are in Greece.

    http://klauskastner.blogspot.gr/2012/03/update-on-target-2.html

    • Dear Klaus,
      Thank you for the answer, but as far as I know, and correct me if I am wrong, Cyprus did discover there is a limit on target 2, called ECB patience. And the consequences were “unpleasant”.
      As for your last part about the origins of the tomatoes. You are absolutely right that there is more Greek content in a tomato grown in Greece than one grown in Netherlands, but this doesn’t necessarily means that value was added. On the contrary, value may be destroyed because a worker who may be more valuable working in tourism, and bringing € 50 per hour of foreign currency, is being used on a € 4 per hour job.
      And this is exactly the beauty of a free market and a free flow of goods, to make the best allocation of resources as possible based on the mechanism of pricing. So, if tomatoes are not being grown in Greece, there must be a reason, either the land is unfit to it, even the technology and the know how is non existent, etc…
      And I will give an example by absurd. Bill Gates may be the most productive farm worker in the world, but any tomato grown by him would be the most expensive tomato who had ever existed, because his work hour is worth something like a million dollar.
      So, when a supermarket discover that no home grown tomato is cheaper that a tomato coming all the way from the Netherlands, believe them, value will not be created by buying it locally. If you are the government, what you may do is discover what is the reason for that. Are labor laws too strict or unemployment wages so high that it discourage anybody to do the work? Are there structural impediment like a transport cartel that makes it cheaper to transport it from the Netherlands than from 100 km from there? Are there no agricultural school worth the name in the country?
      It is obvious that attacking any of the formers, including the inefficient teachers of the agricultural school, will create huge resistances, and there is the reason that the “troika” is so hated in Greece. But if what you are worrying is the long term well being of the country, this is the kind of “dirty” job that should be done, not telling people to buy tomatoes who are more expensive than the imported ones.

      • Guest (xenos)

        Abject nonsense. Just propaganda for free markets with not one iota of empirical evidence to sustain your claims and plenty to disprove it, Something that idiots like you fail to comprehend is that markets do not function properly: their normal behaviour is far from perfect because they are affected by a whole range of variables. These include exchnage rate; access to finance; excess aggregate demand; imperfect competition (which includes the USA as well as Greece).

        Klaus has already explained to you the functionng of the ECB euro system (Target 2) and how different that is from a national currency regime. Yet you ignore the distortion effect created by that to make a stupid remark that is not even correct.

        You are a right wing cretin, with no understanding of economics.

      • Estevao
        Maybe I should point out to you that I am a firm believer in the private sector, in free markets; and in prices as the most powerful regulator. I was/am also an enthusiastic reader of Friedrich von Hayek’s writings and consider his Constitution of Liberty as a monumental work. In my blog you can find all of Milton Friedman’s video lectures on “Free to Choose”.

        http://klauskastner.blogspot.gr/2012/09/free-to-choose-milton-friedman.html

        Having said that, I am also a firm believer that recognizing reality, applying common sense, the preparedness to get smarter every day, etc. MUST supersede the stubborn following of dogmas.

        A case in point: of all the places in the world, it was professors from the University of Chicago who started voicing, a couple of years ago, that the big American banks ought to perhaps be nationalized! Why? Because they started to fear that those TBTF-banks might cause destruction in the free market which might no longer be creative.

        The first thing Milton Friedman told the Chileans was that they had to define what they saw as their international competitive advantages/disadvantages; focus on the advantages and play down the disadvantages. If you are trying to tell me that Greece with all the sun and pleasant climate does not have competitive advantages in agriculture, you should give up trying. If you have the impression that Greeks face the either/or choice whether to work in agriculture at 4 EUR/hr. or in tourism at 50 Euro/hr., you should look at unemployment statistics. There is ample availability of Greeks to work in both sectors. In fact, one of my points is that the Greek economy can only employ its people more or less fully if it brings significant value generation (back) to the country. I am not saying that Greek consumers should be forced to buy lesser quality tomatoes at a higher price. What I am saying, though, is that Greek producers should be put on a development path where they will end up producing the best tomatoes in the world at a fair price.

        I can only suggest that you should browse a bit more through my blog so that you can see that I am definitely aware that things need to change in Greece and that change will have to come about. The question is not the WHAT; the question is the HOW. As I sugggested before, I appeal to you to put your text books aside for a while and use your common sense. Russia had a sudden transition from communism to democracy and from a planned economy to more or less free markets. Do you really think that Russia, today, is a well-working democracy and a well-functioning economy? No more authoritarian strongmen? No more corrupt oligarchs?

        Sorry, perhaps keep one of your text books open, namely Hayek’s Constitution of Liberty. He writes there that before one worries about anything else, one has to worry that there is a State of Law. An by State of Law he does not only mean a state which has laws but, much more importantly, a culture which unequivocally shares the view that without a well-functioning State of Law, you might as well forget everything else. Are you suggesting that such a well-functioning State of Law will come to Greece overnight if only one lets the free forces play out?

      • Estevao
        Perhaps the following anecdote from Chile will help you.

        I had seemingly endless discussions with the Chicago-Boys about theory versus practice. I would ask, for example, the President of the Central Bank “don’t you worry when you see how much money foreign banks are lending to your rapidly growing private sector economic groups? Are you not concerned what these groups are spending that money on?” The response was invariably: “Why should we worry? Those loans are agreements between two private parties. If, one day, it turns out that the lenders made poor decisions, the two private parties will have to suffer the consequences”. I would respond that there could be a wave of huge bankruptcies. The response: “That may be so. But the assets don’t disappear in a bankruptcy; they are only revalued downward to a level where a new investor will find the prices attractive again”. I could not win any such arguments because the Chicago-Boys were truly intellectually brilliant. In theory, that is.

        However, when Pinochet saw that half of the private sector might go bankrupt if they left it up to the private sector, he knew that even all his military might would not be good enough to keep the country stable with legions of unemployed. They bailed out all of the banks and much of the private sector. However, they did it in smart way; not all of the losses were taken over by the state. And the outcome of that became the basis of what Chile’s economy is all about today.

      • Estevao
        Regarding target-2 and Cyprus: I was under the impression we were talking about Greece and not Cyprus, or did I miss something? Greece has NOT been told by the ECB that it would stop funding its banking sector and until that is so, Greek banks have an unlimited credit card for cross-border settlements. I was not speculating about what the ECB might or might not do in the future. I was strictly commenting on facts as of today.

      • Guest (xenos)

        @Klaus: Two points about comparative advantage.

        One, a theoretical point, is that the traditional theory actually does not apply when there is relatively free movement of capital and ease of setting up businesses — at least, not in the medium run. So it is possible to attract FDI (or use profits from energy exploitation) and change the structure of your economy without any prior history of success in a certain sector. This requires good and predictable infrastructure and political will — including legal system, ministries and other state support for the private sector. Free markets have nothing to do with it, although excessive and foolish regulation/interference will certainly prevent FDI from coming.

        Secondly, on Greece and agriculture. My personal experience is that the best quality Greek vegetables and fruits (often the ones not sold but handed out by friends and relatives from villages) are far superior to anything you can get in Holland, the UK, Italy, Germany etc. The marketized sector is of lower quality and has consistently declined in quality since I rented an apartment in 1995 (for research not residence). This tells us that there is a problem somewhere in translating quality products into a traded commercial business. Indeed, we know that from this sector generally, where olive oil (amongst other things) was and is sold in bulk to Italy and blended with others and sold in international markets for a fortune.

        So, my reading of this is that there is a comparative advantage in the agricultural sector, and there is even an absolute advantage (a rare thing). What was missing was organisational structure for marketisation: this arises largely from the prevalence of small SMEs in southern Europe, the lack of co-operatives in Greece, and the completely deficient role of the state in promoting such organisation and exports. With the advent of the euro, the overhigh exchange rate (after some time) priced Greek production out of the Greek domestic market and of course made it almost impossible to export.

        All of this has NOTHING to do with free markets and everything to do with lack of organisational skills, a useless state that does nothing more than steal money, and various market dysfunctions and distortions that emanate as much from the EU as from Greece itself.

      • Estevao Veiga

        Dear Klaus,
        Let’s put it clear, I am not a Herbert Hoover republican. I am very Keynesian in a depression, much less so in a recession. Second, I can’t agree more that when a sector start to be “too big to fail”, rules need to be imposed in order to recover the cost on society of this loaded dices, in form of taxes, or regulations, or even prevent their existence. And if you may remember, I did mentioned the big deposit that Chile Central bank requested on foreign loans, so I do agree with you on your conversations with the President of the Central Bank.
        For the rest of your text about agriculture and others, if what you mention is subsidies, I disagree, I am firmly convinced that infrastructure and education are better ways to spend money in the long term than subsidies. But, advanced institutes on farming, count on me.
        You also made mention of a well-functioning State of Law fostered by a free market. No, I don’t believe so, what I believe is that the only way for people to give value to a State of Law is if the consequences of it in-existence are so high that enforcers start to appear, because the consequences on being an enforcer are lower than the in-existence of a State of Law.
        As for confusion between Greece and Cyprus, I made mention of Cyprus in the sense that if Greece start to believe it is effectively an unlimited credit card, they can have nasty surprises, so, in effect, there are limits on it.

        I hope I have addressed the majority of your points, and I have the impression that we agree more than we disagree. But if this is not your opinion, please bring to my attention what I may have overlooked.

      • Guest (xenos)

        @Veiga

        If you are a Keynesian then I must be a transvestite from Mars. i never heard so much rubbish in my life (and I have heard a fair amount).

  44. Dear Estevao, I think one of the problems with our agricultural system was the EU grants and the Greek cooperatives that were corrupt. The grants should have been used by farmers to purchase adjoining land and increase the size of their farms, co-operatives should have been there to jostle Greek farmers to work together with exports of their products. Crete is an example of where it did work and one of the reasons why they are up in arms with the ministry. At one time there was a program from the government encouraging Greeks to swop pieces of land between neighbours. Many families like my Husband’s for instance have 10 to 20 plots dotted about which are the result of past dowry’s or inherited plots. This hasccurred due to Greek law where a parent has to divide their assets between all children even illegitimate, whereas in Ireland and the UK for instance estates were always left to the eldest son as heir. Small plots are difficult to manage economically and unfortunately our Greek farmers preferred to purchase air conditioned tractors rather than modernise their farming methods and enlarge their fields. You are right of course regarding agricultural colleges, most of our farmers even now have never been near one and those that have, have managed to find a slot in our over employed ministerial positions and co-operative sectors. Hopefully now this will change with youngsters returning to the land.

    • I agree. The distortions introduced into the greek agrictultural system by the EU and the Greek state have had terrible effect.

      As far as agricultural colleges are concerned (of which I have no knowledge) I see no difference between that case and people who think they know about economics and actually have had no link with reality but spout theoretical right wing nonsense from crappy American neoliberal teaxtbooks.

    • Dear Ann,

      Could you tell me how qualified are this youngsters to work the land? Because my first impression is that this return to land is by people who aren’t aware that agriculture is a serious business, where you may become pauper if you make mistakes.

      • Guest (xenos)

        If you were living in Greece you would not need to ask this question. how would Ann know more than anyone else, including me? Where are you living, Veiga?

      • Hi E V, I think most of the youngsters have returned to their villages to farm family plots and so have relations there that are experienced. From what I understand wine has become a very popular with new estate wines both red and white. Bee keeping with honey production is another and of course olive oil which in the past they probably sold bulk or simply left them to rot. There is plenty of scope here especially in animal husbandry as over the past years we have been importing from Albania lambs and goats, which wasn’t necessary in the past. I also read of some youngsters that were involved with snails, a delicacy in France , which they are already exporting. Don’t forget it’s only one generation that left the villages so you still have Grandparents there.

  45. Hi Xenos,
    As soon as I see a consistent pattern on your part of treating other participants of this blog with respect,, I will gladly answer your questions. In the meantime, I will refrain to recompensate a behavior that I object.

    • @Veiga: respect has to be earned and is not an automatic right. i have previously asked you what is your training or professional competence in economics, and you did not reply. Now I am asking you why you appear to know nothing about what is happening in Greece, and you also refuse to reply. Yet you feel entitled to write thousands of words of right wing propaganda concerning what Greece and Greek people should do about their country’s economy.

      Does that deserve respect? Not in my world, no.

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