Facts that reconcile this article with what we already know:
1. The Greek labour market is inefficient. That is why so many people work in small (inefficient) shops. Closed shop regulation for many professions lock people out of high wage occupations. Next to Portugal's 28% high school graduation rate [1] Greece's recent progress (<50% of 25-64 year olds completing high school in 1997 versus 61% today [2]) is valiant but the leaves an uneducated, unproductive generation untouched. It also doesn't account for Greeks' shorter working years.
2. Doing business is tough. Here is an anecdote from a financial commentator in Athens:
"My friend explained that the owner of the bookstore/café couldn’t get a license to provide coffee. She had tried to just buy a coffee machine and give the coffee away for free, thinking that lingering patrons would boost book sales. However, giving away coffee was illegal as well. Instead, the owner had to strike a deal with a bar across the street, whereby they make the coffee and the waitress spends all day shuttling between the bar and the bookstore/café. My friend also explained to me that books could not be purchased at the bookstore, as it was after 18h and it is illegal to sell books in Greece beyond that hour. I was in a bookstore/café that could neither sell books nor make coffee." [3]
3. The government used cheap loans not for infrastructure or reform, but to pay public servants and build a military.
4. The government lied about its finances and is depravedly corrupt.
"books could not be purchased at the bookstore, as it was after 18h and it is illegal to sell books in Greece beyond that hour. I was in a bookstore/café that could neither sell books nor make coffee."
Unreal.
Note that it wasn't that the store was somehow incompetent, it's that doing something as simple & normal as selling a book after 6PM is illegal. Giving away brewed-in-house coffee is illegal. I'm having trouble articulating how profoundly outrageous this is, how self-destructive a country is which not only enacts such regulations but, it seems, tolerates it.
If mere sale of a book is prohibited during any hours (much less perfectly reasonable & normal hours), outsiders will find it hard to extend sympathy and aid to a country so keen on destroying its own economy via absurd legislation and citizens so willing to comply. I'm glad to help the needy, but that stops quick when the recipient won't quit obviously self-destructive behavior.
the anecdote about the bookstore is very weird. Bookstores in Greece are open (and selling) until 9pm, not before 6pm as in the anecdote, I’m not sure what’s up with that. Airport bookstores are often open (and selling) 24 hours/day. I live in Greece and after seeing this article spread all over the internet, went to a local bookstore last night just to check. The bookstore owner looked at me like I was out of my mind. “Would I be sitting here burning the lights and paying my employee if I couldn’t sell books? That makes no sense.” So, you know, there’s that…. (And I’ve personally bought books late into the night in many, many parts of Greece.) Don’t let that affect how you interpret such anecdotes, of course. Even if something is wrong, if it sounds correct, we might as well treat it as such, right? I think that’s how this works….
It seems to me, too, like an extraordinary story, I'd like to see more context on this supposed ban on bookselling in the evening.
That number is (more than) a bit misleading. I don't know where OECD pulls those numbers but it certainly doesn't feel as if Greeks work more than the average european. Shops dont work on sundays, public services are open for only a few hours a day, banks close at 2 etc. Underproductivity is a major issue, most of the work of public services is unnecessary red tape that could be easily automated if the government was willing.
Work hours is not our major problem, it's work ethics that are lacking. Hard work is not compensated, it is in fact frowned upon in the public sector, and this situation has even infiltrated much of the private sector. Absurd regulation and governmental dependencies has stifled competition in all but a few sectors (where it works it works reasonably well, such as telecommunications or banking). Couple that with a hostile investing environment and you have the perfect recipe for disaster.
That said, Greeks in general are industrious and entrepreneurial, but we tend to channel our inventiveness on finding ways to avoid paying taxes. Personally i believed from the start that Greece should have exited the euro in order to revitalize its dormant economy.
The article paints a different picture anyway. Greeks apparently have the most worked hours, while Germans have the second-fewest worked hours. Greece is 7th _least_ productive and Germany is 7th _most_ productive.
When Germans come in to work, there is surprisingly little socialising. When they work, they work hard. Also, the difference in hours worked is probably solely due to the difference in the number of part timers between the countries. 2000 hours per year (avg. Greek hours per year) is only 38 hours per week.
Admittedly my exposure to opening hours in Greece is limited to the tourist areas, but I've found they have longer opening hours than most places in Western Europe. --Definitely longer hours than the UK, Germany, or anywhere in Scandinavia!
most administrative services close at 13:00 for the public. Still, the greater issue is not the hours worked, it's the fact that it's unacceptably slow. For example, most accounting offices employ people whose job is to wait in queues outside government offices all day (such as tax and social security offices).
>Work hours is not our major problem, it's work ethics that are lacking.
The problem here is that you can't quantify "ethics." Up until today everyone believed your average Greek worked 3-4 hours a day and drank coffee the rest of the day. So your side has been debunked and you come back with "ethics?" Really?
At the end of the day these issues are fairly complex. There are a lot of Greeks who work hard, are far from lazy (as per German characterization), and have more or less been betrayed by their government. I also think its incredibly naive to think they could have a German-like efficiency becuse efficiency in manufacturing can only happen with deep pocketed corporations as well as a technical sector that can produce robotics and a worldwide market for its electronics of cars. We can build a Greek auto manufacturer with big loans today, make it incredibly efficient, etc but there's no market for Greek cars.
The lazy Greek stereotype needs to die. Yes, they have a very young retiree age and their tax system is a mess, but they're probably a handful of reforms away from fixing all this. Oh well, back to your typical stereotype based bashing.
I agree it's a stereotype, and i agree that it only takes a few reforms to fix it, but attacking the stereotype won't fix anything. My experience from working in both the private and public sector (and now luckily as an entrepreneur) is this, and i m not bashing anyone, but there is such a thing called "work ethic" and i 've lived long enough to watch it being bent with unsustainable consequences.
I disagree that it takes a mountain of money to do anything successful, especially in technology, even in Greece (and it is happening, but successful businesses tend to be quiet). However you do need entrepreneurs who can do more than just lobby the government for public sector works.
I don't know about Greece, but I grew up in Portugal, and I suspect there are some similarities. People in Portugal "work" long hours. But they also work in a very infective way: long useless meetings, everything requires lengthy social interactions, bizantine bureaucracy, too many managers for too few real workers and so on. There are complex cultural problems that cannot be expressed by such simplistic metrics (and that, unfortunately, cannot be solved with quick fixes).
I'm also from Portugal but I have been working in London for some time now. Curiously, I don't see much of a difference besides now working only from 9 to 6 instead of working from 9 to 10. Same useless meetings, a very long line for coffee all day long, everyone is a manager, etc.
My opinion is a simple one: some countries sell stuff others want, some don't. We were just unlucky and not smart enough to value our geographical position in the world.
Have you guys ever worked for a big company in the United States? Because I have some news for you...
Seriously though, it's interesting to hear these opinions about the sources of work inefficiency inside the EU. I'm American but lived in Italy for several years in the late 90s, and "Why is our economy so inefficient?" was a common topic of discussion at the time. Almost no one thought it was because of long meetings or too many managers; there seemed to be a consensus among the people I spoke with that the number one problem was the type of regulation mentioned above (e.g. not being able to sell books after 18h in a bookstore).
It's important to realize that lots of those regulations do actually have a purpose, which is to keep certain sectors of the economy dominated by small sole proprietorships instead of by big corporations. Again with the bookstore example, a Borders or Barnes and Noble or any other big box store chain would just give up on such a market. On the other hand, an owner/operator of a small bookstore would either find loopholes (like this owner's swap with the cafe owner across the street) or else they just grease the right palms and work around the rules. In either case, success depends on the kind of social capital big corporations will never have.
TL;DR The purpose of these "senseless" regulations is to keep shops in Europe small and charming. Inefficiency is the tradeoff.
As a portuguese also, I totally subscribe this. Hence the reason I don't work in/for Portugal anymore, and I won't until this mentality is gone for good.
Well BBC ran a show last night. And it did show the some reasons why Greece is such trouble today.
It turns out people spent like crazy, far beyond their means. Things like electricians driving Porsche's and High End Mercedes cars. All of it imported from Germany. When a nation full of people with government included involves in such spending it is but other wise natural that they price for it later on.
The anchor did explain that it wasn't just weak institutions and bad government policies. It was reckless lifestyle spending on part of Greeks. It seems many Greeks now want to sell of their costly cars, which are now believed to sell for less than half the price they bought it. So what happens? If they are unable to pay the loans and Bank take the cars. Banks still get only ~50% of what they lent. Its step by step collapse of a whole system.
In many ways, the institutions, like Banks are responsible too, for lending out money like that- unchecked. But the whole system is to be blamed. People, Government and everybody else involved.
On the other hand they also showed, Germany and how they manage their economy.
Now lets look at it, Greeks might work harder than Germans. That is no indication of why Greece is such crisis today. Apart from working and earning you also need to manage your money well. Why spend more than what you can earn?
Also scenes in Greece were heart warming, difficult to believe its 21st century Europe. Its almost like a third world country. People begging on streets, sleeping on footpaths, Eating from what is distributed. Couples relying on free clinics for minimal healthcare. As I said, only the Infrastructure looked grand. Otherwise it looked like a third world country.
The number of Greek electricians driving Porsche is not very high. Also the German exports to Greece are also not that big (from both sides).
In reality Greece imports from all over the place. It also imports a lot of energy sources. It has a huge military with costly imports (parts from that also from Germany). Also the money does not come especially from Germany. If you look at the banks, they are from France, Italy, Germany, US, etc.
Avoiding paying tax is a sport - especially for some of the very rich families in Greece.
There are several other reasons.
There are a lot of people in Greece who work hard and a lot of people who don't work that hard. There is a huge and relatively unproductive government sector for example.
How many hours people work is really not that important. In Germany people may work fewer hours, but the work is much more focused. After the necessary working hours many workers actually go home. In many other countries workers spend more time at to workplace without being productive. Also there are large parts of the industry which have lots of robots. For example in car manufacturing you find 10000+ robots working. You would find that level of automation only in a few places on this planet. Not so much in Greece.
Larisa, which has about 250,000 inhabitants, is the capital of the agricultural region of Thessaly in central Greece.
Larissa “is the talk of the town in Stuttgart, the cradle of the German automobile industry, and, particularly, in the Porsche headquarters there”, since it “tops the list, world-wide, for the per-capita ownership of Porsche Cayennes”.
Self-confessed Eurosceptic Michael Portillo visits debt-stricken Greece. He believes that the euro crisis must have shaken the Greeks' faith in Europe's single currency and wonders if there'll be a desire to revert to the free-floating drachma. In Athens he meets everyone from a destitute young family to the former finance minister and the outgoing Prime Minister, and is surprised by some of their answers.
Meanwhile in Germany, Europe's economic powerhouse, Michael encounters the taxpayers who are paying most towards Greece's mammoth financial bailout while having to watch angry Athenians burning the German flag.
With tensions rising in the Eurozone, is this the moment it becomes more united, or will it be pulled apart?
Yes that's the documentary, Its a nice one to watch.
What I realized about the entire chapter of Greece was that you can't blame the government and corporations for all the problems in the world.
Sometimes we as individuals need to step back and think of our own financial future. Reckless spending on our behalf without planning for the future are disastrous. Savings and investments are important for our future. And we need to think of it.
There is a point where the government's job ends and ours begins.
1. I wouldn't think for a second that Michael Portillo is a reasonable unbiased analyst here.
2. How do we prevent individuals from spending recklessly? Seems like government is going to have to play a large part in that story.
On (2), it's not an issue of blame, and personally I'm not interested so much in who to 'blame' - we're doing economics, not philosophical ethics. Rather it's an issue about what we do about it. Simply telling people to act differently is unlikely to be a sensible solution.
That might be a start, but probably only if banks were suitably sized and regulated in the first place which wasn't the case this time. Better bank regulation / breaking up banks going forward seems more sensible.
I would look into Hisotry and Economic Theory befor you make such clames. Specially about the size of banks, the US had strong regulations on bank sizes for a long time (I dont know when the stoped exactlly) and that lead to a massiv amount of bank failure in the great depression. About 8000 Banks failed in the US, most of them single branch (this is in a system with a central bank), while you look at canada where you dont have a central bank (until 1935) you have only one bank failure.
The History shows that some of the banking system with less regulation (and sometimes not central bank) have shown to be much stronger. This is large subject if you are intressting look for "free banking".
The most comprehensive book on the subject is: The Theory of Free Banking: Money Supply under Competitive Note Issue by George Selgin
'Many commentators have stated that the Gramm-Leach-Bliley Act’s repeal of the affiliation restrictions of the Glass-Steagall Act was an important cause of the late-2000s financial crisis.'
Here in the UK we had something similar with the 'big bang' of bank liberalisation in the 1980s, resulting in the City of London becoming the world's largest financial centre - and subsequent problems.
Whilst I'd look into History and Economic Theory, I wouldn't look to Cato Institute fellows for sensible views on this matter.
Fanny Mea and Fredy Mac pushed down the cost of housing (the where allowed to directly lend from the fed, that had low intresst rates) and set false insentives to build houses. That (among some other small things) was the big thing that led to the crash.
The deregulations allowed banks to be more agressiv, that is only bad if you give them a strong insentiv to be agressiv. Maybe it mad some of them more unstable but it would not have changed the fundamentals of the crash and it is in such a situation only more importent that YOU DONT BAILE THEM OUT.
Prof. Selgin is btw a well regard specialist on banking and money, he does not earn his money from the Cato Institute and they dont direct his research. Its nice that only attack where somebody is working not what they say.kj
Since all you did was paste the first counter argumetn you fund on wikipedia I highly doute that you even no any ecnomics, and only posted it because of your 'deregulation = bad' bias.
I was only mentioning the Free Banking School because of the comment "suitably sized and regulated" is not the only way of looking at things. Infact I think pretty much every economist agrees that the banking regulation pre 1933 where very bad and made the great depression worse. Passing rules to make banks smaller does not really help in itself.
If you have read the article by Stigliz that is refrenced after your comment on wikipedia, you will see that stigliz agrees that the bubble was caused by inflation ("Greenspan presided over not one but two financial bubbles. After the
high-tech bubble popped, in 2000-2001, he helped inflate the housing
bubble.") and he says:
"The most important consequence of the repeal of Glass-Steagall was
indirect - it lay in the way repeal changed an entire culture. Commercial
banks are not supposed to be high-risk ventures; they are supposed to
manage other people's money very conservatively. It is with this
understanding that the government agrees to pick up the tab should
they fail."
What you will notice that he is pro bailing out bank! The banks that failed in the crash where not acctually banks that where "Commerical banks" but the government bailed them out anyways! Its funny that the free-market guys are the ones that are "pro-buissness" acctually its the other way arount people like him are the reason taxpayer are paying for failed banks.
Free Market guys dont go deregulate and then bailout, if a bank investment or not goes done thats what they deserve!
I don't tend to respond to ungrounded accusations of bias (and to pre-empt a claim, it does not follow that it's inappropriate to choose not to devote much time listening to members of the Cato Institute on the grounds they are members of the Cato Institute). Good day.
It sounds fine to me to have small banks failing with FDIC around. People don't lose their money, and someone with better business sense starts a new branch.
I think deposit insurence is great but Im not sure why the state should provide it. Most of the Bankruns happend befor the FDIC (1933). The problem with the FDIC is just that it makes, that people dont run on banks. Bank runs or often 'good' in the sence that banks that are overleveriged get finally taken down. As sooner as banks are taken town the more return you get for every doller in the bank.
With the FDIC and the FED banks can go on longer then the should and therfore pay back less when they are finally go down.
You don't need to regulate banks if you prove to them you are not going to bail them out when they are too loose in their lending practices. They'll go out of business or tighten their lending standards. The real problem here is banks the world over have convinced their people and their governments that having debt-financed possessions is the key to happiness and prosperity.
What does one have to do with the other? Bailing out banks does not happen so people can still keep spending recklessly, it comes from the belief that letting banks fail will cause major harm to the financial system.
"Financial bailouts of lending institutions by governments, central banks or other institutions can encourage risky lending in the future if those that take the risks come to believe that they will not have to carry the full burden of potential losses."
> 2. How do we prevent individuals from spending recklessly? Seems like government is going to have to play a large part in that story.
The Reserve Bank of India (India's equivalent of the Federal Reserve) does this by encouraging saving in small ways.
In India, savings accounts are the default for retail individuals, not current/checking accounts. Most banks only permit you to open an interest-free current account as a business account. The small amount of interest earned in a savings account acts as some incentive to keep the money in it. I believe no overdrafts are permitted on savings accounts either, so easy credit in the form of spending more liquidity than you have becomes just a little more inaccessible.
In relation to point one. Everyone is biased no matter how hard they try not to be, at least with Portillo you know what you are getting and can treat it with a pinch of salt.
2 is a good question. One answer is presumably mandatory payments for social security and health insurance. You can't spend money recklessly anymore that you gave to the taxman.
On the other hand, if you can't save money, spending it recklessly is much more likely. Politicians who choose not to spend money now cannot expect to choose to spend it later (due to the uncertainty of being reelected), which creates a strong incentive to just spend it. It would be a rare politician who could be elected repeatedly while running on a policy of saving money for the next generation's government to spend.
I don't think that's why these stats are interesting. There seems to be a stereotype of lazy Greeks being bailed out by hard-working Germans. These OECD stats (which I originally checked out after an episode of Radio Open Source featuring economist Mark Blyth) show that this is just another example of an ugly, incorrect stereotype.
German banks have substantial exposure in Greece and other troubled Eurozone countries, through bonds/loans. Those bailouts (and we're getting a little vague here) are often used to service these debts, allowing said banks to report a profit and pretend their investments were sound in the first place.
Interesting that we rarely look at who lent Greece such vast quantities in the first place.
I agree; let us not forget that due to EU, Greeks got looser borrowing from banks, and they bought German products. Last time I was in Romania for a business trip, I saw a similar picture. Goods flow from Western Europe to Romania together with easy credit. That spoils people quickly.
I live in Romania and the picture ain't at all similar.
Surely you can spot luxury cars on our streets. But in general I haven't seen those cars purchased by people that can't afford it. Also, many luxury cars that you see have been purchased from second-hand dealers from other countries for cheap. And let me assure you that most luxury cars you see in Romania (and you can spot many of them) are bought by people that can afford to pay cash ;-)
I do worry about loans for purchasing homes.
In our country it is much better to own your apartment than to rent it, especially in the big cities, where rents are equal to how much you'd pay for the monthly loan payments. Landlords also make it difficult to rent an apartment for a long time. But young people these days do not make enough money to ever have a chance of purchasing their own property, without getting loans from banks. And as long as the system does not collapse, it is better for them.
This is not the same thing as buying luxury cars. And if this system collapses, only the banks should take the blame for passing loans to people that can't pay their debt on the long term.
Because you can generate more wealth than the interest costs you, and hence everyone can get wealthier. Government and people and companies have been borrowing money to spend on things for ages.
That is quite right and works for buissnesses, sometimes. Buissnesses are part of the market and they have competition. Government is a hole other thing, Government can creat wealth too, matters differ on how often that happens.
Specially in the last 10 year (or longer) most government didn't seam to be much of investing there money smartly.
I think there's a big difference in investing money in things that will generate more money, and spending it on luxuries that will only depreciate in value. I expect the parent was referring to the latter not the former.
When a market is flooded with easy, cheap money distortions occur. Witness the housing excesses in the U.S. prior to 2008. This is a phenomenon of human nature. Excess credit inevitably leads to too many bad loans.
I have studyed this stuff quite a bit. The deregulatian probebly had some effect but compaired with the effect the easy money had it was not that imprtend. There where other things like that the taxcode favers buying instead of renting. Asian saving lowered long term lones .....
Most importendly Fanny Mea and Fredy Mac could borrow cheap money from the Fed and went below equillibrium prices for a long time.
It's definitely not a third world country. Despite the crisis, greeks still have good free healthcare and education and crime is still low. Don't know for how long though.
The thing with the Porsches is a hyperbole, but it's also true that Greeks have become avid spenders in the past decade. There is this Nielsen report that showed that in 2008 Greece was number 1(!) in (designer) brand awareness worldwide: http://pl.nielsen.com/site/documents/ConsumersandDesignerBra... . Not a healthy sign for a country that produces almost none of those expensive products.
Most of this money went to vitalize local markets that had no future, such as construction (building very expensive houses in a country that already has one of the highest home-ownership rates in europe), food/entertainment and retail. Very little was spent on investing, mainly because tight regulations make it hard to take business risks.
The phrase "third world" has nothing to do with economic conditions, and everything to do with allegiance to a particular policito-economic block. Thanks to the work of the allies (and particularly the brits) during the closing parts of WW2 Greece is aligned with NATO after WW2. After the collapse of the soviet union I don't know that it makes much sense to talk about 1st, 2nd and 3rd world countries any more.
It went to Germany. But you can't hold them responsible for this mess. Germany is a export based country, they are also more productive than the Greeks. They have managed their money well.
The only thing is that the Euro facilitated such things more easily.
But Germany can't be blamed for it. Imagine you go to a supermarket and buy like crazy. You know you don't have a way of paying it back, but you keep buying. Soon you run out of your credit limit of buying more. Soon you are in a situation where you owe the bank a lot of money and have no money of retuning it back.
Who is to be blamed, can you blame the supermarket for selling stuff? Or the bank for lending you money? Or you for not knowing when to stop?
Personally, I would give the majority of the blame to the banks (say 60%) and the rest to the borrower. The reason for this is that, in my experience, banks have got a lot less careful about who they lend money to (at least when it comes to personal lending).
The last numbers I read for Greece's imports from Germany were very small, in the low one-digit range. So I am not sure this is valid to say "it went to Germany" although at the beginning of the crisis this was a picture the Greek newspapers were all too happy to paint: the wealthy, greedy Germans who got fat and rich off of all those Greeks buying so much from them...
Well BBC ran a show last night. And it did show the some reasons why Greece is such trouble today. It turns out people spent like crazy, far beyond their means. Things like electricians driving Porsche's and High End Mercedes cars. All of it imported from Germany. When a nation full of people with government included involves in such spending it is but other wise natural that they price for it later on.
If BBC did run such a show, then, as a Greek, I can tell you it was bollocks.
In fact, in you check the private (homes + enterprises) debt for Greece as compared to the GNP you will see that it is quite small, actually one of the smallest in the western Europe.
Plus, even for this private debt, the majority is in the form of housing loans (= to buy a house). So, no "electricians driving Porsches". Well, you could find one or two maybe. But I doubt you could find five of them.
"Well BBC ran a show last night" therefore it must be true and I can now give you all my expert opinion in the matter.
Private debt is much higher in the UK than in Greece, both in relative and in absolute terms. Public debt is probably second in line to Greece, it's a close race with Italy and maybe some smaller Eastern countries. I wonder if the BBC covered that last night.
I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out.
UK, Italy and all those countries you mentioned might definitely have the same debt. But the situation there is different because those people have a way of paying their loans back.
I am not expert in economics but I know, spending more than earning(Or what you can earn) is not healthy for any economy.
Germany has massive part on it by enforcing such shockingly low borrowing rates across the Eurozone.
It completely destroyed countries with immature Real Estate landscapes, countries used to high inflation rates that collectively shot themselves in the foot.
Germany and France took no hostages when they were stagnating and failed to meet EU requirements. They gave absolutely no regard to these countries and now they are paying for it. They will either way, because that's their main market, Europe. Because it's not just Greece that's over-borrowed, it's most of the eurozone including Italy, France, Spain, Belgium, Netherlands, ... basically most of the Eurozone by GDP.
As this pops up everywhere, could you please cite a source from e.g. a ECB protocol or otherwise how Germany "controls the rates" or "enforces shockingly low borrowing rates" in violation of the ECB charta?
The ECB back then set rates in accordance with inflation, e.g. to keep it low. That's the charta of the ECB. When a high inflation country joins a construct that has a goal of keeping inflation low, then yes you have a problem if you do not change. But I'm not sure Greece e.g. was forced to join a low inflation construct.
From the ECB homepage:
"The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area."
(Beside the obvious fact that "shockingly low borrowing rates" would lead to high inflation, which could then not lead to "countries used to high inflation rates that collectively shot themselves in the foot.")
The rates always follow the needs of Germany and sometimes France. The rates are discretionary and set by the president of the ECB.
Borrowing in most countries with a "hot" Real Estate market was unstoppable. Only higher rates like they historically had could have controlled it. The dimension of the damage done by this policy is incalculable.
There was no compromise. If a middle-ground, 5-6% rate had been set, the cost would have been shared. Now we're like Japan, the UK and to some extent the US: way over-leveraged, and the problem is our asymmetry and the fact that we really don't believe in the Union. When push comes to shove we shift blame. In the US nobody talked about expelling California from the Union when it went kaput and their hole is of a much bigger dimension than that of Greece. Germans will never consider Greeks as equals, it's a fact, so we either enforce it or call it quits.
The EU consists of independent countries which have their own governments, their own economic policies, their own banks, ... a real-estate bubble in Greece is fully the responsibility of Greece.
A hot 'real-estate' market not stoppable? Where was it tried?
How about Mexico? Would the US pay for Mexico to prevent a bancruptcy there?
If someone in the US decided the interbank interest rate, then they would have shared responsibility.
You are very misguided. The EU is one thing and the eurozone is a different thing. The UK does have some economic independence and very importantly, monetary independence. Those countries in the eurozone have surrendered their monetary policy to the ECB, and the ECB responds mostly to the interests of Germany, followed by France, followed by Italy, Spain and then smaller countries.
The economic cycle of Germany is substantially out of phase with that of most countries from Southern Europe, who in turn thought the Germans would pay for the party. In any case it wasn't their call. Turns up things have snowballed out of control.
Yes it is out of sync b/c Germany cut costs in the 2000, cut social security, changed job laws, increased the minimum pension age etc while the southern countries increased spending and increased massively labor costs.
You seem to think "southern countries" collectively decided to increase costs while Germany took the high road. Southern Countries HAD their costs increased and their internal inflation out of control, so the ECB could help out the then-struggling Germany and France duo.
Germany was stagnating in 2000 and MISSED their promised objectives, while Southern Countries were growing healthily. Then they found themselves with extremely low rates to help growth in Germany and France, which was basically "free money" and an out-of-cycle policy they simply did not know how to deal with. Their internal corruption did the rest.
There is one way to enforce responsibility: stop giving away free money, either be it through low rates, or through "rescue packages" done to ensure your banks won't need to swallow a massive hole from not having their lent money back.
A bit too late for this, but hey, better late than never.
- raise the rates. NEVER drop the rates below 5% as long as there is a single overheating economy in the monetary Union.
- drop the debt. Suck it up. No more rescue plans, also buh-bye to the money irresponsibly lent away. Maybe you didn't know this but you have already dropped a lot of it. Now it's when the big monster Merkel has been avoiding will rear its ugly head: the same will have to happen with other MUCH bigger countries than Greece. This will cost Germany and all the other countries massively, you will be in RECESSION for some years.
Otherwise they will be out of the Euro and then you can bet your lucky pants they will declare bankruptcy and they won't repay the debt or any rescue we (EU members including the UK that's not even in the eurozone) have given them, as Argentina did not that long ago when they let their currency float. Simply because they are unable at this point to go into a position from which they can repay.
Even with those "cuts" the German wages are still 2 times over the "southern countries".
Except if you mean to say that those in the South are less humans and do not deserve even half the wages and social welfare that Germans do --which Germany has historically said in a few occasions...
"The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area."
Which has been done at the expense of causing massive persistent damage in some "secondary" countries in the EU.
As a said before, there was a middle ground, but it wasn't considered. Higher rates during the last decade would have caused stagnation in Germany but would have avoided the complete demolition of some countries. Note that this demolition process was not only beneficial for Germany, but also for bank tycoons in these countries - their direction is now a bunch of billionaires despite whatever happens to their banks now. In these countries 2 full generations basically have had their lives destroyed from being out of the housing and job market chronically, and those with a job will have most of their disposable income confiscated. These are the really important figures usually not told in the BBC, Euronews or Deutsche Welle.
And the worst part of it is the "rescue" - the rescue consists in ensuring the banks in the most affected countries don't need to sell their massive housing stocks in a firesale. It basically consists in pegging housing prices in these impoverished countries so their average house costs twice the price of a house in an average German city, keeping 30+ year olds (the generation coming out of school during the euro-originated frenzy from last decade) homeless or living with their parents. The rescue basically consists in perpetuating this tragedy: a lost generation, birthrates to the ground (impossible to emancipate), people deprived of a sane life plan and forced to be enslaved for decades. Because that's what happens when you "so kindly" inject money to these over-stocked banks. They. Won't. Let. Their. Stocks (housing mostly). Lose. Value. This will only happen when you cannot continue "helping", the sooner the better. But this will ultimately happen, thankfully.
That's the rescue plan. Social collapse in several countries from the eurozone so all banks (both rescued banks and very especially lenders - in supposedly "responsible" countries) can be happy and, very importantly, German banks (and French banks, Spanish banks, British banks in the case of Ireland, ...) don't have to take responsibility for over-lending. The rescue is mainly a rescue to the banks of ALL parties disguised as a rescue to these "filthy irresponsible P.I.I.G.S."
Fucking let them bankrupt and take the hit, you have done enough damage already. Say buh-bye to all the money lent instead of pretending to be "saving Europe".
"Higher rates during the last decade would have caused stagnation in Germany but would have avoided the complete demolition of some countries."
No. There is consensus that during the decade Germany as a country, the people and companies were not borrowing enough. Low rates had no impact on that. So there would not be any stagnation in Germany with higher rates, as companies and people did not borrow. The government is cutting costs especially on the social cost side for a decade now, they have not been Keynes spenders in any way.
Economy growth in the last years came from massive social cuts, restructuring employment laws, increasing the minimum pension age over several years (will be 67 in 2012), cutting early pension programs and cost cutting in companies. Germany is exporting (too much?) because the price per unit cost is low compared to other European countries.
If your argument would have anything behind it, there should be numbers how borrowing increased in Germany , which it did not.
>"The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area."
Hmm, they forgot to add that they are a front for the interests of Germany foremost and France second.
Germany 'enforced' the borowing rates? Let's look a few years back. The rating agencies rated all kinds of junk very high. The banks all over the place where very creative with products hiding the risks. When Germany was asking for tighter regulations we were ignored or laughed at. Now the Germans simply demand that the lessons are learned and we see structural reforms - reforms which can not be done by just throwing more money at countries high in debt.
This is not "a few years back" - this clusterfuck has been brewing since year 2000 with the euribor. At that point several countries needed high rates to stop their overheating borrowing and they were given a shower of petrol to stop their fires.
Spending more than you earn can sometimes be quite healthy, for an individual, for a company, and for an economy. It's called investment.
An example: when you buy take a mortgage to buy a house several times your annual income, you've spent more than you earned. Typically you need two or three decades to pay off the extra money you spent.
>I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out.
Actually it's a long and convoluted history.
Do you know for example that when the newly independent state of Greece was established (after fighting for liberation from the Ottoman empire), Germany (the Bavarian state) appointed a king and cabinet of it's own there?
The new state, being very poor and having an immediate need for money to bootstrap itself (for the army, to build infrastructure, etc), got a series of loans from abroad with very ominous terms, worse than usury that they had to accept, because there where no other sources of income at that early state. The terms were like you get only 60% of the actual loan value and leave the rest 40% as insurance against not paying --but you have to repay everything plus interest. Even those loans were embezzled in large part by the bavarian cabinet (and Greeks connected to it), leaving like 10-20% of the actual loan to the state.
So, those were some of the starting steps of the new Greek state, 180 years before.
Now, in the WWII, Germany not only invaded Greece and destroyed it's infrastructure, but also took a loan (Germany FROM Greece), amounting to something like 1/5 of the current debt in today's money. When I say "took a loan", actually the appointed government of the occupying German forces gave them one, it's not like the Greek people approved it. Then, after the war, they refused to pay the recuperations...
Greece could be the most productive country in the EU and their government would still be in dire straits. Tax evasion is endemic. It doesn't matter how much people are making if almost nobody is paying their taxes. The Greek government has started cracking down, but Greek disrespect for taxation has been building for generations and won't die easily.
Same in Spain. People look at you in disgust if you ask something about taxes; 'why would you do that?'. And if you desperately WANT to pay tax, they made it INCREDIBLY difficult. I thought the Netherlands was bureaucratic, but that's really child's play compared what you have to do in Spain (for practically anything official).
It was (and mostly still is) so easy to avoid taxes in Greece that it's fair to say the burden is on the government more than the people. I believe it's difficult to make people tax-conscious when they see that it's so easy for everyone around them to steal. The tax authorities here are corrupt, underqualified, and have a very low rate of tax collection. It's so bad that it had better be replaced altogether.
That's a fair point. But it's true that the government took advantage of the tools offered to the country for free and unchecked by the EU (namely, subsidies and cheap credit lines) to lull people into a false sense of euphoria (To think that in 2000-2007 governments were proud for having the highest-growing economy in the EU (with borrowed money, of course)). There is an issue with EU's general lack of adequate checks on how EU money is spent in individual countries (esp. the south).
The perfect democracy achieving the will of all voters is not achievable, as different groups may promote conflicting policies. There are however parts that are consistent with all populace, and as the cabinets change you definitely can see what they do have in common.
Greek politicians are Greek people too, with same cultural background and overall attitudes prevailing in the society. Ditto for Greek government employees (a huge sector of their economy), who are there to enforce the regulations.
If there is a culture of tax evasion, you can't expect the government to fix it just because there is a tax code in the writing. People's attitude have to change.
Not sure why you were downvoted, widespread tax evasion in Greece is certainly a contributing factor for the trouble they're in. You can build an apartment building, have an 'uncompleted' top floor, and therefore pay no tax on the building.
Time spent in work is not time spent working. All my greek buddies have a easy gong day. They are in work a number of hours, but how productive those hours are who knows.
But last year I think there was an article linked that explained how Germans have more productivity output per year than US Americans, although Germans have more holidays.
Said that, it's obviously a generalization. I'd think it's very company specific, and depends on many factors, especially the number of "meetings" one has to attend, those that are not work because they have no agenda, no action items, no decisions made etc.
The hours worked figure is misleading. in The Netherlands, Germany etc workforce participation rate of women are much higher. But because women tent to work mostly part-time, especially if they have kids, average the number is really low. Also a lot of young family's split this time as both parent's work part time to spend time with the kids. A normal work week is about 40 hours so if you take out 6 weeks for vacation days, sick days etc your left with 1840 hours. I think a more interesting number would be average work time per household I suspect that the list would look differently.
As I understand it, Greece's problem is the wealthy completely dodge taxes, putting the burden on everyone else (or collapsing the government). It's an idealized version of America's wealthy dream-state.
Leads the way? Belgium and the Netherlands are higher. In that table (where did they get those numbers) I would say Norway + Netherlands 'win'; least hours, most productive. For me as a programmer that's exactly how it should be.
Greece's problems are predominantly due to state debt, caused by:
1) State Fraud and Corruption:
"In early 2010, it was revealed that successive Greek governments had been found to have consistently and deliberately misreported the country's official economic statistics to keep within the monetary union guidelines."
2) Public Tax Evasion:
"Greece suffers from very high levels of tax evasion. In the last quarter of 2005, tax evasion reached 49%,[142] while in January 2006 it fell to 41.6%.[142] The Tax Justice Network has said that there are over €20 billion in Swiss bank accounts held by Greeks."
This is not a very relevant statistic. Note for instance the semi-slave factory workers of Asia who on average would work much harder and longer hours than either of these two groups, but end up with much less money and a worse lifestyle. Now why is that? (and how can I fit it within my pre-existing ideological bias?)
As well as the issues other posters have mentioned, the HN title (though not the article) is misleading as the Greek retirement age was 55 until recently.
Working 40% longer hours each week, but cutting a decade off your career, does not mean you work 40% longer.
It's very easy to blame simple people for the mess that capitalism created. "They spent a lot". Really? Who's to say? Did you ever wonder how much is spend on high tech weapons by your government? Do you KNOW what YOUR country's public debt is? Are YOU responsible for it (because you're gonna be held accountable for it either way).
As easy as it is to buy mainstream media "analysis" it's also just that - mainstream, meaning that it is designed to keep the powers that be from safe from criticism.
What happens in Greece is that we're taking loans upon loans to save defaulted banks that are based mainly in Greece, Germany and France. Tax evasion, porsches' and the rest are dirty propaganda designed to hide the crime that's being perpetuated. Saving failed capitalists (mainly banks up to now) by robbing the laymen.
As for the tax evasion bit, it's mostly true if we are to speak for a small fraction of the Greek population - namelly the rich and superrich Greeks. All the rest are paying our due for nothing - meaning that our taxes (for me it's about 50% of my gross income) are used to refinance loans and not a single dime goes to roads,health or education.
Bear also in mind that for two decades every banks were all over people to persuade them to get loans (sth like the mortgage situation in USA) which were used to buy shit from Germany and France (that's why many say that these countries surplasses are European south deficits). This was evident at a state level too with huge amounts going to buy arms from these two countries. Arms that were of no use.
Anyway, this issue is far from simple and what's more you, no matter where you're from, are far from just spectators. What happens in Greece (namely the ripoff of any hind of welfare state + the death of the middle class) is just an experiment to be continued in virtually every western country. It's the way that western capitalism wants to proceed - and bear in mind that what really counts is workers wages (that have been slashed in Greece since the begining of all this crisis) - many big heads waiving their finger have told us Greeks, that the only way to get back to economic development again is to be OK with chinese salaries. We're trying to take that fingers and put them back where they belong and maybe you should try thinking your line of defense against those failed bussinessmen and politicians.
The reason why you're being downvoted is because your argument is weak and, frankly, your tone is annoying.
> Do you KNOW what YOUR country's public debt is?
> not a single dime goes to roads,health or education
You cannot claim that the strawman you are postulating your response to doesn't know the first (it's very simple to look up) and thinks you are competent on the second statement (it's painfully obvious to be a fabrication).
Yes, there are problems like an eroding of the middle class or waste in government. But that's the same all over Europe - So why is it different in Greece? They are certainly not the only ones who have to bail out businesses or banks.
> As for the tax evasion bit, it's mostly true if we are to speak for a small fraction of the Greek population - namelly the rich and superrich Greeks. All the rest are paying our due for nothing [...]
Well, that's not at all an easy way to pass blame, is it?
> [...] for two decades every banks were all over people to persuade them to get loans [...] buy shit from Germany and France (that's why many say that these countries surplasses are European south deficits). This was evident at a state level too with huge amounts going to buy arms from these two countries.
And this is the point at which you finally lose all credibility. It simply does not compute.
They really need to, and a large portion of the populace seems to be fighting for it.
Also, I'm not sure that we can blame Greek public debt for the rise in interest rates that's actually killing the country, seeing as Spain is going through a similar thing and they were running surpluses.
Okay, but maybe your living of standard is "chinese wages". What I mean by that much lower standard of living. Why should other countries taxpayers because you don't want to accept the reality?
Well obviously they should work less then. Most people I know who spend less time working tend to enjoy life more, look better, have more money and live longer.
We're led to believe the solution to this economic crisis is either getting deeper in debt or more austerity measures (higher taxes, less subsidies)
We're led to believe it's either A or B.
It's neither A or B for most countries. The truth of the matter is that it's a political problem.
We have to reduce the size of the government.
... and jail the corrupt people that hold public office yet act against the citizens in any way. Until that moment in time, nothing good will come out of this and the status quo will just keep on rolling and smashing everyone in its way.
Germans are known for their efficiency, not hard work. Besides, a rested worker is more productive than an overworked one. Germany has got it right.
Also, starting a business in Germany is much easier than in Greece - it's on par with the US and UK, while Greece is more restrictive for some reason...
But only recently. It was a nightmare founding a limited 10 years ago (GmbH) when I founded a startup, it's quite easy today when my wife founded a startup (UG).
Many Germans founded Ltds in Britain on paper, that made the government see the need to change some laws.
As a Greek I have to admit that this number tells half the truth. The other half is that in terms of productivity Greece is very low. So while we may work a lot more than the average German the quality of the products/services we provide is significantly worse.
Fun thing that this article doesn't mention: in Germany it is very, very common to work extra hours that are not paid and not in the books. This is particularly true for high profile jobs.
That highly depends on what line of business we are talking about. In some "new" jobs like Design or even Programming it may be true. But the meat of the German Economy - the part that is highly influenced by unions - is far away from that. I would assume that, writing this on Hacker News, you are probably in the former line of work and don't see that it's very different for average folks.
> in Germany it is very, very common to work extra hours that are not paid and not in the books
I am working in Germany and what are you talking about? More specifically which industry? The employment laws here are so ridiculously pro-employee that I basically need to "excuse" and justify myself if I was to work more than X hours a week. And typically, at least in IT, a certain amount of overtime (or a "flat charge") is in your contract and you get more salary for that - more than the so called "collective agreement" requires your employer to pay you. So for most people in regular jobs, I doubt this holds true. Maybe small IT startups try to squeeze the youngens by circumventing all laws and regulations? At least where I am working, typical German bigger but not huge company, you can set your clock by how punctual they show up to and especially leave work; shortly after 5pm they can start cleaning here because that's when practically the whole building is empty except for some poor souls like me.
"High profile", executive level jobs are different, that is true but this is to be expected at that level and pay rate and I doubt you will find any other country where this doesn't hold true.
I think it's more common with larger companies and the corresponding 9-to-5 attitude.
I work for as architect for a small consultancy/software-development company and I'm paid the same salary no matter how many hours I actually work. Contract says 40 h/week, but there are weeks when I reach the 40 on wednesday. MIght be able to work less than 40 hours when times are not as stressful (haha), but the average has to be clearly above 40 h/week.
I heard some of them even hold two full time jobs at the same time, receiving double salary. And that is in government employment, one of the most stressful jobs available in Greece.
As the 4 columns show, productivity & hours worked go diametrically opposite (negatively correlated). All the countries in the most working list are also in the least productive list. So, it still doesn't change the German assertion that Greeks are not doing enough.
Second, the article itself accepts - " because the two labour markets are structured differently, it is actually hard to compare like with like."
That means the headline is pointless as it is contradicted by the sentence above.
Very interesting to see that Norway is the 2nd most productive, but ranks 3rd in fewest hours worked! Makes me feel good about leaving work at four. ;)
Oh, we have that too. Just because I chose to get in at 8 this morning, doesn't mean I have to. YMMV, of course, but flexible hours are the norm in the IT industry.
I don't know about Greece but the statistics in the page are quite disturbing to read. You do long work hours to be more productive, but in the end (probably it has more factors than that but I am simplifying it) it doesn't do you any good so you do overtime, which damages your productivity even more...
This is the most damned vicious cycle I've ever seen I think...
We keep hearing about the lazy Greeks being bailed out, but isn't it really the banks who lent too much money to Greece who are being bailed out? If the Greeks are so lazy and corrupt, then it was foolish to lend them so much. Why should laziness be punished while foolishness is rewarded? Which poses the greater systemic threat?
This article would be much more beneficial if it went beyond pointing out inaccuracies in common beliefs, and explained where they came from. As given it simply regurgitates self reported government statistics and provides no insight.
There is a difference between "working" and working.. "working" in a highly inefficient system is very different than working fewer hours in a more efficient system
When we talk about the shortcomings of Greece we should not forget that Greece was under military dictatorship up until the middle of the 70's (as were Spain and Portugal). And there were several terrorist bombings afterwards (http://en.wikipedia.org/wiki/Revolutionary_Organization_17_N... just to name one of many groups).
As a German I'm getting tired of painting the Greeks as lazy. It's rather their country that's in a mess.
One thing that I always find very unsettling when reading things like that: how Germany is somehow always an epitome of efficiency and productiveness. I am working here and I absolutely do NOT perceive it like that and friends who are also working here confirmed that impression. We are constantly swapping horror-stories of stupid bureaucracy, lengthy extremely bloated processes, having to do things five times, lazy people, stupid people, people who have no idea about their job and no education, tons of stupid "office wars/games" going on, lengthy discussions about very petty things and just for the sake of "but I was actually right" and so on and so forth...
The only conclusion is then, it is much much MUCH worse elsewhere? Really?? (Or is this just some sort of "halo effect"?)
much of the financial problems in .gr (and .it) have occurred because many citizens do not declare the bulk of their income, then, lo and behold, there is insufficient tax revenue to pay for the myriad government services. there are more porsche cayennes in .gr than there are people who declared over EUR 50K income in 2010.
based on the fact that .gr has essentially committed long-term fraud with their financials i put absolutely zero stock in any claim that "they're working harder than germany".
sure, there are some greeks who work really hard and are productive, but if you've spent any decent amount of time in other countries that border the mediterranean sea you'll notice that their definition of "work" is very different from most people from a less pleasant climate.
there are more porsche cayennes in .gr than there are people who declared over EUR 50K income in 2010
That 'fact' is not only completely untrue, but utterly ridiculous and off by several orders of magnitude. There where over 300000 people declaring of EUR 50k in income in 2010, while Porsche has sold 1500 Cayennes in Greece since launch.
1. The Greek labour market is inefficient. That is why so many people work in small (inefficient) shops. Closed shop regulation for many professions lock people out of high wage occupations. Next to Portugal's 28% high school graduation rate [1] Greece's recent progress (<50% of 25-64 year olds completing high school in 1997 versus 61% today [2]) is valiant but the leaves an uneducated, unproductive generation untouched. It also doesn't account for Greeks' shorter working years.
2. Doing business is tough. Here is an anecdote from a financial commentator in Athens:
"My friend explained that the owner of the bookstore/café couldn’t get a license to provide coffee. She had tried to just buy a coffee machine and give the coffee away for free, thinking that lingering patrons would boost book sales. However, giving away coffee was illegal as well. Instead, the owner had to strike a deal with a bar across the street, whereby they make the coffee and the waitress spends all day shuttling between the bar and the bookstore/café. My friend also explained to me that books could not be purchased at the bookstore, as it was after 18h and it is illegal to sell books in Greece beyond that hour. I was in a bookstore/café that could neither sell books nor make coffee." [3]
3. The government used cheap loans not for infrastructure or reform, but to pay public servants and build a military.
4. The government lied about its finances and is depravedly corrupt.
[1] http://m.upi.com/m/story/UPI-16361301069117/
[2] http://www.oecd.org/dataoecd/44/21/48657344.pdf
[3] http://fabiusmaximus.wordpress.com/2012/03/01/36085/