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On July 04 2013 18:00 fleeze wrote:Show nested quote +On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. ![[image loading]](http://www.marketobservation.com/blogs/media/blogs/Statistics/WorkHoursGreece.jpg) So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post.  i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt.
You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place.
In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 3,385,000 fulltime and 363,000 parttime workers we have 2034*(3385+363)=7,623,432,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 25 euro GDP for every hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here.
Edit: fixed calculation where I took only male employment figures
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On July 04 2013 20:26 Flyingdutchman wrote:Show nested quote +On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here.
I don't even understand the point of the discussion.
Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ?
And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others...
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On July 04 2013 21:43 WhiteDog wrote:Show nested quote +On July 04 2013 20:26 Flyingdutchman wrote:On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here. I don't even understand the point of the discussion. Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others...
The point of the part-time statistic is important because if the same amount of work is being divided amongst more people the average would be lower than before, yet more people work. Look at it this way, according to the same source as the graph 34% of all inhabitants of greece had a job, or 52% of the working age population definition of ages 15-64 in 2012. For Germany the figures come down to 43% and 66.1% respectively. There is a minority in Greece that basically work 40 hour weeks without vacation against a majority of Germans that work a little less per person. As a collective they (Germans) still put in less (average) hours (average per citizen is 636 annual hours worked in Germany against around 700 in Greece). That brings me to the points I made regarding the validity of the data; measurement errors, and suitability in international comparisons.
These figures come from survey data, which basically equates to a small sample of people answering the question 'how many hours they have worked and expect to work'. This then gets extrapolated to the population as a whole. Because the data collection is widely dispersed amongst many 'collectors' they are only suited for looking at trends within boundaries and not for comparing between different boundaries at a given time. There are clear cultural differences regarding every aspect of life that need to be taken into account when evaluating the validity of the responses of people. The actual institutional source of these figures recognizes this fact, and clearly states what I have said regarding this when you collect these data points from them yourself.
This does not connect with the issue you raise however. Greeks are less productive than Germans, and the reasons you state are certainly the main contributing factors. But why are they lacking in infrastructure, human capital, and technology? Is it because their own government chooses to rack up unfunded liabilities instead of investing in infrastructure? Is it because it is very likely that a higher proportion of the working age population does his work off the books and is therefore constricting government in investing in infrastructure? You tell me. The way I see it, the foremost question Greeks should ask themselves is how they are going to contribute to their own success in a more equal way.
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On July 05 2013 01:09 Flyingdutchman wrote:Show nested quote +On July 04 2013 21:43 WhiteDog wrote:On July 04 2013 20:26 Flyingdutchman wrote:On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here. I don't even understand the point of the discussion. Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others... The point of the part-time statistic is important because if the same amount of work is being divided amongst more people the average would be lower than before, yet more people work. Look at it this way, according to the same source as the graph 21% of all inhabitants of greece had a job, or 33% of the working age population definition of ages 15-64 in 2012. For Germany the figures come down to 43% and 66.1% respectively. There is a minority in Greece that basically work 40 hour weeks without vacation against a majority of Germans that work a little less per person yet as a collective they put in more (average) hours (average per citizen is 636 annual hours worked in Germany against 447 in Greece).
I think you should figure in unemployment too. It's not really fair to fault Greek workers for being unemployed in the context of "who works the most." Or maybe just use pre-crisis numbers?
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On July 05 2013 01:47 JonnyBNoHo wrote:Show nested quote +On July 05 2013 01:09 Flyingdutchman wrote:On July 04 2013 21:43 WhiteDog wrote:On July 04 2013 20:26 Flyingdutchman wrote:On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here. I don't even understand the point of the discussion. Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others... The point of the part-time statistic is important because if the same amount of work is being divided amongst more people the average would be lower than before, yet more people work. Look at it this way, according to the same source as the graph 21% of all inhabitants of greece had a job, or 33% of the working age population definition of ages 15-64 in 2012. For Germany the figures come down to 43% and 66.1% respectively. There is a minority in Greece that basically work 40 hour weeks without vacation against a majority of Germans that work a little less per person yet as a collective they put in more (average) hours (average per citizen is 636 annual hours worked in Germany against 447 in Greece). I think you should figure in unemployment too. It's not really fair to fault Greek workers for being unemployed in the context of "who works the most." Or maybe just use pre-crisis numbers?
Well my post basically stated that the comparison on the basis of that number is moot in the first place, Fulltime and parttime employment has both gone up in absolute numbers from 2000 untill 2009 for both countries. After that Greece saw a sharp decline from 2010 to 2012 (-17,6%) in head count.
It will always come down to a matter op opinion with regards to opportunity and the question 'who works the most' however.
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On July 05 2013 01:09 Flyingdutchman wrote:Show nested quote +On July 04 2013 21:43 WhiteDog wrote:On July 04 2013 20:26 Flyingdutchman wrote:On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here. I don't even understand the point of the discussion. Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others... The point of the part-time statistic is important because if the same amount of work is being divided amongst more people the average would be lower than before, yet more people work. Look at it this way, according to the same source as the graph 21% of all inhabitants of greece had a job, or 33% of the working age population definition of ages 15-64 in 2012. For Germany the figures come down to 43% and 66.1% respectively. There is a minority in Greece that basically work 40 hour weeks without vacation against a majority of Germans that work a little less per person yet as a collective they put in more (average) hours (average per citizen is 636 annual hours worked in Germany against 447 in Greece). I'm not sure how they treated freelancers and other self-employed people with the full-time/part-time statistics I used to calculate these figures. If there are big differences in that regard between Germany and Greece my outcomes are biased. Furthermore, That brings me to the points I made regarding the validity of the data; measurement errors, and suitability in international comparisons. These figures come from survey data, which basically equates to a small sample of people answering the question 'how many hours they have worked and expect to work'. This then gets extrapolated to the population as a whole. Because the data collection is widely dispersed amongst many 'collectors' they are only suited for looking at trends within boundaries and not for comparing between different boundaries at a given time. There are clear cultural differences regarding every aspect of life that need to be taken into account when evaluating the validity of the responses of people. The actual institutional source of these figures recognizes this fact, and clearly states what I have said regarding this when you collect these data points from them yourself.
That the indicator we have are imperfect is completly true. Everything you say is, objectively speaking, true, but it goes nowhere. Nobody can really say if a country is more "hard working" than another country through numbers - because there will always be things that will not be taken into account. But with all the work you can do on those indicators, on those numbers, you will always see that overall Greek works more "hours" than Germans.
Even that doesn't mean much. For exemple in France we voted for the 35 hours work a week in 2000, and what we saw is that for some people (in specific sectors), it pushed them to actually work more : they had to do the same (or even more) work in 35h when they used to do it in 39. Working less in time, actually ended up forcing people to work more for each hour.
There are two huge misconception in regard to how people comprehend "economical science" and one of those two is that people forget that in reality information is imperfect and thus economic indicators are built by scientist in order to grasp reality the best way possible - it is always possible to critic them.
In France, in 2008, the president Sarkozy asked a lot of well known economist to work on how the wealth and social progress of a nation could be measured, without relying on the uni-directional Gross Domestic Product (GDP) measure. In this commission were present high figures such as Kenneth Arrow (nobel price in economy) Daniel Kahneman (nobel price in economy) James Heckman (nobel price in economy), Amartya Sen (nobel price in economy), Joseph Stiglitz (nobel price in economy), Tony Atkinson, François Bourguignon, Jean-Paul Fitoussi and more.
What's the result ? Six nobel price and they couldn't really give any answers aside from : the GDP is imperfect, it does not give a good enough evaluation of the well being of a country (word ?), we could add some other indicator to that GDP, but overall it is still the best indicator we have.
We can always discuss one specific indicator, and show it flaws, but every indicator should be used to defend a precise point or perspective, a point that take into account the imperfection of the said indicator.
This does not connect with the issue you raise however. Greeks are less productive than Germans, and the reasons you state are certainly the main contributing factors. But why are they lacking in infrastructure, human capital, and technology? Is it because their own government chooses to rack up unfunded liabilities instead of investing in infrastructure? Is it because it is very likely that a higher proportion of the working age population does his work off the books and is therefore constricting government in investing in infrastructure? You tell me. The way I see it, the foremost question Greeks should ask themselves is how they are going to contribute to their own success in a more equal way.
This is one of the biggest problem I have with most of the posts I see in this forum.
I completly agree that the Greek politician certainly did some really dumb things, and that things could have been better, but overall, if you think in a macro economic perspective, everything that happenned would have happenned, and the global economic situation of Greece has been moddled by economic mecanism that goes way beyond their own political possibilities (considering that they are part of the EU, things would be entirely different if they still had control over their currency).
For exemple, if we consider the question of infrastructure that you raised, we know since 40 years or so that what we call the globalization (which is the progressive disappearance of trade barrier all over the world, under the impulsion of the GATT then the WTO, and here specifically the mobility of capital) has negative effect on taxation rates.
In economy we usually say that the existence of mobile bases (mobile capital) create a fiscal competition between countries (I could quote D. E. Wildasin, "Nash Equilibria in Models of Fiscal Competition" if you want to dig in it, be my guess) that lead countries to an suboptimal fiscal rate : basically, the fiscal competition push countries to lower their taxation rate to a point where the taxation rate is actually lower than what is needed to produce and maintenance public goods such as public infrastructures.
In modern economy (read economic geography for those who know about that), what we know is that this idea of suboptimale fiscal rate caused by fiscal competition is not true for every regions. In regions with a high concentration of economic activities, like the "Ile de France" in France or the "Ruhr" region in Germany, the public power is in a situation where the benefaction of the concentration of economic activities will permit them to push for a higher taxation rate (see Forslid & Anderson, "Fiscal Competition and Economic Geography").
So, in region that are already highly developped, politicians will be able to raise higher tax and thus propose high quality public infrastructures that will boost the productivity of the workers in the said regions.
According to those works, a small and underdevelopped country such as Greece, considering that it is part of a free trade space with highly developped regions, will be forced to lower its taxation rate to a level where it will be suboptimal; which means that they will not have enough revenue through taxation to actually develop infrastructures.
All this is a complicated way to enlight a very simple idea : in a free trade capitalism (I used 3 words that don't mean shit back to back, please don't nitpick me you understand what I mean) or a "globalized economy", a small country, with small markets and regions such as Greece, cannot compete efficiently if that same country don't possess the tools to defend itself from the negative impact of the free trade.
I could develop relatively close reasonning for most of the other factor that participate in the productivity of a country. The idea that country can strenghten their economy through brave and intelligent political actions is very seducing, but in reality, there are economical, and I should add historical, geographical and demographical mecanisms that explain a huge part (if not entirely) of the success of the said country.
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WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy.
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On July 05 2013 05:00 Nyxisto wrote:
WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy.
what do you expect of a chancellor that thinks a trade surplus of +9% is a good thing to have when basic economic knowledge says you should aim for a balanced trade. even basic logic tells you someone has to PAY for this surplus with -9% (this is simplified, it's spread out across countries we export to obviously). so we are drawing money from those countries to germany in the form of loans that other countries can't pay back (and in the case of EU countries they can't inflate their currency), but we give the money to our banks anyway and let taxpayers bleed for it. it's a lose/lose situation for everyone.
the money goes to the bank that doesn't buy products but invests in a retarded stock market, german population can't buy more products and demand doesn't go up so our imports get upped (it goes down actually because of inflation and higher taxes for the masses) and other countries lose in competitveness because our unit labor costs decrease even further through the stagnating wages and growing production.
btw: france is the ONLY EU country that kept wages in line with the growing production. they should be the prime example to follow in this case. unfortunately there aren't many countries that critize german wage dumping in a way that makes it to our media.
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On July 05 2013 05:00 Nyxisto wrote:
WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy.
I agree with most of the things you said but I never said that competition between countries is usually bad 
Objectively speaking I just insisted on the fact that globalization had a bad influence on taxation rates - it doesn't mean that it is not a good thing in other part of the economy (in economical science, there are only a few arguments that goes against globalization - it doesn't mean that I personally consider that globalization is a good thing).
If I wanted to draw biggest conclusions from what I tried to enlight, it is simply that free trade cannot work without the state - and in Europe, the only who can play that role is the EU (with the ECB of course).
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On July 05 2013 06:40 WhiteDog wrote:Show nested quote +On July 05 2013 05:00 Nyxisto wrote:
WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy. I agree with most of the things you said but I never said that competition between countries is usually bad Objectively speaking I just insisted on the fact that globalization had a bad influence on taxation rates - it doesn't mean that it is not a good thing in other part of the economy (economically speaking, there are a few arguments that goes against globalization - it doesn't mean that I personally consider that globalization is a good thing). If I wanted to draw biggest conclusions from what I tried to enlight, it is simply that free trade cannot work without the state - and in Europe, the only who can play that role is the EU (with the ECB of course).
yup, biggest problem of the euro:
you can't inforce a free trade zone without coordinated economic politics.
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On July 05 2013 05:00 Nyxisto wrote:
WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy.
Well look at the Baltic countries that passed through lower wages and less government spending without disruptive protests. Estonia, Lithuania and Latvia cut spending and realized that going forward will not be easy but it's the best way to recover from a devastating recession.
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Where do you suggest we take the money for your Marshall Plan from? Nobody is currently lending you money, that is the whole problem.
Also while we are at it, the Marshall Plan after the war was in no way an altruistic initiative. US made a fortune with these loans and got political control on top of it (and even got to be the 'good guy').
I am not suggesting a Marshall Plan for Greece. My point was that the solution cannot be an economical one but a political one. That's all. Which is why numbers are numbers.
Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ?
As i already said numbers are numbers. The graph I posted did not have the intention of showing anything else other than the fact that Greeks are not lazy as the media tries to portrait them. Of course there are huge issues with productivity. But productivity in Greece is (for the most part) low because of incompetent people in positions of leadership. But that's another topic.
Well look at the Baltic countries that passed through lower wages and less government spending without disruptive protests. Estonia, Lithuania and Latvia cut spending and realized that going forward will not be easy but it's the best way to recover from a devastating recession.
I don't think you have a full picture of what's really going on here. Here let me paint you a picture of how things are, to make it clearer. They cut our wages, unemployment goes up companies are closing left and right, people commit suicide due to their inability to pay and the government is selling the entirety of our public sector for 10%-20% of its price. They even sell our gold in Chalkidiki to companies from Canada. And after all that our debt just keeps going up and up and up.
You have to understand that (almost) nobody protested for lowering the wages. It's the stuff they pull after all that in the name of "Saving our Country". And obviously after 3 years its safe to say it's leading nowhere.
All this is a complicated way to enlight a very simple idea : in a free trade capitalism (I used 3 words that don't mean shit back to back, please don't nitpick me you understand what I mean) or a "globalized economy", a small country, with small markets and regions such as Greece, cannot compete efficiently if that same country don't possess the tools to defend itself from the negative impact of the free trade.
Your post is a really nice read. You see the thing is, Greece had, and still has ways to become competitive. Perhaps not like Germany or France, but there are a ton of products in Greece that are unique and can be competitive. The issue here is that there was never any real focus on our "comparable advantages" to other countries. If (aww i hate using the word 'if') a long time ago our economy was more focused to what we can do better than others, we would probably not end up here.
I'll give you an example. Every year half of the students in high school end up in universities. So we "produce" a ton of scientists and generally speaking people with advanced academic knowledge on a certain field. And yet, the market has absolutely no way to absorb them. So the question becomes, why does everyone study? Well because there are no incentives for working anywhere unless you have an academic degree. If (there i used it again) there was a way to make it worth working as a farmer, or a sailor or whatever else is our "comparable advantage" to other countries, then those fields would be highly advanced and we could be talking about a competitive economy.
See I understand the argument a lot of people bring up, that these are the problems of "free trade" and "capitalism" and the "euro". But this is what we have and probably what we will have for the next years. And I believe there were solutions and are solutions still if the right political moves are made. So even though what you say might be true (and i don't disagree), we're still talking about a lot of mistakes done in the past, which unfortunately are still being made.
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On July 05 2013 08:22 AbstractSC wrote:Show nested quote +Where do you suggest we take the money for your Marshall Plan from? Nobody is currently lending you money, that is the whole problem.
Also while we are at it, the Marshall Plan after the war was in no way an altruistic initiative. US made a fortune with these loans and got political control on top of it (and even got to be the 'good guy'). I am not suggesting a Marshall Plan for Greece. My point was that the solution cannot be an economical one but a political one. That's all. Which is why numbers are numbers. Show nested quote +Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? As i already said numbers are numbers. The graph I posted did not have the intention of showing anything else other than the fact that Greeks are not lazy as the media tries to portrait them. Of course there are huge issues with productivity. But productivity in Greece is (for the most part) low because of incompetent people in positions of leadership. But that's another topic. Show nested quote +Well look at the Baltic countries that passed through lower wages and less government spending without disruptive protests. Estonia, Lithuania and Latvia cut spending and realized that going forward will not be easy but it's the best way to recover from a devastating recession. I don't think you have a full picture of what's really going on here. Here let me paint you a picture of how things are, to make it clearer. They cut our wages, unemployment goes up companies are closing left and right, people commit suicide due to their inability to pay and the government is selling the entirety of our public sector for 10%-20% of its price. They even sell our gold in Chalkidiki to companies from Canada. And after all that our debt just keeps going up and up and up. You have to understand that (almost) nobody protested for lowering the wages. It's the stuff they pull after all that in the name of "Saving our Country". And obviously after 3 years its safe to say it's leading nowhere. Show nested quote +
All this is a complicated way to enlight a very simple idea : in a free trade capitalism (I used 3 words that don't mean shit back to back, please don't nitpick me you understand what I mean) or a "globalized economy", a small country, with small markets and regions such as Greece, cannot compete efficiently if that same country don't possess the tools to defend itself from the negative impact of the free trade.
Your post is a really nice read. You see the thing is, Greece had, and still has ways to become competitive. Perhaps not like Germany or France, but there are a ton of products in Greece that are unique and can be competitive. The issue here is that there was never any real focus on our "comparable advantages" to other countries. If (aww i hate using the word 'if') a long time ago our economy was more focused to what we can do better than others, we would probably not end up here. I'll give you an example. Every year half of the students in high school end up in universities. So we "produce" a ton of scientists and generally speaking people with advanced academic knowledge on a certain field. And yet, the market has absolutely no way to absorb them. So the question becomes, why does everyone study? Well because there are no incentives for working anywhere unless you have an academic degree. If (there i used it again) there was a way to make it worth working as a farmer, or a sailor or whatever else is our "comparable advantage" to other countries, then those fields would be highly advanced and we could be talking about a competitive economy. See I understand the argument a lot of people bring up, that these are the problems of "free trade" and "capitalism" and the "euro". But this is what we have and probably what we will have for the next years. And I believe there were solutions and are solutions still if the right political moves are made. So even though what you say might be true (and i don't disagree), we're still talking about a lot of mistakes done in the past, which unfortunately are still being made.
My question is what are the right political moves that Greece can do without the help of the EU and without getting out of the EU ?
Competitive disinflation... and at what cost.
"Competitive advantage" cannot be built in a free trade situation in my opinion. You need either an help from the state - a short term protectionnism whatever the face that protectionnism takes.
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On July 05 2013 07:07 archonOOid wrote:Show nested quote +On July 05 2013 05:00 Nyxisto wrote:
WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy.
Well look at the Baltic countries that passed through lower wages and less government spending without disruptive protests. Estonia, Lithuania and Latvia cut spending and realized that going forward will not be easy but it's the best way to recover from a devastating recession.
Well i don't know if that comparison applies here, because as far as i know(and correct me if i'm wrong because i don't know that much about the Baltic states) the Baltic countries are already quite similar regarding their economy. If everyone just gets rid of some unnecessary government programs thats fine, but the situation here is different.
Greece is already cutting so much that their GDP went down by 25% since the austerity started. A quarter of their economy is gone, their debt is higher than ever and a stunning amount of the population is unemployed. And they still won't be able to compete with the big countries, we're just too different.
What you proposed may work for France, Italy and Germany, (although as i said i think it makes more sense for us to get more "uncompetitive", because we also export way too much stuff), but the peripheral states will never be able to stay on toe with the big ones.
I'd actually propose we do big haircuts for all European countries and refinance the core businesses of the banks so that the economy doesn't go in a complete dive. The states also guarantee private assets up to a million or so while the rest goes into the bankrupt's estate.
I don't know if that would work at all but at least for me it makes more sense than pumping money into half dead financial markets that are way too bloated.
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On July 05 2013 04:28 WhiteDog wrote:Show nested quote +On July 05 2013 01:09 Flyingdutchman wrote:On July 04 2013 21:43 WhiteDog wrote:On July 04 2013 20:26 Flyingdutchman wrote:On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here. I don't even understand the point of the discussion. Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others... The point of the part-time statistic is important because if the same amount of work is being divided amongst more people the average would be lower than before, yet more people work. Look at it this way, according to the same source as the graph 21% of all inhabitants of greece had a job, or 33% of the working age population definition of ages 15-64 in 2012. For Germany the figures come down to 43% and 66.1% respectively. There is a minority in Greece that basically work 40 hour weeks without vacation against a majority of Germans that work a little less per person yet as a collective they put in more (average) hours (average per citizen is 636 annual hours worked in Germany against 447 in Greece). I'm not sure how they treated freelancers and other self-employed people with the full-time/part-time statistics I used to calculate these figures. If there are big differences in that regard between Germany and Greece my outcomes are biased. Furthermore, That brings me to the points I made regarding the validity of the data; measurement errors, and suitability in international comparisons. These figures come from survey data, which basically equates to a small sample of people answering the question 'how many hours they have worked and expect to work'. This then gets extrapolated to the population as a whole. Because the data collection is widely dispersed amongst many 'collectors' they are only suited for looking at trends within boundaries and not for comparing between different boundaries at a given time. There are clear cultural differences regarding every aspect of life that need to be taken into account when evaluating the validity of the responses of people. The actual institutional source of these figures recognizes this fact, and clearly states what I have said regarding this when you collect these data points from them yourself. That the indicator we have are imperfect is completly true. Everything you say is, objectively speaking, true, but it goes nowhere. Nobody can really say if a country is more "hard working" than another country through numbers - because there will always be things that will not be taken into account. But with all the work you can do on those indicators, on those numbers, you will always see that overall Greek works more "hours" than Germans. Even that doesn't mean much. For exemple in France we voted for the 35 hours work a week in 2000, and what we saw is that for some people (in specific sectors), it pushed them to actually work more : they had to do the same (or even more) work in 35h when they used to do it in 39. Working less in time, actually ended up forcing people to work more for each hour. There are two huge misconception in regard to how people comprehend "economical science" and one of those two is that people forget that in reality information is imperfect and thus economic indicators are built by scientist in order to grasp reality the best way possible - it is always possible to critic them. In France, in 2008, the president Sarkozy asked a lot of well known economist to work on how the wealth and social progress of a nation could be measured, without relying on the uni-directional Gross Domestic Product (GDP) measure. In this commission were present high figures such as Kenneth Arrow (nobel price in economy) Daniel Kahneman (nobel price in economy) James Heckman (nobel price in economy), Amartya Sen (nobel price in economy), Joseph Stiglitz (nobel price in economy), Tony Atkinson, François Bourguignon, Jean-Paul Fitoussi and more. What's the result ? Six nobel price and they couldn't really give any answers aside from : the GDP is imperfect, it does not give a good enough evaluation of the well being of a country (word ?), we could add some other indicator to that GDP, but overall it is still the best indicator we have. We can always discuss one specific indicator, and show it flaws, but every indicator should be used to defend a precise point or perspective, a point that take into account the imperfection of the said indicator. Show nested quote +This does not connect with the issue you raise however. Greeks are less productive than Germans, and the reasons you state are certainly the main contributing factors. But why are they lacking in infrastructure, human capital, and technology? Is it because their own government chooses to rack up unfunded liabilities instead of investing in infrastructure? Is it because it is very likely that a higher proportion of the working age population does his work off the books and is therefore constricting government in investing in infrastructure? You tell me. The way I see it, the foremost question Greeks should ask themselves is how they are going to contribute to their own success in a more equal way. This is one of the biggest problem I have with most of the posts I see in this forum. I completly agree that the Greek politician certainly did some really dumb things, and that things could have been better, but overall, if you think in a macro economic perspective, everything that happenned would have happenned, and the global economic situation of Greece has been moddled by economic mecanism that goes way beyond their own political possibilities (considering that they are part of the EU, things would be entirely different if they still had control over their currency). For exemple, if we consider the question of infrastructure that you raised, we know since 40 years or so that what we call the globalization (which is the progressive disappearance of trade barrier all over the world, under the impulsion of the GATT then the WTO, and here specifically the mobility of capital) has negative effect on taxation rates. In economy we usually say that the existence of mobile bases (mobile capital) create a fiscal competition between countries (I could quote D. E. Wildasin, "Nash Equilibria in Models of Fiscal Competition" if you want to dig in it, be my guess) that lead countries to an suboptimal fiscal rate : basically, the fiscal competition push countries to lower their taxation rate to a point where the taxation rate is actually lower than what is needed to produce and maintenance public goods such as public infrastructures. In modern economy (read economic geography for those who know about that), what we know is that this idea of suboptimale fiscal rate caused by fiscal competition is not true for every regions. In regions with a high concentration of economic activities, like the "Ile de France" in France or the "Ruhr" region in Germany, the public power is in a situation where the benefaction of the concentration of economic activities will permit them to push for a higher taxation rate (see Forslid & Anderson, "Fiscal Competition and Economic Geography"). So, in region that are already highly developped, politicians will be able to raise higher tax and thus propose high quality public infrastructures that will boost the productivity of the workers in the said regions. According to those works, a small and underdevelopped country such as Greece, considering that it is part of a free trade space with highly developped regions, will be forced to lower its taxation rate to a level where it will be suboptimal; which means that they will not have enough revenue through taxation to actually develop infrastructures. All this is a complicated way to enlight a very simple idea : in a free trade capitalism (I used 3 words that don't mean shit back to back, please don't nitpick me you understand what I mean) or a "globalized economy", a small country, with small markets and regions such as Greece, cannot compete efficiently if that same country don't possess the tools to defend itself from the negative impact of the free trade. I could develop relatively close reasonning for most of the other factor that participate in the productivity of a country. The idea that country can strenghten their economy through brave and intelligent political actions is very seducing, but in reality, there are economical, and I should add historical, geographical and demographical mecanisms that explain a huge part (if not entirely) of the success of the said country.
Ok it seems that you want to argue for the sake of arguing. I merely pointed out that there is a lot more to a simple statistic like average hours worked that makes international comparisons tricky if you use them. I don't know why you would bring up GDP. As long as you know what GDP stands for it is quite clear what it measures. The whole social and 'wealth' thing comes from how you use your GDP. That is, at least to my opinion, where Greece has failed, and where France is going to run into some trouble later on. For all intents and purposes it is a good thing that the Greece government lost control of monetary policy. You can't keep adjusting your exchange rate indefinitely. Monetary policy is merely manipulating supply and demand for your currency. They don't send out a memo casually informing other countries that the exchange rate has been changed. It has real consequences, especially in the long run. You do not want such a tool in the hands of someone elected and therefore working with a 4 year time frame.
What Greece needed was structural reform, they collected a comparable percentage of GDP in taxes as other European countries, yet where others invested in roads they invested in things that did not increase their productivity. How are countries, and therefore inhabitants of other countries, responsible for the political outcomes that they had absolutely no control over? You keep going on about IF Greece was not part of the euro they WOULD have done great. That is just bullshit and you know it. They knew what they were getting into when they signed the papers, they knew they had to show discipline (because only France and Germany can get away with breaking the rules) in fiscal policy. They didn't show any fiscal discipline whatsoever. As I already said they just promised to take care of everyone and left the bill in the bottom drawer. Then, when Europe asks to see the books, they lie. If they didn't lie from the beginning things would have been very different. Now it is this ridiculous amount of debt and they have nothing to show for it. No increases in productivity, nothing. Sure, if you make three times the amount someone else makes it is a lot easier to save for a pension and get nice things.
I've downloaded the paper you linked on tax competition. On a first glance the results are intuitive enough, yet it is a highly abstract 2 country model. The validity of this for Greece has to do with the specific assumptions the authors made, and how they relate to the real world. I haven't had time to look into it yet, but I would not bet any money on it if I were you. Mainly because the assumption of uninhibited agglomeration will always lead to the situation where everyone and everything end up in one country if you apply the right exogenous shock. It is a nice brainteaser, and gives some nice insights that you could build upon. But it is not applicable in this context. Same with NE's, they are highly theoretical exercises where the outcome is dependent on the assumptions you make. Also, a NE merely means that the parties involved are in a situation where neither would change their strategy. I haven't read the paper on NE's that you linked, although I highly doubt that it has any real implications for the Greek situation considering the abstract: 'This
paper analyzes Nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition. Small-number Nash equilibria in which tax rates are the strategic variables are shown not to coincide with Nash equilibria in which
public expenditure levels are the strategic variables. '.
I'd rather talk real actual economics. Like how GDP per capita in Greece grew 410% from 1950 to 1989. Then from 1990 to 2012 GDP per capita grew merely by 25%. And the 25% growth would have been higher if it wasn't for the decline in GDP/capita in 2009, 2010, and 2011. Yet they did a lot better than France for instance, with a higher initial starting value they grew 317,5% over the 1950-2012 period. (Greece GDP/cap grew 562% over the same period). Lets look at the Netherlands for good measure, since German data is rather icky due to the whole being divided and later reintergrating: NL GDP/cap grew only 306%. So when I look at figures like these I'd say there has been a lot of improvement over the years in all countries. What the different countries did with that growth is another matter, and the whole point of this bloated collection of words and sentences I call a post.
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On July 05 2013 08:50 Flyingdutchman wrote:Show nested quote +On July 05 2013 04:28 WhiteDog wrote:On July 05 2013 01:09 Flyingdutchman wrote:On July 04 2013 21:43 WhiteDog wrote:On July 04 2013 20:26 Flyingdutchman wrote:On July 04 2013 18:00 fleeze wrote:On July 04 2013 08:04 AbstractSC wrote:Because people post a lot of numbers about the Greek Debt-Crisis, I'd like to make somethings clearer for people not living in Greece, that are not told by popular media around the world. First of all, numbers are numbers. They do NOT paint the whole picture of what is going on in a country. Almost no Greek had any problem with big changes occurring in Greece. Before the huge cuts in salaries and the insane amount of people ending in unemployment, in 2010, a lot of people and probably the majority agreed that if we were to go bankrupt as a country, then yeah OK... we'll pay for that by lowering our monthly wages. The problem is a lot of things were either NOT done at all (like chasing tax-evasion) or they were done without a real plan in a non-democratic way. Let's see where we were 3 years ago and where we are now. Today there is approx 67% official unemployment for people between 15-24 years old. The real unemployment (which means taking into account anyone working in the black market or is a college-university student which is searching for a job) is much much greater, which means almost no young person in Greece has any chance of finding any kind of job at all. So let's stop looking at numbers just as numbers and let's start thinking that behind all those numbers are people's dreams, families, lives. And when you have taken a huge hit to your own life for nothing in return, for so long, and with nothing on the horizon, then I don't see how any of the policies used in Greece "make sense" for an economic point of view. Secondly, the problem in Europe is no longer ECONOMICAL, as weird as that sounds. We've reached the point where Greece will NEVER, and I really mean NEVER be able to payback the money Greece owes. And the same probably goes for other countries as well. The problem is now POLITICAL. The solution can no longer by economical means because there's no way to "fix" those numbers. With huge unemployment, and the constant hit both the public and private sector receive, there will never be economic growth, and when there will be, we will need to pay everything we make to cover our debt, leaving nothing for growth. Just to paint a picture for you, every new baby born and every young kid that's still going to school, already "owes" more than 10.000 Euros. How do you build a life like that? So since the solution can only be political, numbers lose their meaning. After WWII, the Marshal Plan was a political solution, that gave the opportunity to Germany to stand on it's feet, and achieve economic growth. The austerity measures are in no way similar to what the Marshal Plan was, and I find it astounding that 2 different plans have been used in the past, with obvious results as to which works, and we're still keep trying to make this terrible plan work. Lastly, I don't know what the big media in other countries say about Greeks, whether their lazy, corrupt etc etc. but according to an official survey done in 2008, Greeks are the most hardworking people in Europe. So in my opinion don't blame the Greeks for the situation except for voting the wrong people and not protesting and fighting as hard as they could. I could probably write a lot more on the subject but I don't want to make a huge post. i just want to comment the graphic. it's missleading, especially because it highlights germany. there are much more part time or 400€ jobs, that don't work full time, in germany. so take this with a grain of salt. You are certainly right. According to the source of that graph, for every part-time worker in Germany there are 4.6 full-time workers (30+ workweek). Greece has a more than 17 full-time workers for every part-time worker. As AbstractSC said, number are just numbers, especially when they come from Greece. When we look at 'average annual hours actually worked' from the OECD website, which in turn is derived from the european labour force survey, we see that Greeks work more or less 40 hours a week for 52 weeks a year on average. Two things are worth mentioning with regards to these numbers. First, they are based on survey data which is inherently unreliable due to possible measurement error. Second, the OECD states they are intended for comparisons of trends over time, and are not suited for comparing levels for a given year. I suspect that they assume the bias incorporated by the different sources are constant over time but are different for each country. So the graph shown by AbstractSC is used in a way that the source of the data is saying would be incorrect in the first place. In any case, if we extrapolate the average hours worked to a total number of hours worked in the whole economy we get 2,034 average annual hours worked times 2,098,000 fulltime and 274,000 parttime workers we have 2034*(2098+274)=4,824,648,000 hours worked total in the economy in 2012. The provisional figures for gross domestic product at market prices for greece in 2012 is 193,749,000,000 as taken from eurostat. That gives an average of 40 euro GDP for evey hour worked. Using the same sources and crude calculation for Germany gives an average of 74.6 euro. A little side note here is of course that the average GDP per hour is not what an hour of labour actually produces or what a worker would get in a competitive market since I did not take capital into account here. I don't even understand the point of the discussion. Basically, a Greek works more than a german or a french. That one hour of work is way less productive for a Greek than for a German a given : Greeks are overall not as educated (human capital), they don't have the same infrastructure nor the same technological machinery. What does it change that there are more part time work in Germany ? And there you are, toying with number to make it seems like there are things hidden behind that simple fact. Greeks works more, period. Anybody who have been in Greece for a week would know that fact : there are part of Greece that are completly under developped in comparaison to German and French standard, especially in the farming sector (some farmer in Greece lack the basic tools for a productive agriculture). In this kind of situation, you just have to work more to do the same as others... The point of the part-time statistic is important because if the same amount of work is being divided amongst more people the average would be lower than before, yet more people work. Look at it this way, according to the same source as the graph 21% of all inhabitants of greece had a job, or 33% of the working age population definition of ages 15-64 in 2012. For Germany the figures come down to 43% and 66.1% respectively. There is a minority in Greece that basically work 40 hour weeks without vacation against a majority of Germans that work a little less per person yet as a collective they put in more (average) hours (average per citizen is 636 annual hours worked in Germany against 447 in Greece). I'm not sure how they treated freelancers and other self-employed people with the full-time/part-time statistics I used to calculate these figures. If there are big differences in that regard between Germany and Greece my outcomes are biased. Furthermore, That brings me to the points I made regarding the validity of the data; measurement errors, and suitability in international comparisons. These figures come from survey data, which basically equates to a small sample of people answering the question 'how many hours they have worked and expect to work'. This then gets extrapolated to the population as a whole. Because the data collection is widely dispersed amongst many 'collectors' they are only suited for looking at trends within boundaries and not for comparing between different boundaries at a given time. There are clear cultural differences regarding every aspect of life that need to be taken into account when evaluating the validity of the responses of people. The actual institutional source of these figures recognizes this fact, and clearly states what I have said regarding this when you collect these data points from them yourself. That the indicator we have are imperfect is completly true. Everything you say is, objectively speaking, true, but it goes nowhere. Nobody can really say if a country is more "hard working" than another country through numbers - because there will always be things that will not be taken into account. But with all the work you can do on those indicators, on those numbers, you will always see that overall Greek works more "hours" than Germans. Even that doesn't mean much. For exemple in France we voted for the 35 hours work a week in 2000, and what we saw is that for some people (in specific sectors), it pushed them to actually work more : they had to do the same (or even more) work in 35h when they used to do it in 39. Working less in time, actually ended up forcing people to work more for each hour. There are two huge misconception in regard to how people comprehend "economical science" and one of those two is that people forget that in reality information is imperfect and thus economic indicators are built by scientist in order to grasp reality the best way possible - it is always possible to critic them. In France, in 2008, the president Sarkozy asked a lot of well known economist to work on how the wealth and social progress of a nation could be measured, without relying on the uni-directional Gross Domestic Product (GDP) measure. In this commission were present high figures such as Kenneth Arrow (nobel price in economy) Daniel Kahneman (nobel price in economy) James Heckman (nobel price in economy), Amartya Sen (nobel price in economy), Joseph Stiglitz (nobel price in economy), Tony Atkinson, François Bourguignon, Jean-Paul Fitoussi and more. What's the result ? Six nobel price and they couldn't really give any answers aside from : the GDP is imperfect, it does not give a good enough evaluation of the well being of a country (word ?), we could add some other indicator to that GDP, but overall it is still the best indicator we have. We can always discuss one specific indicator, and show it flaws, but every indicator should be used to defend a precise point or perspective, a point that take into account the imperfection of the said indicator. This does not connect with the issue you raise however. Greeks are less productive than Germans, and the reasons you state are certainly the main contributing factors. But why are they lacking in infrastructure, human capital, and technology? Is it because their own government chooses to rack up unfunded liabilities instead of investing in infrastructure? Is it because it is very likely that a higher proportion of the working age population does his work off the books and is therefore constricting government in investing in infrastructure? You tell me. The way I see it, the foremost question Greeks should ask themselves is how they are going to contribute to their own success in a more equal way. This is one of the biggest problem I have with most of the posts I see in this forum. I completly agree that the Greek politician certainly did some really dumb things, and that things could have been better, but overall, if you think in a macro economic perspective, everything that happenned would have happenned, and the global economic situation of Greece has been moddled by economic mecanism that goes way beyond their own political possibilities (considering that they are part of the EU, things would be entirely different if they still had control over their currency). For exemple, if we consider the question of infrastructure that you raised, we know since 40 years or so that what we call the globalization (which is the progressive disappearance of trade barrier all over the world, under the impulsion of the GATT then the WTO, and here specifically the mobility of capital) has negative effect on taxation rates. In economy we usually say that the existence of mobile bases (mobile capital) create a fiscal competition between countries (I could quote D. E. Wildasin, "Nash Equilibria in Models of Fiscal Competition" if you want to dig in it, be my guess) that lead countries to an suboptimal fiscal rate : basically, the fiscal competition push countries to lower their taxation rate to a point where the taxation rate is actually lower than what is needed to produce and maintenance public goods such as public infrastructures. In modern economy (read economic geography for those who know about that), what we know is that this idea of suboptimale fiscal rate caused by fiscal competition is not true for every regions. In regions with a high concentration of economic activities, like the "Ile de France" in France or the "Ruhr" region in Germany, the public power is in a situation where the benefaction of the concentration of economic activities will permit them to push for a higher taxation rate (see Forslid & Anderson, "Fiscal Competition and Economic Geography"). So, in region that are already highly developped, politicians will be able to raise higher tax and thus propose high quality public infrastructures that will boost the productivity of the workers in the said regions. According to those works, a small and underdevelopped country such as Greece, considering that it is part of a free trade space with highly developped regions, will be forced to lower its taxation rate to a level where it will be suboptimal; which means that they will not have enough revenue through taxation to actually develop infrastructures. All this is a complicated way to enlight a very simple idea : in a free trade capitalism (I used 3 words that don't mean shit back to back, please don't nitpick me you understand what I mean) or a "globalized economy", a small country, with small markets and regions such as Greece, cannot compete efficiently if that same country don't possess the tools to defend itself from the negative impact of the free trade. I could develop relatively close reasonning for most of the other factor that participate in the productivity of a country. The idea that country can strenghten their economy through brave and intelligent political actions is very seducing, but in reality, there are economical, and I should add historical, geographical and demographical mecanisms that explain a huge part (if not entirely) of the success of the said country. Ok it seems that you want to argue for the sake of arguing. I merely pointed out that there is a lot more to a simple statistic like average hours worked that makes international comparisons tricky if you use them. I don't know why you would bring up GDP. As long as you know what GDP stands for it is quite clear what it measures. The whole social and 'wealth' thing comes from how you use your GDP. That is, at least to my opinion, where Greece has failed, and where France is going to run into some trouble later on. For all intents and purposes it is a good thing that the Greece government lost control of monetary policy. You can't keep adjusting your exchange rate indefinitely. Monetary policy is merely manipulating supply and demand for your currency. They don't send out a memo casually informing other countries that the exchange rate has been changed. It has real consequences, especially in the long run. You do not want such a tool in the hands of someone elected and therefore working with a 4 year time frame.
No ? Monetary policy is way more than manipulating supply and demand for your currency. And monetary policy is actually known for its lack of consequences in the long run. It gets its power from short term price rigidity.
What Greece needed was structural reform, they collected a comparable percentage of GDP in taxes as other European countries, yet where others invested in roads they invested in things that did not increase their productivity. How are countries, and therefore inhabitants of other countries, responsible for the political outcomes that they had absolutely no control over? You keep going on about IF Greece was not part of the euro they WOULD have done great. That is just bullshit and you know it. They knew what they were getting into when they signed the papers, they knew they had to show discipline (because only France and Germany can get away with breaking the rules) in fiscal policy. They didn't show any fiscal discipline whatsoever. As I already said they just promised to take care of everyone and left the bill in the bottom drawer. Then, when Europe asks to see the books, they lie. If they didn't lie from the beginning things would have been very different. Now it is this ridiculous amount of debt and they have nothing to show for it. No increases in productivity, nothing. Sure, if you make three times the amount someone else makes it is a lot easier to save for a pension and get nice things.
Where did I say that Greece would have done better if they were not part of the EU ? As stated before, free trade is a source of growth. It is clear that Greece gained from its adhesion to the EU. It is also clear that it is suffering from it right now.
I've downloaded the paper you linked on tax competition. On a first glance the results are intuitive enough, yet it is a highly abstract 2 country model. The validity of this for Greece has to do with the specific assumptions the authors made, and how they relate to the real world. I haven't had time to look into it yet, but I would not bet any money on it if I were you. Mainly because the assumption of uninhibited agglomeration will always lead to the situation where everyone and everything end up in one country if you apply the right exogenous shock. It is a nice brainteaser, and gives some nice insights that you could build upon. But it is not applicable in this context. Same with NE's, they are highly theoretical exercises where the outcome is dependent on the assumptions you make. Also, a NE merely means that the parties involved are in a situation where neither would change their strategy. I haven't read the paper on NE's that you linked, although I highly doubt they it has any real implications for the Greek situation considering the abstract: 'This
paper analyzes Nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition. Small-number Nash equilibria in which tax rates are the strategic variables are shown not to coincide with Nash equilibria in which
public expenditure levels are the strategic variables. '.
The idea of a nash equilibria, in this paper, just means that the countries act strategically and take into consideration the taxation rate of others to decide of their own taxation rate (what I'm saying is wrong but it's the gist of it). The competition between countries push each other to lower their taxation rate : yes the models are up to critic, the only point of the model is to show that countries engaged in an economic competition "should" lower their taxs to attract mobile bases.
The point of my post was to show that there are macro economic mecanism that goes beyond Greece as a country. If you cannot agree with that, I don't really know. I was just pointing out that the fiscal competition badly influence the taxation rate of every a country, and specifically small countries - it doesn't mean that every small countries everywhere lowered their taxation rate accordingly to the model. I could have picked other type of exemple to show that Greece "productivity" is not something you can vastly improve in the short run through a certain number of political actions, like Greece is some kind of Island unnafflicted by the actions and the situations of others. Historic, demographic and geographic reality basically explain the disparities between Germany and Greece, and not the qualities of their leaders.
I'd rather talk real actual economics. Like how GDP per capita in Greece grew 410% from 1950 to 1989. Then from 1990 to 2012 GDP per capita grew merely by 25%. And the 25% growth would have been higher if it wasn't for the decline in GDP/capita in 2009, 2010, and 2011. Yet they did a lot better than France for instance, with a higher initial starting value they grew 317,5% over the 1950-2012 period. (Greece GDP/cap grew 562% over the same period). Lets look at the Netherlands for good measure, since German data is rather icky due to the whole being divided and later reintergrating: NL GDP/cap grew only 306%. So when I look at figures like these I'd say there has been a lot of improvement over the years in all countries. What the different countries did with that growth is another matter, and the whole point of this bloated collection of words and sentences I call a post.
I don't see where you wanna go.
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On July 05 2013 09:22 WhiteDog wrote:
No ? Monetary policy is way more than manipulating supply and demand for your currency. And monetary policy is actually known for its lack of consequences in the long run. It gets its power from short term price rigidity.
Monetary policy definitively has long run effects, it comes down to a trade-off between employment and inflation. That is why it is important to have some sort of independence for Central banks with a clear mandate for price stability. If you do not know this you are either trolling or cherry picking what you learn about economics.
Where did I say that Greece would have done better if they were not part of the EU ? As stated before, free trade is a source of growth. It is clear that Greece gained from its adhesion to the EU. It is also clear that it is suffering from it right now.
I must have been mistaken, the thread has been going on for a while now and I always got the feeling that this is the stance you had on the subject of Greek Eu membership. If you believe it is the fault of the EU economic system that would imply that they would have been better off never being a member. If this is merely a setback in an otherwise healthy relationship I'd suggest taking the opportunity to see what they can change themselves and getting back to healthy spending habits. I'd say they the academic world is already exploring the shortcomings of the EU system. Unfortunately I have some concerns with the influence of the financial sector on policy makers that have to choose the reforms.
The idea of a nash equilibria, in this paper, just means that the countries act strategically and take into consideration the taxation rate of others to decide of their own taxation rate (what I'm saying is wrong but it's the gist of it). The competition between countries push each other to lower their taxation rate : yes the models are up to critic, the only point of the model is to show that countries engaged in an economic competition "should" lower their taxs to attract mobile bases.
The point of my post was to show that there are macro economic mecanism that goes beyond Greece as a country. If you cannot agree with that, I don't really know. I was just pointing out that the fiscal competition badly influence the taxation rate of every a country, and specifically small countries - it doesn't mean that every small countries everywhere lowered their taxation rate accordingly to the model. I could have picked other type of exemple to show that Greece "productivity" is not something you can vastly improve in the short run through a certain number of political actions, like Greece is some kind of Island unnafflicted by the actions and the situations of others.
Why did you even post it if one of the conclusions was not somehow of relevance to this specific situation? Nobody needs a paper to tell them people act strategically. For further reference it might aid you to know NE are precisely defined situations within a theoretical model where strategic behaviour comes to a grinding halt.
The whole point of the EU is that "actions and the situations of others" are of influence.That was the point of the budgetary rules for fiscal policy. Greece got into this mess by breaking down communication about the actual finances of the country. Is it appropriate to complain that they are now not allowed to apply quick fixes to something that has built up over the long run, and will take the long run to fully deal with?
I don't see where you wanna go.
The red pill was reality, right? What I mean is you can talk about institutional failures like historical and cultural influences, but when you look at the outcomes they did pretty well, mainly due to political and economical integration in my opinion.
On topic: I'm really pessimistic about EU decision making lately. There just isn't a lot of accountability it seems. Bigger countries got away with breaking the rules in the past. It really didn't set a good precedent when the previously agreed upon sanctions weren't enforced on them.
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McKinsey put out a pretty nice report on what Greece can do to regain a competitive economy a little over a year ago. You can see the (long) executive summary here.
They seem to think that there's plenty of opportunity in Greece. Areas like tourism can easily be competitive due to natural advantages. There's also huge room for improvements in government efficiency and business consolidations. It's a pretty good read. At the very least it's nice to focus on something like growing key industries rather than macroeconomic hooey
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On July 05 2013 10:27 Flyingdutchman wrote:Show nested quote +On July 05 2013 09:22 WhiteDog wrote:
No ? Monetary policy is way more than manipulating supply and demand for your currency. And monetary policy is actually known for its lack of consequences in the long run. It gets its power from short term price rigidity. Monetary policy definitively has long run effects, it comes down to a trade-off between employment and inflation. That is why it is important to have some sort of independence for Central banks with a clear mandate for price stability. If you do not know this you are either trolling or cherry picking what you learn about economics.
You are talking about the Phillips Curve, it has been proved since the 70s, by both keynesian and monetarist economist (Phelps & Milton) that the Phillips Curve only work in the short run. You can trade-off between employment and inflation in the short run. The desire to trade off between the two in the long run bring stagflation - both inflation and a stagnation of unemployment, because in the long run people will defend their purchasing power by asking for a raise in wages.
And that is why some people consider that Central Banks need independance with a clear mandate for price stability - because you can't trade off between employment and inflation in the long run...
If you could why would you want independance ? Why would you want price stability if you could lower unemployment by letting price go up (inflation) ? We could go back to the stop-and-go all day every day.
Show nested quote +The idea of a nash equilibria, in this paper, just means that the countries act strategically and take into consideration the taxation rate of others to decide of their own taxation rate (what I'm saying is wrong but it's the gist of it). The competition between countries push each other to lower their taxation rate : yes the models are up to critic, the only point of the model is to show that countries engaged in an economic competition "should" lower their taxs to attract mobile bases.
The point of my post was to show that there are macro economic mecanism that goes beyond Greece as a country. If you cannot agree with that, I don't really know. I was just pointing out that the fiscal competition badly influence the taxation rate of every a country, and specifically small countries - it doesn't mean that every small countries everywhere lowered their taxation rate accordingly to the model. I could have picked other type of exemple to show that Greece "productivity" is not something you can vastly improve in the short run through a certain number of political actions, like Greece is some kind of Island unnafflicted by the actions and the situations of others. Why did you even post it if one of the conclusions was not somehow of relevance to this specific situation? Nobody needs a paper to tell them people act strategically. For further reference it might aid you to know NE are precisely defined situations within a theoretical model where strategic behaviour comes to a grinding halt.
What ? "Nobody needs a paper to tell them people act strategically"... No, the papers says that "if people act strategically", meaning if they take into consideration the actions of others when they decide of their taxation rate, the globalization will most likely push countries to lower their tax.
The whole point of the EU is that "actions and the situations of others" are of influence.That was the point of the budgetary rules for fiscal policy. Greece got into this mess by breaking down communication about the actual finances of the country. Is it appropriate to complain that they are now not allowed to apply quick fixes to something that has built up over the long run, and will take the long run to fully deal with?
So they are in this mess because of a lack of communication... I see.
And yes it will take a long time to deal with the crisis, but dealing with it by destroying employment, global demand, and the future of the greek youth is not the right way. We agree on the rest, in fact it is my point since the beginning : Greece will not be able to get out of this mess the right way without the EU and the BCE doing something else than just forcing them to lower their deficit.
Their actions are limited by the fact that most of the tools they could use are not in their hands.
The red pill was reality, right? What I mean is you can talk about institutional failures like historical and cultural influences, but when you look at the outcomes they did pretty well, mainly due to political and economical integration in my opinion.
Interesting how you decide to pick your own number to back up your own little idea. That the Greek GDP had a huge boost during 1950-1980 is perfectly normal : they were merely catching up with others in a period of economic success. You were talking about France, from 1945 to 1975 it had on average 5% GDP growth a year ? What does it do to your own point of view ? Nothing. Greece was still way below France or Germany in both GDP per capita and productivity - 25% below the average European productivity.
You know that some Africans countries would need a 10% GDP growth for 50 years just to catch up the american of today ? Pointing out numbers doesn't mean much.
If you wanna talk about real economic, then first agree that models teach a lot (they are not reality, but "GDP" is not either), and secondly, see how the greek society is actually structured.
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On July 05 2013 06:49 fleeze wrote:Show nested quote +On July 05 2013 06:40 WhiteDog wrote:On July 05 2013 05:00 Nyxisto wrote:
WhiteDog is making a really, really important point:
Competition between companies is good, competition between countries is usually bad
Saying that Greece needs to get more competitive is just a nicer way of saying: dump your social security, lower your wages, and make the government get rid of everything that costs money.
Which is most of the time pretty bad for its citizens.(with exceptions of unnecessary bureaucracy). And especially a small country like Greece is never going to be as cheap as we are without turning their country into a state of slaves, just because we are 80 million people here in Germany and our industrial infrastructure was built up over decades.
Same goes for France, instead of saying "let's get our wages up here and lets stop putting people into temporary work". Our government actually says that France needs to do the same shit we did ten years ago. With our so often praised labour market reforms we did nothing but destroy our employment rights to make our companies happy. I agree with most of the things you said but I never said that competition between countries is usually bad Objectively speaking I just insisted on the fact that globalization had a bad influence on taxation rates - it doesn't mean that it is not a good thing in other part of the economy (economically speaking, there are a few arguments that goes against globalization - it doesn't mean that I personally consider that globalization is a good thing). If I wanted to draw biggest conclusions from what I tried to enlight, it is simply that free trade cannot work without the state - and in Europe, the only who can play that role is the EU (with the ECB of course). yup, biggest problem of the euro: you can't inforce a free trade zone without coordinated economic politics.
I dont know about that tbh, europe has been a free trade zone even before the euro, or am i mistaken now? , and the economic policys have been coordinated since the euro?
Greece did pretty well in the early years after 2000.
Maybe tourism and construction of resorts/hotels took a bit hit due to the recession in the whole eurozone,less people go on holiday to greece and spend it closer by home. Am not sure if this is the case btw, would have to look up figures but i can imagine this beeing one of the causes, same for spain.
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EPT
