The Greek electorate is in denial. It rejects austerity, but insists on keeping the euro. All the main parties duly parroted what voters wanted to hear, making for a fantasy election, a make-believe election, a fingers-in-my-ears-I-can’t-hear-you election. The only list which was honest about the necessary cuts – a coalition of three liberal parties – failed to gain a single seat.
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Samizdata quote of the dayJune 18th, 2012 |
 23 comments to Samizdata quote of the day |
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Gods of the Copybook Headings, please call the office!
The quotation is accurate.
Listening to the Greek voters (whether directly or via transtlationi) is profoundly depressing.
“You are always depressed Paul” – no this was weird stuff.
Normal people in Britain to do go on about “Europe” as if it was a God.
“We are nothing on our own – only as part of Europe….”
And on and on.
The see objective reality of a collapsing economy (and a collapsing civil society) and yet they still have a FANTICAL faith in “Europe” (the European Union) as if it was a religious cult (if the Greek people want a religion what is wrong with the Greek Orthodox Church – why do they have to worship the European Union as a God?).
These people not only reject the idea of doing anything themselves (and by voluntary cooperation with others) they also reject their own country (Greece is “nothing”) and believe that only something bigger can achieve anything.
If that is so, what was the point of leaving the Ottoman Empire?
They also believed that the Greek people were “nothing”.
I am not great fan of my fellow countrymen (including me) – but we do not believe ourselves to be “nothing” utterly unable to do anything without control from above.
Yet the same Greek people are actually deeply cynical about politicians and administrators.
What do they want?
Some sort of pure state – that (like a Platonic form) is over and above the actually existing human beings that make up the state machine?
“But Paul – New Democracy won the elecition”. In the sense of being the largest party.
Actually New Democracy is (perhaps) the most PRO bailout party in Greece.
No one in Greece says “we will pay out own way – pay our own debts”. “Keep your filthy bailouts”.
No – they all demand bailouts, they just argue over the terms.
What has happened to a once proud nation?
As recently as the 1950s Greece was not even a Welfare State – now the population seem to have no self respect, no honour.
By the way – Person from Porlock.
A very good pointing at Kipling.
Brother Glenn is right to like the poem you are pointing at.
There is no question that the Greek electorate is in denial, but Hannan is wrong in the next sentence: given that Greece has a primary deficit, austerity would necessarily be worse if they left the euro.
There’s much comment to the effect that the Greek electorate has pulled back on the brink of the abyss, the Euro is saved, all is well, etc. ad nauseam. This is very much par for the course when it comes to EU politics: flim-flam and spin substituting for a sober analysis of fact. At this point it’s so much whistling past the graveyard. The Gods of the Copybook Headings must indeed be licking their chops at the thought of the feast ahead.
It’s not just the Greeks. I broke with my habit of not watching the TV news over the weekend and the BBC and Channel 4 seemed to think Syriza had a good point. The line they [the news] seemed to be pushing was that Greece should keep deficit spending, and this will increase GDP, thus eventually solving the deficit.
No one questioned what would happen if the tax take grew more slowly than the deficit, what exactly these state make-work jobs were producing, or where the money would come from in the meantime.
mdc wrote:
‘The line they [the news] seemed to be pushing was that Greece should keep deficit spending, and this will increase GDP, thus eventually solving the deficit.’
Also known as ‘drinking your way back to sobriety’.
The deficit spending the Greek government wants to do is almost-entirely suppressive or neutral to GDP – it is spending by government, for government, on government. The population is shrinking, their internal revenue picture is already dreadful and only getting worse (because they have the worst ratio of producers to consumers of tax funding in the civilized world, and getting worser) and the only way any government of Greece can survive and keep the mayhem in the streets down to acceptable levels is to restore the drunken-sailor approach to public spending that got them into trouble in the first place. This means 14 monthly pension checks a year, retirement at 50 for workers in hazardous trades like hairdressing, and all the other 1,001 ways they managed to bankrupt themselves already.
Everyone’s all excited about whether Greece will leave the Euro – like that would be some sort of a loss.They’re excited about the wrong thing. It’s like the bank worrying about whether the customer will take his overdraft elsewhere. The only thing holding up the Eurozone right now is Frau Merkel’s ability to put it over on the German electorate. The first crack that appears there – the first ‘nein’ – will bring the whole laughable house-of-cards down in a rush. With the way markets work today, I could see the whiole thing falling apart – totallly – in a matter of hours.
In the words of Baroness Thatcher, it’s just a question of when they run out of other people’s money. The ‘austerity’ that has everybody on the left so up-in-arms is a f**t in a hurricane, it will change the eventual outcomes by no more than days or weeks.
And nobody – No Body – in Europe is learning the underlying lesson that This Is What Happens When You Rely On The State, or, in this case, the Super State. The clowns that run the EU are quite happy to drive everybody to the wall to further their silly-ass political dream, and nobody’s raising a finger to stop them.
No vacation in Europe for me this year, I tell you what . . . .
llater,
llamas
llamas:
The first crack that appears there – the first ‘nein’ – will bring the whole laughable house-of-cards down in a rush.
I said it before and I’ll say it again until I can say: I told you so.
It will not be Germany that issues the first ‘nein’, it will be the Netherlands or Austria or Finland.
The way things are going, it’s even possible that Italy will say ‘nein’ first, since they have been paying for all those bailouts and thereby addin to their debt.
And what about Spain, the only country that got deeper in debt by receiving a bailout? might they not say ‘nein’?
If there is a serious prospect of fiscal union, even the East Europeans might issue the first ‘nein’.
“The deficit spending the Greek government wants to do is almost-entirely suppressive or neutral to GDP – it is spending by government, for government, on government.”
GDP values government “production” at cost. It also does not discount liabilities. So by borrowing a lot of money and then spending it on government make-work nonsense it’s possible that the GDP metric can be increased without really creating any value.
Unfortunately this sort of statistical dishonesty has been labelled a “growth policy” by the news media who don’t seem able to tell the difference. Moreover it’s past the point of ‘borrowing’ money to do it, and become begging Germany to give them a gift to keep doing it. Why any of the clever Oxbridge grads at the BBC think there is even half a chance this is going to happen, I do not know.
mdc is correct. I’ve long argued that it makes no sense for government spending to be included in the GDP calculation, but it is. GDP is supposed to be the market value of a nation’s total production of goods and services. At best, government spending is neutral to the nation’s true economy (it’s merely a transfer), but economists persist in maintaining this fiction. So yes, any spending by the Greek government (however funded, and however foolish) would increase its GDP euro-for-euro. But it won’t improve their economy.
I’m with you, Laird. remove government spending from GDP. It is either double counting or just waste.
While government is, without a doubt, mostly waste, I suspect removing it from GDP is simply an attempt to give meaning to an essentially meaningless metric.
It is the curse of certain types (usually management) that they *must* have something to measure so they find something that can be measured, measure it and then focus solely on that measurement to the exclusion of all else.
GDP bears a weak correlation to how well the economy is doing but it is important to remember what actually *is* being measured and to develop a comprehension of what that actually means in the real world. A full wallet is a good thing; a full wallet because you stuffed it with toilet paper, not so much.
Removing gov.spending altogether is too radical a move: it implies that some countries don’t spend anything on health care, for instance.
Also, that the Soviet Union did not spend anything in housing, and yet miraculously an expanding population found itself housed!
A less radical move might be to correct gov.spending by subtracting what the government claws right back in taxes, e.g. include in GDP only the net salary of gov.employees.
One simple and [surely?!] uncontroversial way to improve it would be to discount liabilities.
Currently if I borrow £100 and spend it, ‘my’ GDP increases by £100. Since GDP is taken as a proxy for wealth, like a sort of national salary, I’ve become magically £100 richer. If I did my personal accounting like this and took the results seriously, I would soon find myself bankrupt or in prison, or both!
A simple modification: subtract the discounted future cost of the loan. So if I borrow £100 and owe £110 (net present value), I have become £10 poorer by taking out this loan. It can only make me richer if I invest it in some way that gives me more than £10 of additional NPV, just like a real person or organisation.
Now let’s see politicians try to argue their “investments” produce a measurable monetary return 😉
All points about exact definitions of GDP and government spending are well-taken, and correct.
Not being an economist, I was lazy and used the term ‘GDP’ because that was the term used in the prior comments. I was trying to refer to the overall economy and the growth (or otherwise!) thereof. In that sense, the spending by, for and on the government is (at the very best) neutral and, at worst (and mostly) negative.
The point about givernment health-care spending is well-taken, of course, but I think most here would agree that government involvement in health-care (whether in paying for it, or deciding what it shall consist of, or both) always results in serious economic negatives.
In short, and in terms economic naifs like myself can grasp, the Greek government (whatever it turns out to be) is not going to spend whatever money it gets from the Eurozone on building new steel mills or oil refineries, or deepening its harbours, or enlarging its airports, or any other activity which would encourage growth or trade (even allowing for a moment that expenditures like that are the proper province of governments anyway). No, the money will all be flushed down the bottomless pit of public sector expenditures and entitlements, where all the previous money has gone.
As to who will say ‘nein’ first – it may not be the Germans, as discussed. But I think it is most likely to be the Germans – especially if the Greeks persist in goading them as they have done so far. Timeo Germanae dona ferentes. I read where Germans are actively boycotting Greece for their summer holidays – which will be a welcome relief for the Greeks, I’m sure, no more
‘ . . . swimming pools full of fat German businessmen pretending they’re acrobats forming pyramids and frightening the children and barging into queues . . . ‘
but it tells you how Hans and Ingeborg feel about the Greeks, and they will be telling Frau Merkel about it come election time, I’m sure.
Interesting times, to be sure.
llater,
llamas
I suppose this is as good a place as any to share the following story relating to GDP:
(Thanks, Alisa!)
Well if people do not want government spending (or the Central Bank credit bubble which is what “fiancial services” have become) in the figures, I suppose we could just look at industrial production figures (and add in other physcial industries – such as farming).
However, then the economy is only a small fraction of the size we are told it is.
Well if people do not want government spending (or the Central Bank credit bubble which is what “financial services” have become) in the figures, I suppose we could just look at industrial production figures (and add in other physcial industries – such as farming).
However, then the economy is only a small fraction of the size we are told it is.
It’s unreasonable really, because healthcare, defence and education, which are monopolised by the state, don’t produce no value, even if their actual value is perhaps less than their current cost.
Laird: 🙂
I suppose I should say how I would have voted if I had been part of the Greek electorate. Otherwise I am just making noises – and not saying what I would have actually done.
I would have voted for the “Independent Greeks” – on the grounds that they are anti bailout agreement and neither Communist or Fascist.
However, I have been to find out what their SPECIFIC economic policies would be.
llamas:
“As to who will say ‘nein’ first – it may not be the Germans, as discussed. But I think it is most likely to be the Germans – especially if the Greeks persist in goading them as they have done so far.”
An extremely one-sided argument, in that it considers incentives for Germans and for nobody else.
But never mind: let’s make a deal.
If the Germans go out first, I’ll write a comment on this blog saying: I was wrong and llamas was right, with a link to your comment.
If any country which has not received a bailout to date goes out first, then I expect you to do the same for me.
If Greece, Ireland, Portugal, or Spain goes out first, the deal is off.
Agreed?
Paul: I submit that, if you were a Greek resident, you should have voted with your feet, or at least with your bank account.