Greece: if austerity doesn't work... Try more austerity! | 287 comments (287 topical, editorial, 0 hidden)

Re: What's wrong with this plan? (none / 0)

All economics might be politics, but all business certainly isn't. When you ask politicians or pundits to run manufacturing companies, things usually go down the drain. Fast.

According to a recent WEF survey, Greece has the lowest competitivness of all EU nations. Greece has slipped from place 50 to place 109 on the World Banks list of the best places to run a business, below countries like Bangladesh or Ethiopia. Big stumbling blocks are things like inefficient government bureaucracy and massive corruption. During 2004-2009, employment in the public sector increased by 100.000 people, largely as a reward for political loyalty. At the same time, public salaries rose by 60 %. How this could not result is a fiscal disaster, is hard to understand. It's just not possible to keep spending more than you tax, year after year, and especially not when you're in the good part of the business cycle!

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Jun 18th, 2011 at 10:23:52 AM EST
[ Parent ]

Re: What's wrong with this plan? (4.00 / 5)

During 2004-2009, employment in the public sector increased by 100.000 people

No. The number is supposedly +58.000 (16.000 of those were in 2008 for obvious reasons, 12.000 in 2004 - an Olympic year...). In early 2010 a detailed census of public sector employees found them to be ~768.000 - that's about 15% of the work force, not a high number by OECD or EU standards.
Public salaries rising by 60% in 4 years is a joke. Just to give you an idea: over the same period public sector wages as a percentage of GDP were pretty much steady despite the rise in public employee numbers.

So the public sector's extent was not the cause of the "fiscal disaster". Lagging revenue was. And the decile where the lagging was humongous was the top decile...

An aside:

I'm thinking of posting a diary with a title like "10 fairy tales about the Greek economy" debunking the poppycock that "serious" news sites (not to mention economists) are propagating regarding the data before the crisis... is that the sort of thing we all have in mind that ET reports are about?

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sat Jun 18th, 2011 at 06:21:01 PM EST
[ Parent ]

Re: What's wrong with this plan? (4.00 / 2)

I'm thinking of posting a diary with a title like "10 fairy tales about the Greek economy" debunking the poppycock that "serious" news sites (not to mention economists) are propagating regarding the data before the crisis.

That would be very useful. I can only 'dip' into the discussion/analysis intermittently so anything helping to separate Reality from the Intellectual Sludge hiding Reality would be welcome.

...is that the sort of thing we all have in mind that ET reports are about?

From my perspective: Yes.

Ever since I learnt about confirmation bias I've started seeing it everywhere

by ATinNM on Sun Jun 19th, 2011 at 11:50:42 AM EST
[ Parent ]

Re: What's wrong with this plan? (none / 0)

Mail coming your way.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Jun 19th, 2011 at 12:51:28 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 0)

According to the FT.

Greek unit labour costs have risen by 50 per cent since 2001. This compares with a eurozone average of about 25-30 per cent and a German cost increase of little more than 6 per cent. Even Portugal has a much lower increase than Greece of some 36 per cent.

So yeah, massive wage inflation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Jun 25th, 2011 at 03:18:53 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 0)

Uh, no, you can't conclude that from the data given. The data given is also consistent with asset stripping.

I note, in passing, the inherent dishonesty of comparing to German unit labour costs, since German wages have failed just as much as Greek wages to track productivity.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jun 25th, 2011 at 03:43:06 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 0)

Not dishonest, as in the next sentence it's mentioned that German salaries need to increase. And as far as I know, there has been no evidence of any unusually large asset stripping in Greece in the decade leading up to the Greek crisis.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Jun 25th, 2011 at 04:01:01 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 0)

Greek unit labour costs have risen by 50 per cent since 2001

50% is outlandish even for nominal compensation. I would like to see that sourced. I'm having second thoughts about Jones' numbers, but certainly noone has claimed 50% increase in even nominal ulc netween 2001 and 2009

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sat Jun 25th, 2011 at 07:15:10 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 1)

As I said, Jones was using 2009 projections, but since the economy collapsed in 2009 these were not accurate. Here he restates his case with updated numbers

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sat Jun 25th, 2011 at 07:41:17 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 1)

One could play BTW with this from the University of Pennsylvania Center for International Comparisons and see how GDP per person per hour worked compared:

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sat Jun 25th, 2011 at 07:38:37 PM EST
[ Parent ]

Re: What's wrong with this plan? (none / 0)

In GDP per capita, Greece is now below where it was in the 1990s.

by Upstate NY on Sun Jun 26th, 2011 at 07:51:48 PM EST
[ Parent ]

Greece: if austerity doesn't work... Try more austerity! | 287 comments (287 topical, 0 editorial, 0 hidden)

Top Diaries

A short note on extreme flooding (wonkish)

Catholic Bishops fighting losing battle in Ireland

A shift of sexual mores

Tour of the German offshore wind sector

Record flood on the Danube

Utopian Ideas - Digital Infrastructure

Histories of Neoliberalism?

Woolwich killing: responses

Recent Diaries

Catholic Bishops fighting losing battle in Ireland

A short note on extreme flooding (wonkish)

A shift of sexual mores

Tuesday Open Thread

Utopian Ideas - Digital Infrastructure

Tour of the German offshore wind sector

Record flood on the Danube

Histories of Neoliberalism?

No Desertec for Europe

The metro revolution

Woolwich killing: responses

Methane Cell Phone Sniffers

What price, Irish recovery?

How the "riots" in Stockholm started

One lone paper?

Fiscal and Organizational Capacity of States and Sovereignty

Austrians finally discover hyperinflation - in Diablo III

Rail News Blogging #25

Pentecost steam

Standing on the Shoulders of Giants - Europe and the Mongol...

Occasional Series