Comments on: Europe’s inevitable Greek divorce A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: TFF Thu, 23 Feb 2012 22:09:57 +0000 “wait a sec, TFF, you’re not suggesting Whitman is an entrepreneur?”

Sorry, KenG, I realized after I posted that I was conflating two ideas. :) No, not an entrepreneur. But she sprung to mind as an East Coast transplant!

And yes, Boston is at the same latitude as Rome. Same daylight hours, just a little more snow. :)

By: KenG_CA Thu, 23 Feb 2012 19:58:25 +0000 wait a sec, TFF, you’re not suggesting Whitman is an entrepreneur? She was a big business consultant when she was given the plum job of running ebay, which had already started to take off. She used her big business acumen to waste money on Skype, and was the antithesis of an entrepreneur. Her only entrepreneurial venture was running for governor of California, and she failed miserably at that (I still don’t know how she lost big time to Jerry Brown).

Silicon Valley became the first Silicon whatever because that’s where the first silicon companies were located. They drew engineers there because of the work, not the climate. They always had an advantage over every other region because the knowledge was there. The only reason any other area can challenge the valley is because their biggest creation, the internet, has enabled less expensive areas to compete. New York isn’t still a financial capital for any other reason than it is the financial capital. Inertia is a powerful force.

I’m with you on your point about “moral superiority”. While I think there are differences between cultures that give them some advantages, natural resources and climate have a huge impact on a society’s success or failure. One of my favorite books is Collapse by Jared Diamond; he gives great examples of how climate and resources greatly influenced how civilization evolved.

And Y2K, most of the US is south of most of Europe, and they’re not richer than us. In fact, any edge that those northern European countries might have over the US is solely due to how much we spend on the military, which they don’t do. If we had a “defense” budget proportionate to those countries, we would have a lot less debt. And debt is the problem that Greece is facing, not poverty.

By: realist50 Thu, 23 Feb 2012 18:01:44 +0000 Here’s the link to the Fortune article mentioned by Curmudgeon – 5/greece-economic-reforms/

Putting it in the context of the Canadian comparative advantage/natural resources discussion, it’s notable how much Greece has done that holds back its tourism/resort industry, on top of a generally inflexible economy with rent-seeking incumbents guarding their privileges (see trucking and pharmacies in Tully’s article).

By: paintcan Thu, 23 Feb 2012 16:50:45 +0000 If the Greeks don’t default they will be forced to sell parts of their territory. They shouldn’t do that.

It is also obvious to me that the business community everywhere is more shark and predator than responsible fiscal manager. No wonder the Chinese keep tight control of their currency, banking and speculation. They were colonized before and it wasn’t to their benefit.

The sharks deserve to have their backs broken and thrown back in the sea as food for other species for a change, or they’ll never stop eating the small fry. The global economy is creating conditions for the evolution of mega predators. They can eat governments and whole countries now. I’m never going to like or trust the giant businesses like Facebook, Google, Microsoft, or the mega merchandising chains etc. Gravitational attraction alone can make them larger and when they die they leave enormous carcases. They are all like a revival of the age of the dinosaurs. They are even more frightening because they can grown bigger brains while the dinosaurs couldn’t. And the command of life is to survive and they will do that regardless of the cost to the rest of the human population.

BTW – One thing the Africans and the warmer climates have always had working against them were/are environmental diseases and nasty predators. The colder climates have winter to contend with as many comments mention. The cold weather seems to kill off insects and mammal species before they evolve into more aggressive species. Even the fauna have to work to survive the winter and don’t seem to become large carnivores because the vegetation is much more plentiful.

The environment did a lot to keep Africans in a state of subjugation and they could stand to live in hot climates better then the Europeans. That made them a useful commodity. The Greeks have a very rocky set of islands and peninsulas that don’t appear to be very lush or fertile. Their small population doesn’t work to their advantage either.

By: TFF Thu, 23 Feb 2012 15:27:00 +0000 Curmudgeon, you might better argue that the favorable climate makes Northern California an attractive destination for young, educated, highly mobile engineers?

Boston is also a technology hotbed (perhaps in different fields), largely due to the concentration of top schools in the area. An entrepreneur will consider various factors when choosing a location. One of the most important is the quality of the workforce in that area.

Steve Jobs was born in San Francisco, but how many other entrepreneurs were born elsewhere and moved? Zuckerberg was born in White Plains, NY. Meg Whitman may have run for governor of California, but she comes from Long Island originally.

By: Curmudgeon Thu, 23 Feb 2012 15:12:36 +0000 TFF, point taken, but the freezing to death was really more of a symbolic phrase for having to deal with more difficult circumstances in general due to a harsher climate.

By: TFF Thu, 23 Feb 2012 15:07:04 +0000 y2kurtus, the warmer climates derive more of their income from agriculture. The colder climates are forced to turn to industry. Over the past century, industry has been vastly more profitable than agriculture, and has seen even greater gains from automation.

Moreover, the industrial nation will trounce the agricultural nation in a war every time. North vs. South in the Civil War (one of the major dynamics both in the roots of the conflict and in the outcome was industry vs. agriculture). Germany vs. France. Japan vs. China. Is it any surprise that the industrial nations ended up on top in the 20th century?

I’m strongly suspicious of arguments that depend on a claimed “moral superiority” of one culture over another. Most of the time these arguments are used to plaster over historical dynamics that we don’t care to dwell on.

And Curmudgeon, your argument also fails the sniff test. Very few people in Boston freeze to death. (More likely to die of a heart attack from shoveling your driveway or from a broken hip caused by slipping on ice.) Those who do are not entrepreneurs who are down on their luck, they are the mentally infirm and/or career homeless. Very different circumstances.

By: Curmudgeon Thu, 23 Feb 2012 14:24:44 +0000 y2kurtus: Maybe. It’s not that simple. I got into this debate almost 20 years ago when Saxenian published her book Regional Advantage, which trumpeted the superiority of the Silicon Valley business culture over that of the Boston area. One of the points often raised in the debate was that because losing your shirt in sunny and warm California didn’t mean you would freeze to death in the winter, entrepreneurs there were more willing to take risks. If it is in fact true, it seems to contradict your last statement.

By: y2kurtus Thu, 23 Feb 2012 11:04:14 +0000 @ KenG_CA. I totally agree with your premise that Canada would not be as well off without their massive exports of natural resources. Many of those (timber, water, windpower, hydropower, wheat) are renewable. If you rank Canadian Companies by market value the top 3 are banks. After that 14 of the next 20 are oil, gas, or metals companies further proving your point. There are a few non resource plays. Canada invented the blackberry which was the biggest thing going 7 years ago.

I feel like most of the exceptions you listed really aren’t. Even after their national bankrupcy Iceland is a rich nation. Even Chile with a GDP/capita of 14,000ish, is among South America’s richest nations… double the GDP of Colombia, tripple the GDP of Ecuador or Paraguay.

Saving and investing for the future is a deeply cultural trait. If your garden produces 12 months of the year and you can sleep with the windows open on new years eve than your culture simply won’t value planning and saving the same way as a culture where you either have enough food or fuel to make it through the winter or you starve / freeze to death.

By: luiscatan Thu, 23 Feb 2012 06:40:00 +0000 More than 70% of the Greek economy is services. Since being in the EURO they cannot devalue, the only way for Greece to become more competitive (e.g. Tourism) is for wages to fall significantly, but all economists know that wages are “sticky” and cannot easily – or rapidly – be reduced; similarly, prices would also have to be reduced, yet another “sticky” problem. So, with the EURO, Greece is condemned to many years of recession, high unemployment and dangerous deflation in a vicious circle.

By contrast, a sizable devaluation can bring about swift and automatic changes in all Greek wages and prices relative to its neighbors and the rest of the world. This would have an immediate positive effect on current account income (especially through tourism) and, on the manufacturing side, the sudden devaluation would severely compress imports, thereby forcing domestic production and hence supporting employment gains. The effect would be to significantly ameliorate the present economic and employment crisis in Greece, as well as immediately improve its current account deficit. Leaving the EURO is by far a better policy for Greece’s future.

As to the external debt, fears have been magnified out of all proportion: many other countries have defaulted in the recent past and, after a useful period of non-payment, have negotiated very favorable debt-reduction plans. Greece would continue to owe EUROS on most of its external debt, but it would stop payment for a recovery time as others have done (similar to what companies sometimes do when they go into temporary bankruptcy). With its domestic banks, that hold a sizable portion of Greek debt, the Greek government could simply exchange those bonds for new Drachma ones, thereby avoiding a domestic banking crisis with the support of its resuscitated Central Bank.

It is time for Greece to leave the EURO before it is too late and its economy collapses further, with great social suffering that could be avoided.