68 replies on “Ireland can show Greece a way out of the crisis”
First, start fifty years ago …
It will take Greece decades to accumulate embedded knowledge, know-how and industry institutions that Ireland has now if it starts now, and there is no sign that it is going to make that start.
There is a gain in cost competitiveness at which Ireland will be able to generate enough employment to sort out its problems, and I reckon that we need maybe another 15% to 20% relative to the rest of the EU. We are in deep trouble because our government is resisting that adjustment.
With its almost complete lack of competence in non-tourism exporting, I reckon Greece needs to cut costs by about 50% to achieve the same. There’s any number of countries with human capital comparable to Greece’s available that are stuck in economic limbo because they are uncompetitive. There are plenty of countries that are developing quickly, but their price levels are a small fraction of Greece’s. It’s not going to happen this generation without Greek pay cuts much steeper than the troika envisages, or an exit from the euro.
Greece owes its income to borrowed foreign spending it cannot pay back. It produces no machines, no electronics and no chemicals. Of every 10 US dollars of worldwide trade in information technology, it accounts for one cent.
Not good at all.
Greece is a good place to try to replicate this aspect of the Irish model. We have calculated how easy it would be for countries to move to exporting more complex goods. Greece ranks second only to India in this dimension, a heartening finding.
Greece behind India?
Not good at all.
Suppose the question is.
Can they ever achieve the transformation with the debt overhang and no exchange rate advantage.
If you dont have a subscription to the FT just google the story name e.g., “Ireland can show Greece a way out of the crisis” and it will take you behind the paywall.
Greece may rank only behind India in ease of moving to export complex goods, but only if one ignores its vastly over-inflated cost base, and its lack of the sort of technology exporting tradition that some regions of India have built up over the last 30 years. Factor those limitations in, and Greece is trapped.
Any body bought a bottle Greek Wine or Brandy recently. I used to buy the odd bottle in Superquinn many years ago. The Greeks got too used to the Government funding their live style. So they gave up even exporting wine brandy . Local commodities with no raw material imports required.
So when the Government goes broke so does every one else go broke.
They are just a bit further down the road than we are.
This is another example of the manic race to be competitive ……….
Its all very sad – competitive against who ?
If everyone tries to be competitive in a hamster wheel like fashion who will create the wealth ?
This is just the cartel trying to extract the last drop of blood from the victim.
Its time to go back to Creating Tariff walls & building real capital withen them – the depletion phase of economic “growth” must stop.
@ All
It is nothing short of amazing that such an academic article could appear without any reference to the Greece’s merchant navy, the largest in the world, or the cost of its defence apparatus.
There is no mention of the waste of resources implicit in maintaining a defence force out of all proportion to the country’s needs (but a very useful source of contracts for core country defence suppliers, notably Germany and France).
The Greek finance ministry recently published an extensive list of Greek tax defaulters. The presence of so many German names on it was the source of comment in the German media. The Greek merchant navy pays no tax, as far as I know, and , indeed, its position in this regard is protected by the Greek constitution (although I stand to be corrected on this).
There are few clean hands in the mess that Greece has now become, notably those of the European leaders that shut their eyes and hoped for the best by allowing the country to enter the euro in the first place. The argument about falsified statistics is simply a smokescreen for a historical error of judgement, the bill for which is now being presented.
The relevance of Ireland to Greece’s situation is very limited. What is certain is that there is no shortage of wealth in Greece. The problem is that it is concentrated in too small a number of hands (which have moved much of it offshore).
Of course, the green-tinted spectacles worn by the author of the article do us absolutely no harm.
Anesthetized upon a table of debt in a Troika induced coma, Ireland is not going to be leaving debt hospital soon.
Its touch and go.
I wouldn’t expect ways out of the crisis to be shown based on its performance so far.
While I think the author is out of touch with reality of that article is out of touch with reality regarding Greece’s prospects, the report on the research he references really is rather interesting. http://atlas.media.mit.edu/
A quick trawl through shows up some big negatives (high costs and low “economic complexity”) about Greece, as well as the positive he references in the article.
My interpretation of the report’s analysis is that Greece has great opportunities, but little capability to exploit them.
*GREEK POLITICIANS SAID TO REACH AUSTERITY DEAL: FINANCIAL TIMES
@ BeeCeeTee
There is a gain in cost competitiveness at which Ireland will be able to generate enough employment to sort out its problems, and I reckon that we need maybe another 15% to 20% relative to the rest of the EU.
Without some further detail, this could be a politician’s aspiration.
Irish competitiveness indicators are not reliable.
The manufacturing total hourly labour is in line with Germany’s.
So where will new exports come from?
The problem for both Greece and Ireland sofar are that reforms target the soft underbelly of democracy, cement the relationship of banks to politics and create a lopsided, bailout of the elite, who caused the crisis; not exactly a right wing Greek junta, military takeover, but certainly a financial takeover, the other to happen later. We’ll see if the opposition to these ‘solutions’ get crushed; or if solutions stick. The former lies probably somewhere in the future; the latter is certain not to happen.
@ Michael Hennigan
“So where will new exports come from?”
They are not likely to come from anywhere. Quite the opposite, though Kenny is talking of 10,000 new jobs in the financial services sector, the fact is Merkozy are eyeing that CT as are the republicans in the USA.
How long more can ‘transfer pricing’ contribute to our exports and our GDP, is anybody’s guess.
Its all house of mirrors once you move beyond the agri sector, pharmaceuticals; with exports from multinationals not going to generate any huge increase in jobs due to over capacity and global slowdown.
@DOCM
Good Comment.
A forward looking Europe should recognise the error of Greece joining the euro, jointly plan for Greece to default and exit the Euro and assist Greece through the difficult transition.
But the new Europe will have its pound of flesh.
It is a New Europe run by bankers and devoid of all values, save helping the super rich to retain their wealth.
Everything, including Europe itself, is to be sacrificed to that objective.
First they came for the Greeks….
I can’t really see the parallel. Even Ireland isn’t showing the kind of economic contraction figures or spike in unemployment/drop in numbers employed coming out of Greece this morning. The country is being slowly wrung to death – and that’s before the second bailout and subsequent cuts bite in.
There’s nothing that Ireland can ‘show Greece’ now – Greece is toast.
FT is currently reporting that a deal has been agreed in Greece and no doubt EU politicians etc. will all go round glad-handing and high-fiving each other but back in the real world, the country is going to implode (or is it explode?) once those new cuts are introduced. Youth unemployment figures this morning show it spiked to just over 50%. That really is trouble a brewing (ditto Spain). Giving young people no hope and no money may be a good strategy for getting a rock through your government department window but it’s not good for much else.
“It’s very clear that Ireland has not sought and will not seek any writedown,” Mr Kenny said in an interview with Bloomberg Television yesterday in New York. “We’ll pay our dues in full and on time.”
Ireland is looking for help in the wake of the bailout of the former Anglo Irish Bank, once the country’s third-largest lender by assets. The State seeks to refinance about €30 billion of so-called promissory notes used to rescue the bank, now known as Irish Bank Resolution Corp, on better terms and over a longer period.
Consistent?
At least the Greeks didn’t foist a wretched blanket bank debt guarantee on their population.
@PR GUY
“Greece is toast”
+1
It is hard to see Greece remaining a democracy with the kind of help that can manage to create 50% youth unemployment.
Another example of what happens when social scientists ignore history, institutions and politics.
@ Colm Brazel
You are on the ball as usual!
How long is it going to be before Obama decides at the stroke of a pen that Pharma and other industries need to come back to the US ? Similarly, how long is it going to be before CCTB (rates) are harmonised (forced on us)? We are living on bailouts in this country and the people to whom bailout is funneled in salaries are never going to complain after all they arranged it that way. It is another good day at the office if a stockbroker can pen a piece that says, a bond trader stands to make a 700 million on Irihs bonds because other bond traders got afraid and dumped our bonds. This “good news” this “confidence in our economy” can be spun as as two positives firstly, we are closer to getting back to sell government bonds. Secondly, we are a step closer in terms of Ireland being able to secure a second bailout if we require it (which we will, Croke Park II) . We can borrow more, we are looking good for another bailout? The road to recovery, growth? More like the road to Greece!
The cornerstone of the Irish economy is agriculture and increased exports will accelerate from that sector, especially after 2017 when milk quotas are due to be abolished. Agriculture is substantially within our own control, unlike the FDI which we trumpet but which can be decimated by external forces almost in the blink of an eye and over which we have little or no control.
@Michael,
Where the new exports will come from is not a good question, as the most obvious areas where we can increase exports will have little impact on the Irish economy. A better question is where the export-based jobs will come from.
I would point to a few things:
1) Whatever IDA Ireland is not quite managing to win
2) Wherever indigenous exporting businesses do not have quite enough of an edge to grow, or faster growth where it already has an edge
3) 20% lower costs would reposition us as the relatively low cost location with the characteristics of a northern European economy, which should also open up new streams of inward investment across a range of sectors.
4) Subsupply and services supplied to the above businesses.
To actually attach some sectors to that, my guess is that we are talking more ICT employment, maybe more financial services employment, more shared services and call centre employment, more EMEA HQ type employment, more food-related employment, possibly pulling back some other manufacturing employment (or at least slowing losses), more R&D embedded in medical devices and pharma companies, more export-oriented professional services, and possibly things like healthcare tourism.
We are already getting fairly decent levels of export-based job creation, but a lot of that is being lost to simultaneous job destruction. A serious shift in cost competitiveness should give a meaningful boost to job creation and cause a meaningful reduction to job destruction. Without the sort of detailed knowledge they have in IDA Ireland and EI, it’s hard to produce detail on opportunity, but when I look at other countries that have gone through reductions in real costs of that scale I see large employment effects.
For me, the main indicator of Irish competitiveness is what’s happening to employment in tradeable industries. With a little data manipulation, I get a fairly reliable fix on that once a quarter from the CSO’s QNHS. I get what I think is a reliable fix on it once a year from the Forfas employment survey.
If its staying still or going down, we clearly are not competitive enough. If it’s going up fast enough to sort out our unemployment problem within 5 years (taking account of indirect and induced employment effects), then we are competitive enough. Comparisons with German levels of pay are just a distraction.
In solidarity with fellow European citizens in the area known as Greece …
Most of the ‘reckless’ Capital Flows into Greece that allowed ‘reckless’ fiscal spending by Greek Govs since it entered the EZ originated in …… other areas of what is known as Europe such as France, Germany, Holland, etc
Reckless on both sides deserve to ‘burn’ ….
And the ECB stood blind and idly by ……. back to dodgy capital flows again …..
And Merkozy remains delusional cubed ….
Greece, Portugal, Ireland, Italy, and Spain require write-downs on these dodgy capital flows to regain some debt sustainability …
This is a EUROPEAN problem, eminently solvable, possible ….. but the politicos (including our own) are pawns under the control of the MatrixsQuidesque elite who are pulling all strings …. Peter Sutherland, John Bruton, and their increasingly willing pupil .. Enda Kenny ….
@BeeCeeTee
“With its almost complete lack of competence in non-tourism exporting, I reckon Greece needs to cut costs by about 50% to achieve the same. There’s any number of countries with human capital comparable to Greece’s available that are stuck in economic limbo because they are uncompetitive. There are plenty of countries that are developing quickly, but their price levels are a small fraction of Greece’s. It’s not going to happen this generation without Greek pay cuts much steeper than the troika envisages, or an exit from the euro.”
You could substitute Ireland for Greece here if speaking about indigenous industry in the main with the exception of food.
Ireland’s competitiveness was hardly helped by Cowen raising public spending 10% y-o-y while he was in Finance. Croke Park Agreement and pay cuts, now there’s conundrum.
Ireland’s record on reform is dismal, absolutely dismal, despite literally a mini-baiout having being spent on tribunals over the years.
And as for the critical worth of human capital. Remind me again about the unemployment rate, especially amongst the long term unemployed
Youth employment in Ireland is nothing to feel to proud of. At the moment Third Level absorption plus emigration disguise the true rate of youth unemployment.
Just hope that Australia etc. don’t pull in the welcome mat anytime soon.
@ Alchemist,
In Ireland’s case, it is necessary to consider both FDI and indigenous industry.
Just focusing on indigenous industry, you are right that food is the big sector, but its less than half the total, and there is a lot of other exporting activity spread across other sectors too. Take a look at page 8 in this: http://www.forfas.ie/media/forfas101123-ABSEI_2009%20-%20Appendix.pdf
Production / tourism / services etc requires a little thing called energy.
Its clear that some colonies are being cut off from the spigot to save the central Imperium / Citadel
When we get our energy balance figures for 2011 & 2012 ours and Greek TPES should look something like this Countries TPES post 1989.
When Empires can no longer plan & execute long term & complex endevours they decay from the inside but try to spread the chaos outwards.
en.wikipedia.org/wiki/Juragua_Nuclear_Power_Plant
@ BeeCeeTee
About 200,000 net jobs are required.
In the FDI and indigenous internationally tradable sectors, there were hardly any net jobs added from 2000 (the indigenous exporters had a booming domestic market at the time).
@Michael,
I think we have been through that before in the past. By my reckoning, each exporting job historically supported something like four others within the economy. Allowing for the fact that public sector employment has been acting as an employment stabiliser, I’ll guess that each new exporting job created can create three more through indirect and induced effects. Based on your 200,000, that would mean that we need 50,000 net new export-based jobs.
Employment in exporting industry has been crucified by two factors since 2000. One is a loss in competitiveness caused by the bubble and its aftermath. The other is a tougher environment for FDI and for manufacturing industry. If we resolve the first of these, we will get employment growth.
Ireland and Greece are not really comparable in terms of economy, society, and institutional architecture and history. ‘Societal Effects’ – Maurice, Sellier, Silvestre – Aix-en-Provence Sources of Industrial Power – demonstrate clearly that Sarkozy’s simplistic idea of France following the German model is just that – simplistic political balderdash ……. their labour markets/skill formation systems are simply too diverse ……
The real comparison is that Greece, Portugal, and Ireland are SMALL … and with a strong European Centre [which does not exist at the mo] should be eminently … er … MANAGEABLE :LOL: …. as Axel Weber pointed out a few years ago ……..
“With the European Union (EU) heading into a double dip recession, even before the peak level of GDP of the previous business cycle has been regained (Figure 1), it is evident that the solutions adopted to deal with Europe’s economic crisis have failed. But the focus of financial markets on Greece’s debt crisis should not obscure the fact that the largest scale economic failures in Europe, with the most direct impact on world growth, are not in Greece, the GDP of which accounts for only 1.8 per cent of the EU’s, but in the UK, Italy and Spain. The latter economies collectively account for over one third, 34.7 per cent, of EU GDP. Furthermore these large EU economies, having failed by significant margins to regain their previous peak levels of GDP, are again turning down.
To give some idea of the relative scale of these problems it may be noted that the combined GDP of the UK, Italy and Spain is equivalent to 40.9 per cent of US GDP, whereas Greece’s GDP is equivalent to a mere 2.0 per cent of US GDP. Even the combined GDP of the three economies under EU bailout measures (Portugal, Ireland and Greece) is only 5.1 per cent of US GDP. In short, while they pose significant problems for financial markets the recessions in the peripheral Eurozone economies are simply too small to make a direct significant difference to global growth prospects.”
I was wondering as well about all the decks that were built in Leinster.
Are they still in use ?
And could any of this stuff be exported to Greece?
@ BeeCeeTee
IDA Ireland’s “Horizon 2020” plan targets the creation of 62,000 direct and 43,000 indirect new jobs in Ireland over the period 2010-2014.
The estimated net direct jobs would be about 15,000 over 5 years.
Indigenous jobs would have higher value added but hardly at a 4: 1 ratio.
@Michael.
I imagine IDA is cautiously assuming that the government will continue to do its best to prevent prices in the economy falling – hence the 15k net jobs.
Just to get terminology straightened out, indirect jobs are jobs associated with supplying the businesses we are talking about, and induced jobs are jobs associated with spending by the additional people employed directly and indirectly.
It’s hard to be sure what IDA Ireland means when it talks about jobs impact, but my guess is that it means direct plus indirect as you have suggested. If this interpretation of what IDA Ireland has written is correct, then it has left out two important considerations.
1) It has quietly failed to recognise that net indirect jobs under its projections will only be about 8,800, as opposed to the gross 43,000 you have noted.
2) It has completely ignored induced employment effects.
What IDA has done on indirect employment appears to be, let’s say, “lacking in sophistication”. It looks like they just multiply the direct number by 60%, and round.
What I’m coming around to here, is that Horizon 2020, even if it is perfectly correct in its own terms:
1) Says nothing about total net employment impacts, and
2) Appears to assume an economic strategy quite significantly different to the one I have suggested.
@ David O Donnell
Sometimes you are pleasantly surprised and have to give hats off to on the ball piece of superb analysis. I’m no leftie or rightie, so I’m not picky where good analysis comes from, once I think its on the ball:
So I read your link to John Ross and curiously clicked the link in the Ross article to see what he wrote 15 yrs ago. You should read this too.
“The overall conclusion is clear. The Eurozone crisis was predictable – the present author noted 15 years ago by/
JOHN ROSS Is Visiting Professor at Antai College of Economics and Management, Jiao Tong University, Shanghai
01 September 1996”
Fundamental economic implications of a single European currency
This reality is sharply posed in the debate on a European currency. If theory and the real world do not coincide, only two courses are available. A sensible person abandons the theory. Only a fool ignores the real world — demanding that it desert its sinful ways and correspond to their abstract theory.
The only way out of this situation is that if flexibility via the monetary unit, the exchange rate, is removed, and flexibility via the price system will not occur on an adequate scale, then pliability in the real economy must be carried out via non-price means — i.e. by introducing transfer payments between regions of the single European currency area. The creation of a single European currency will only not have the most serious negative economic effects if it is accompanied by the creation of a European budget, with large enough resources to make substantial transfer payments between countries.
Who will control a European budget?
But the above leads directly to the sphere of politics. Who will control such a budget? It cannot be any of the individual countries — otherwise the budget will simply end up benefiting the states which control it. It must, clearly, be a supra-national body, composed on some proportionate basis from the EU member states. Whether this is called a federal European body or not (for fear of shocking Europhobes of a nervous disposition), is not important. Any institution controlling a substantial European budget, on a scale capable of overcoming the inflexibilities that will be produced by a single European currency, is, in reality, a European federal body. The existence of such a body, in turn, will produce all the normal political questions of control of a budget — the well rehearsed problematic of ‘taxation and representation’. A powerful European parliament would be required to supervise this budget. In short, the creation of a single European currency, if economic disaster is to be avoided by its introduction, requires substantial steps towards the creation of a single European state. ”
“This returns to the starting point. Maastricht tries to have its cake and eat it. It wants a single currency, but without significant steps towards a single state — in the form of a substantial European budget. One half of the cars will drive on the left hand side, of inflexible exchange rates, and the other half will drive on the right hand side of no state transfer payments. The traffic lights, known as prices, which are supposed to direct the resulting chaos won’t function adequately because, in a twentieth century, imperfectly competitive economy, they are significantly jammed, give green lights only in one direction, and work either too slowly or inadequately. Traffic will move increasingly slowly, and the passengers will become increasingly angry. Fights will break out between some of them, and the traffic jam will be coming increasingly overrun by pickpockets and criminals. An increasingly authoritarian police, originally called in to try to get the traffic moving, will try to do so by beating up increasing numbers of the drivers. All these symptoms are already present.”
Well done, Mr Ross 🙂 All right, you’ll told them so…
A better quote from Ross above shuda been:
“Maastricht’s proposals are, instead, disastrous. It proposes to create the most fundamental features of a common state — a single currency and a central bank. But it does not create any state budget which can deal with the huge regional and sectoral implications of this.
The process that would unfold with the creation of a single currency by this method may be predicted with certainty. Substantial parts of the EU, including Britain, will be pushed into severe recession if they join.
There will be sharply deepening regional imbalances and inequalities. The malignant expressions of economic depression — unemployment, poverty, collapse of the welfare system, weakening of trade unions, racism, chauvinism, crime — will multiply. The end will be either an economic tragedy, or the deepest crisis in the history of the EU, or more probably both.”
Pretty good for 1996
I see that Schäuble is heading into that meeting tonight shouting from the rooftops that the spending cuts the Greek coalition leaders have agreed to do not fulfill the bailout conditions. He thinks there is no deal and won’t sign it off.
He apparently told journalists waiting outside to ‘go home as there won’t be deal tonight’. It’s not clear to me though whether what he might actually be whining about is that some stuff in the first programme still hasn’t been implemented rather than the cuts agreed as part of the second bailout.
The farce continues. Maybe he was just testing the water over the past week or two to see what the market reaction was to the possibility of a Greek default and when he saw they seemed pretty sanguine he’s now going to scupper the deal and get Greece thrown out. Who knows how these people work…
@PR Guy
Look at the Dax. Where is the signal to the Germans that they have been getting it wrong?
This concentration on the production of even more finished goods for export is maddening.
We are up too our tits in finished goods , be it hotel blocks , houses , cars , consumer appliances etc etc.
What we don’t have is the energy credits to use them because guess what there is little energy remaining because everything produced is too EFFIECENT so as to maximise profits………..therefore there is little demand.
Here’s a novel concept for struggling economists…………. in a closed system exports do not create wealth.
Look much of the “Growth” in western Europe during the 1990s came directly from a pretty simple raw material resourse transfer from eastern Europe.
Nothing that complex – a basic drop in consumption in places such as Poland and a corresponding rise in consumption in Western Europe.
Now we produced far better and more Goods then communist Poland but the equation still involved a basic transfer of real resources & real negative depletion.
Now although Western Europe is still transferring resourses out of places such as the Baltics & Hungry – Poland is doing a bit better but it is nothing spectacular.
But at the moment it is all a zero sum game.
For instance imagine a Europe where Poland did not export any net Coal………..well we are getting quite close.
Poland total energy self sufficiency
Y1980 :1.0002
Y1990 :1.0074
Y2000 : 0.8930
Y2009e :0.7136
Coal self sufficiency
Y1980 : 1.2058
Y1990 : 1.2549
Y2000 : 1.2664
Y2009e :1.0976
Notice the big drop after 2000 as Poland slowed the transfer of real resourses abroad…….and burned them at home.
You can see the raw energy total TPES figures which give a countrywide overview of total consumption over these years.
Y1980 :126.6 (Peak) – strikes ?
Y1990 :103.9
Y2000 :79.6
Y2009e :93.6 (more home consumption / investment ?)
Wealth has been continually destroyed to maximise profits for some time – I know its hard to get your pretty little heads around such simple concepts but I am afraid the monetarist propoganda they taught yee lads at College was just magnificent embroidery.
With our current zero sum economic model a rise of growth in lets say Poland will result in a fall of growth somewhere else because of resourse starvation.
Capital is just using one country as a base of operations for a decade or so (think Ireland 1990s) & then moving on to another and another and another leaving a trail of destruction in its wake.
No new net wealth is being created.
Just material & sadly Human Junk that cannot be retrained when they become old dogs in a newer trick world.
@Colm Brazel
Ta for that update link on Ross’ ‘past’ – he is pretty pragmatic in the present as well.
ditto. Thank you for equally enlightening Forfas link
@ Dork
Ok.
‘Wealth has been continually destroyed to maximise profits for some time’
Can you offer a reasonably succinct definition of wealth ?
@Paul
Grain /Slaves , Grass / Horses , Coal / heat , Oil / locomotion, Gas. / electricity………………..Energy is what I call core wealth.
Although there is little point in utilizing this capital base if the finished product is endless Pig Iron as in the communist days.
The oil age could not have come about withen 18th century England of amateur inventors – although many of those guys were highly intelligent and proficient in mathematics they simply did not have the material science , knowledge , critical mass of capital to build a internal combustion engine.
It took 19th century industry before you could get the progress needed to build a functional car.
So you had capital creating more capital and so on……..
But something happened – especially in the 1960s … something very deep – when the Central bankers targeted interest rates rather then the credit money supply to control inflation the credit started to eat into the capital base over time without creating new net energy via technology to replace the depletion.
For example – The Apple I phone era technology is a joke when compared to the 1900 to 1960 period of technological development.
The capitalist world seems to be experiencing the very opposite of what the Communist world experienced of too many coal mines and not enough consumer items.
I also think it has much to do with the monopoly control of natural utilties by limited liability corporations with skin in the game of shortages.
There is no profit in creating energy gluts which has very different dynamics to finished product , only shortages.
So all effort is spent creating shortages via Keynesian or monetarist maximum demand management which is a form of high efficiency as all the goods will be consumed and therfore profits maximised.
But the efficiencies in production using the present energy base (not consumption) have reached almost their theoretical peak.
The capital /wealth base has been ignored in the race for profits.
The Labour theory of value is mixed up in this somehow.
@Grumpy
Look at the Dax. Where is the signal to the Germans that they have been getting it wrong?
Leaving aside the Dax for a moment, is there an index that measures the mood of the near 50% unemployed youth in Greece and the over 40% unemployed youth in Spain.
Is there any sensible person, even in Germany, that in their saner moments does not believe that such rates of youth unemployment will leave a very nasty mark on the European landscape for a generation.
A nasty mark that not be of much benefit to the DAX.
The future conference tables of Europe had better not ask for too much solidarity from the generations now being destroyed in the peripheries.
@ Dork
No arguing about the fundamental role of energy, to which you continually return. But wealth is a very much more complex concept, even if one sticks to the economic sphere.
‘For example – The Apple I phone era technology is a joke when compared to the 1900 to 1960 period of technological development’
Maybe, but that is probably a social/political rather than an economic problem per se. The gross misallocation of technical resources. As you say, the oppostie of communism. Consumer choice (and marketing) raised to a supreme principle.
Here is a cracker, IMHO, for those with the time to read it
@Paul
Looks good but the worlds energy systems have bypassed yearly / daily , solar heating / light , photosynthesis / sailing locomotion for the power in ancient sunlight.
Therefore the power dynamics must be very different then the past.
Cities no longer trade their hinterlands with one another – its all about capturing huge monetory flows which are in fact symbolic energy flows.
These debates are a bit like talking about ancient Rome without mentioning Slavery.
People now own hundreds of slaves in their house – but they need to be feed BTUs if they are to do work.
How we perceive wealth is a very interesting subject. Why is gold the dog’s nuts, for example. However it does look as though
the continued availability of cheap energy is required to keep asset prices up. The US goes to war very regularly to ensure price stability.
In the global warming debate it is seldom discussed, and is not in Bill McKibben’s interesting article [“Resisting Climate Reality,” NYR, April 7], that the primary fossil fuels, oil, natural gas, and coal, are finite resources. They are collectively being consumed at a rate equivalent to the burning of 10,000 million tons of oil (abbreviated Mtoe) per year and this rate of consumption is growing (BP Statistical Review of World Energy 2010).
Over the last fifty years, and even over the last two decades when concern over global warming was the subject of the Kyoto Protocol, growth in their consumption has averaged over 2 percent a year. A growth rate of 2 percent corresponds to a doubling time of thirty-five years, so that if it continues fossil fuel consumption will be 20,000 Mtoe in 2046. And in less than fifty years the present known reserves (about 770,000 Mtoe) will have run out. The burning of fossil fuels will come to an end.
Clearly this will not happen overnight, but at some date in the not-too-distant future prices of fossil fuels will start to rise very dramatically and alternative energy will look like a bargain. The problem then will be, what alternative energy source can reliably supply 20,000 Mtoe of energy annually, and increase it by 2 percent a year? For an idea of the tremendous amount of energy supplied by fossil fuels, 20,000 Mtoe is the amount of electrical energy supplied by 10,000 power plants each delivering 1,000 megawatts of electrical power continuously for a year.
One of the main causes leading to the present crisis of global warming is the economic philosophy of growth: growth is good, and high growth is better. So when China’s annual growth rate drops from 10 percent to 7 percent economists start to ask if China is in trouble. And poor old Germany, with a growth rate of only 3.6 percent in 2010, is not a model for anybody. Even the economists favored by McKibben in one of the books he is reviewing, Isabel Galiana and Christopher Green, are in favor of growth. Many seem to forget or refuse to acknowledge that consumption of a finite resource must end sometime, and that growth in that consumption can shorten the time substantially. Surely it would be prudent to reduce fossil fuel consumption rapidly and substantially, both to reduce the speed of global warming increase and to husband fossil fuels over the long time needed for alternative energy sources to be developed and deployed.
John J. Simpson
Professor of Physics (retired)
University of Guelph Guelph,
Ontario, Canada
@ The Dork, paul quigley, seafóid
Thanks for the exchange above – much appreciated and will take time to read the Bourdieu passage now.
I think Brian Woods Snr and The Alchemist might have some deep offers on what is wealth if they would care to contribute.
The following is from James Shirley (1596 – 1666), who died after the Great Fire of London and reminds us, that whatever wealth is, death is the leveler – first stanza and last couplet in particular.
The glories of our blood and state
Are shadows, not substantial things;
There is no armour against fate;
Death lays his icy hand on kings.
Sceptre and crown
Must tumble down,
And in the dust be equal made
With the poor crooked scythe and spade.
Some men with swords may reap the field,
And plant fresh laurels where they kill;
But their strong nerves at last must yield,
They tame but one another still.
Early or late,
They stoop to fate,
And must give up their murmuring breath,
When they, pale captives, creep to death.
The garlands wither on your brow,
Then boast no more your mighty deeds;
Upon death’s purple altar now,
See where the victor-victim bleeds.
Your heads must come
To the cold tomb;
Only the actions of the just
Smell sweet and blossom in their dust.
@seafoid,
Various organisations have looked into the matter in greater depth than Prof. Simpson’s back-of-envelope calculations. I recommend the IEA’s Entergy Technology Perspectives 2010 if you can get past the paywall. The Executive Summary is here: http://www.iea.org/techno/etp/etp10/English.pdf
Lets look at real numbers as a Alien would not GDP & other such nonsense which is more a measure of inflation – (if they treated economics as a serious science they would probally be extinct already)
The IEA TPES numbers for the entire OECD.
Between 1971 & 1980 we had 2 massive energy crisis after Yom Kippur in 73 & the 79 Revolution………….yet.
Y1971 TPES :3357MTOE
Y1980 TPES :4051MTOE
A rise of nearly 700MTOE
Y2000 TPES : 5234MTOE
Y2007 TPES : 5470MTOE (peak)
Y2009e TPES :5171MTOE
A real decline of 63MTOE
OECD Europe again similar trends
Y1971 :TPES :1243MTOE
Y1980 :TPES :1494MTOE
A rise of 251MTOE
Y2000 TPES : 1734MTOE
Y2007 TPES : 1826MTOE (peak)
Y2009e TPES :1720 MTOE
A decline of 14MTOE
Remember this is in the context of a growing population even in Europe although you could argue this is countered by efficiency gains.
Its as if Ancient Rome is losing vast numbers of slaves to a mysterious disease yet the senators will not talk about such things for fear of panic.
It is clear the Vulture Banks exported European capital to gain artificial profits from Chinese wage arbitrage and made huge losses from this venture – they then came back & shat all over the nest.
But the real shocker for a small open island economy is the international aviation bunker fuel use in Ireland. ( this is subtracted from final national energy balances using IEA Methodology)
You can be the most dynamic place in the world , whatever that means but you cannot counter these figures too easily………….
Y2007 : 1002KTOE
Y2010 : 754 KTOE
Sorry 2005 / 2006 was the peak in many cases.
Bank Credit & oil availability are the same thing………… although one is a symbolic representation of the physical.
@Paul
Sorry Paul – a bit too metaphysical for my taste.
A good dose of reductionism is in order to challenge this neoliberal gibberish.
Just a final comment on this – – the inclusion of estimates of indirect jobs in official targets in recent years has been part of PR and spin that dominates enterprise policy.
Most firms are micro ones with less than 10 employess and half the new ones are dead within 5 years.
Say a typical firm that creates 6 direct jobs, estimating the economywide impact on job creation as 24 additional new jobs seems a little optimistic.
@ Dork
If you are referring to Bourdieu, I can assure you that his (huge) body of theoretical work is extraordinarily well grounded in empirical social research. His approach is in no sense metaphysical, but as he says himself, complex matters require complex explanations.
@BeeCeeTee
Thanks for the links. It comes down to whether or not we believe that we will overcome our natural greed and laziness to invest in technology that we haven’t figured out yet while time runs down .
@Paul
Sure – the world is a complex place with many linkages that can both increase redundency or decrease it.
But energy systems is the fundamental building bloc of society and indeed increases its potential for complexity – think hunter gatherer , ancient , late medival, Renaissance ,Industrial etc.
A tribe can have the most accomplished hunters on the Savannah but if the rains fail…………….
European energy (in liquid fuels at least) now resides chiefly outside its borders – think about the fragility of such a system.
The Human capital of today has worked withen a certain energy density , their skills & knowledge are appropriate for that ecosystem.
But the ecosystem is regressing to a less complex / sparser form……………….
Watching the CNBC circus with Bill Murray and all……………. cut to a add break………. again
Then there was a advertisement about some Brain storming Energy shindig ———-there was ideas flying everywhere , lots of dramatic hand movements , deep intellectual thought , possibly free flying spittle – – – – and there ,and there amongest the lot of them was Brian Lenihans more intellectually challenged brother – Conor.
We are Doomed, Doomed I tell You Doommmmmmmmmed.
There is now a deep inertia embedded withen the market state , just as the British Nation state created Bomber Command in 1936 – withen half a decade Britain did not have the resourses for a major land war on the continent.
It could only Bomb & then Bomb the rubble.
We now get these absurd functionaires such as this chap on the FT talking nonsense.
Its as clear as Day that Europe needs 100 nuclear stations now so as to create real wealth but the chain of command and monetory / physical structure is now not equipped to churn out the modern equivalent of 10,000 bombers.
Instead we get these farcical conferences & brainstorming events which are little more then the last of the turd eaters feasting on the credit crumbs.
INERTIA can be a powerful force when it has built up enough momentum.
@ All
Very off topic.
The Philip Lane post on “Corporate Balance Sheet Adjustment”, might have been important and looked ignored so I went back, had a look and commented there.
I don’t know why the discussion of the Greek economy always ends up on tourism, perhaps because people have traveled to Greece as tourists. Some people might point out that tourism is a large percent of Greek GDP. Tourism is a highly competitive, not very profitable industry so it can never solve Greece’s economic problems.
The single industry Greece has that can be profitable is shipping. Once upon a time Greece was associated with ship owners like Aristotle Onassis so I am surprised when the discussion of the Greek economy drifts off into tourism. Shipping as measured by the Baltic Dry Index is doing poorly so it is not surprising Greece is having trouble paying its fixed debts during the downturn of its key industry.
My survey of Greek industry:
Shipping – In a cyclical downturn.
Ocean engineering – Potentially an important industry, German ThyssenKrupp recently sold 75% of Hellenic Shipyards to Abu Dhabi Mar. Maybe petro dollars (or euros?) will be recycled into Greek bonds somehow.
Agriculture & Fisheries – Profitable but too small to save the day.
Tourism – You’re kidding right? You cheap ba$#&%@s barely pay more than costs.
Oil and minerals – currently too small to make a difference, but who knows what they might find?
Another ‘service’ the Mediterranean nations provide, which is uncompensated, is securing Europe’s southern boarder. For some reason nations in the center feel that waves of persons from Africa and Asia should be stopped by Greece and others free of charge. So I think a more realistic sharing of the burdens of European defense will need to be put into effect.
@George
Yes I agree, but tourism was taxable – shipping in Greece functions a bit like Multinationals in this country – it really is outside the national sphere – although we hope to get a few scraps.
@ paul quigley
I’ve now read the Bourdieu essay. I had a pleasant chew over it on my Sunday constitutional along the Royal Canal and came up with a variety of lengthy replies – but perhaps these can safely saved to inform thoughts on another day.
The piece does offer a framework for thought about what kind of society the people of Ireland wish the state to develop into, away from defining value as simply the economisation of everything.
It may entertain you to know I am currently facilitating courses at the Lir Academy at TCD, for both actors and playwrights, and I shall bring the piece in to them to see what they make of the objectification of embedded Cultural Capital.
@ gavin
Excellent.
Maybe you should take the class down to the Four Courts to see some social magic in action. The fancy dress is a real giveaway, but there are lots of other stage effects.
‘“Bodily hexis is political mythology realised, embodied, turned into a permanent disposition, a durable manner of standing, speaking and thereby of feeling and thinking.” Bourdieu, Outline of a Theory of Practice
Equally grave is the failure to establish an indigenous Afghan economy that is not permanently dependent on aid (Ireland : CT) handouts.
Another acute problem is that the huge profits of the drug trade are recycled into property speculation rather than economic production.
Just fancy that!
@ paul quigley
“Maybe you should take the class down to the Four Courts”
I have indeed done that, and I am pleased to say Fishamble is the first company to play for an audience of judges and barristers at the Four Courts as well as for politicians at the Oireachtas: a play about bioethical issues by Paul Meade.
I also took some practitioners to the Royal College of Surgeons once to see the dissecting room – a salutary experience.
I did send some actors in training to the protest camp outside the Central Bank, but sadly they couldn’t make head nor tail of it.
As recent as 1967 after weeks of rioting the Greek armed forces carried out a putsch against a left wing government. With violence in the streets there is a risk of another putsch by the military. The last one resulted in a military dictatorship that lasted until 1974. Hundreds of thousands of leftists were put in concentration camps on remote islands. Greeks are a volatile lot not like us dour, fatalistic bog trotters. No need to prepare the Blaskets for an influx of Irish leftists. The question to be answered is whether the EU will accept a military dictatorship, albeit one that agrees with the troika.
I found it rather dispiriting this morning to walk into a client site – the morning after central Athens was literally burning – to find out the hot topic of conversation around the water cooler/coffee machine is….. did Whitney Houston die from a drugs overdose?
Meanwhile, Papademos will now streamline and replace key members of his cabinet with non-elected ‘technocrats’ over the next few days and the Germans will say Greece hasn’t done enough and needs to make more cuts. That should keep the rioters indoors then?
Not that the masses in the rest of the EU will be bothered as they reach for their remotes to see who’s on “X-factor Europe’s Got No Talent Ballroom Skating On Thin Ice.” I wonder what it will take for them to get off their collective fat ar5es? It reminds me of that song (can’t remember who sang it): “if you tolerate this, then your children will be next.”
Perhaps they will pay more attention when they find out that Iran has suddenly announced they’ve got the bomb….. by using it.
@PR
You hit the nail on the head with “fat ar5ses”.
As long as they are fat they will be complacent it is when you go to the beach and can easily count ribs that you will hear about the injustices of it all. Hopefully that will not happen.
68 replies on “Ireland can show Greece a way out of the crisis”
First, start fifty years ago …
It will take Greece decades to accumulate embedded knowledge, know-how and industry institutions that Ireland has now if it starts now, and there is no sign that it is going to make that start.
There is a gain in cost competitiveness at which Ireland will be able to generate enough employment to sort out its problems, and I reckon that we need maybe another 15% to 20% relative to the rest of the EU. We are in deep trouble because our government is resisting that adjustment.
With its almost complete lack of competence in non-tourism exporting, I reckon Greece needs to cut costs by about 50% to achieve the same. There’s any number of countries with human capital comparable to Greece’s available that are stuck in economic limbo because they are uncompetitive. There are plenty of countries that are developing quickly, but their price levels are a small fraction of Greece’s. It’s not going to happen this generation without Greek pay cuts much steeper than the troika envisages, or an exit from the euro.
Greece owes its income to borrowed foreign spending it cannot pay back. It produces no machines, no electronics and no chemicals. Of every 10 US dollars of worldwide trade in information technology, it accounts for one cent.
Not good at all.
Greece is a good place to try to replicate this aspect of the Irish model. We have calculated how easy it would be for countries to move to exporting more complex goods. Greece ranks second only to India in this dimension, a heartening finding.
Greece behind India?
Not good at all.
Suppose the question is.
Can they ever achieve the transformation with the debt overhang and no exchange rate advantage.
If you dont have a subscription to the FT just google the story name e.g., “Ireland can show Greece a way out of the crisis” and it will take you behind the paywall.
Greece may rank only behind India in ease of moving to export complex goods, but only if one ignores its vastly over-inflated cost base, and its lack of the sort of technology exporting tradition that some regions of India have built up over the last 30 years. Factor those limitations in, and Greece is trapped.
Any body bought a bottle Greek Wine or Brandy recently. I used to buy the odd bottle in Superquinn many years ago. The Greeks got too used to the Government funding their live style. So they gave up even exporting wine brandy . Local commodities with no raw material imports required.
So when the Government goes broke so does every one else go broke.
They are just a bit further down the road than we are.
This is another example of the manic race to be competitive ……….
Its all very sad – competitive against who ?
If everyone tries to be competitive in a hamster wheel like fashion who will create the wealth ?
This is just the cartel trying to extract the last drop of blood from the victim.
Its time to go back to Creating Tariff walls & building real capital withen them – the depletion phase of economic “growth” must stop.
@ All
It is nothing short of amazing that such an academic article could appear without any reference to the Greece’s merchant navy, the largest in the world, or the cost of its defence apparatus.
http://en.wikipedia.org/wiki/Greek_Merchant_Navy
There is no mention of the waste of resources implicit in maintaining a defence force out of all proportion to the country’s needs (but a very useful source of contracts for core country defence suppliers, notably Germany and France).
http://www.bicc.de/uploads/pdf/press/2012/Global%20Militarization%20Index%202012%20Fact%20Sheet_e.pdf
The Greek finance ministry recently published an extensive list of Greek tax defaulters. The presence of so many German names on it was the source of comment in the German media. The Greek merchant navy pays no tax, as far as I know, and , indeed, its position in this regard is protected by the Greek constitution (although I stand to be corrected on this).
There are few clean hands in the mess that Greece has now become, notably those of the European leaders that shut their eyes and hoped for the best by allowing the country to enter the euro in the first place. The argument about falsified statistics is simply a smokescreen for a historical error of judgement, the bill for which is now being presented.
The relevance of Ireland to Greece’s situation is very limited. What is certain is that there is no shortage of wealth in Greece. The problem is that it is concentrated in too small a number of hands (which have moved much of it offshore).
Of course, the green-tinted spectacles worn by the author of the article do us absolutely no harm.
Anesthetized upon a table of debt in a Troika induced coma, Ireland is not going to be leaving debt hospital soon.
Its touch and go.
I wouldn’t expect ways out of the crisis to be shown based on its performance so far.
While I think the author is out of touch with reality of that article is out of touch with reality regarding Greece’s prospects, the report on the research he references really is rather interesting. http://atlas.media.mit.edu/
A quick trawl through shows up some big negatives (high costs and low “economic complexity”) about Greece, as well as the positive he references in the article.
My interpretation of the report’s analysis is that Greece has great opportunities, but little capability to exploit them.
*GREEK POLITICIANS SAID TO REACH AUSTERITY DEAL: FINANCIAL TIMES
@ BeeCeeTee
Without some further detail, this could be a politician’s aspiration.
Irish competitiveness indicators are not reliable.
The manufacturing total hourly labour is in line with Germany’s.
So where will new exports come from?
The problem for both Greece and Ireland sofar are that reforms target the soft underbelly of democracy, cement the relationship of banks to politics and create a lopsided, bailout of the elite, who caused the crisis; not exactly a right wing Greek junta, military takeover, but certainly a financial takeover, the other to happen later. We’ll see if the opposition to these ‘solutions’ get crushed; or if solutions stick. The former lies probably somewhere in the future; the latter is certain not to happen.
@ Michael Hennigan
“So where will new exports come from?”
They are not likely to come from anywhere. Quite the opposite, though Kenny is talking of 10,000 new jobs in the financial services sector, the fact is Merkozy are eyeing that CT as are the republicans in the USA.
How long more can ‘transfer pricing’ contribute to our exports and our GDP, is anybody’s guess.
Its all house of mirrors once you move beyond the agri sector, pharmaceuticals; with exports from multinationals not going to generate any huge increase in jobs due to over capacity and global slowdown.
@DOCM
Good Comment.
A forward looking Europe should recognise the error of Greece joining the euro, jointly plan for Greece to default and exit the Euro and assist Greece through the difficult transition.
But the new Europe will have its pound of flesh.
It is a New Europe run by bankers and devoid of all values, save helping the super rich to retain their wealth.
Everything, including Europe itself, is to be sacrificed to that objective.
First they came for the Greeks….
I can’t really see the parallel. Even Ireland isn’t showing the kind of economic contraction figures or spike in unemployment/drop in numbers employed coming out of Greece this morning. The country is being slowly wrung to death – and that’s before the second bailout and subsequent cuts bite in.
There’s nothing that Ireland can ‘show Greece’ now – Greece is toast.
FT is currently reporting that a deal has been agreed in Greece and no doubt EU politicians etc. will all go round glad-handing and high-fiving each other but back in the real world, the country is going to implode (or is it explode?) once those new cuts are introduced. Youth unemployment figures this morning show it spiked to just over 50%. That really is trouble a brewing (ditto Spain). Giving young people no hope and no money may be a good strategy for getting a rock through your government department window but it’s not good for much else.
The Irish way out:
“It’s very clear that Ireland has not sought and will not seek any writedown,” Mr Kenny said in an interview with Bloomberg Television yesterday in New York. “We’ll pay our dues in full and on time.”
Ireland is looking for help in the wake of the bailout of the former Anglo Irish Bank, once the country’s third-largest lender by assets. The State seeks to refinance about €30 billion of so-called promissory notes used to rescue the bank, now known as Irish Bank Resolution Corp, on better terms and over a longer period.
Consistent?
At least the Greeks didn’t foist a wretched blanket bank debt guarantee on their population.
@PR GUY
“Greece is toast”
+1
It is hard to see Greece remaining a democracy with the kind of help that can manage to create 50% youth unemployment.
Another example of what happens when social scientists ignore history, institutions and politics.
@ Colm Brazel
You are on the ball as usual!
How long is it going to be before Obama decides at the stroke of a pen that Pharma and other industries need to come back to the US ? Similarly, how long is it going to be before CCTB (rates) are harmonised (forced on us)? We are living on bailouts in this country and the people to whom bailout is funneled in salaries are never going to complain after all they arranged it that way. It is another good day at the office if a stockbroker can pen a piece that says, a bond trader stands to make a 700 million on Irihs bonds because other bond traders got afraid and dumped our bonds. This “good news” this “confidence in our economy” can be spun as as two positives firstly, we are closer to getting back to sell government bonds. Secondly, we are a step closer in terms of Ireland being able to secure a second bailout if we require it (which we will, Croke Park II) . We can borrow more, we are looking good for another bailout? The road to recovery, growth? More like the road to Greece!
The cornerstone of the Irish economy is agriculture and increased exports will accelerate from that sector, especially after 2017 when milk quotas are due to be abolished. Agriculture is substantially within our own control, unlike the FDI which we trumpet but which can be decimated by external forces almost in the blink of an eye and over which we have little or no control.
@Michael,
Where the new exports will come from is not a good question, as the most obvious areas where we can increase exports will have little impact on the Irish economy. A better question is where the export-based jobs will come from.
I would point to a few things:
1) Whatever IDA Ireland is not quite managing to win
2) Wherever indigenous exporting businesses do not have quite enough of an edge to grow, or faster growth where it already has an edge
3) 20% lower costs would reposition us as the relatively low cost location with the characteristics of a northern European economy, which should also open up new streams of inward investment across a range of sectors.
4) Subsupply and services supplied to the above businesses.
To actually attach some sectors to that, my guess is that we are talking more ICT employment, maybe more financial services employment, more shared services and call centre employment, more EMEA HQ type employment, more food-related employment, possibly pulling back some other manufacturing employment (or at least slowing losses), more R&D embedded in medical devices and pharma companies, more export-oriented professional services, and possibly things like healthcare tourism.
We are already getting fairly decent levels of export-based job creation, but a lot of that is being lost to simultaneous job destruction. A serious shift in cost competitiveness should give a meaningful boost to job creation and cause a meaningful reduction to job destruction. Without the sort of detailed knowledge they have in IDA Ireland and EI, it’s hard to produce detail on opportunity, but when I look at other countries that have gone through reductions in real costs of that scale I see large employment effects.
For me, the main indicator of Irish competitiveness is what’s happening to employment in tradeable industries. With a little data manipulation, I get a fairly reliable fix on that once a quarter from the CSO’s QNHS. I get what I think is a reliable fix on it once a year from the Forfas employment survey.
If its staying still or going down, we clearly are not competitive enough. If it’s going up fast enough to sort out our unemployment problem within 5 years (taking account of indirect and induced employment effects), then we are competitive enough. Comparisons with German levels of pay are just a distraction.
In solidarity with fellow European citizens in the area known as Greece …
Most of the ‘reckless’ Capital Flows into Greece that allowed ‘reckless’ fiscal spending by Greek Govs since it entered the EZ originated in …… other areas of what is known as Europe such as France, Germany, Holland, etc
Reckless on both sides deserve to ‘burn’ ….
And the ECB stood blind and idly by ……. back to dodgy capital flows again …..
And Merkozy remains delusional cubed ….
Greece, Portugal, Ireland, Italy, and Spain require write-downs on these dodgy capital flows to regain some debt sustainability …
This is a EUROPEAN problem, eminently solvable, possible ….. but the politicos (including our own) are pawns under the control of the MatrixsQuidesque elite who are pulling all strings …. Peter Sutherland, John Bruton, and their increasingly willing pupil .. Enda Kenny ….
@BeeCeeTee
“With its almost complete lack of competence in non-tourism exporting, I reckon Greece needs to cut costs by about 50% to achieve the same. There’s any number of countries with human capital comparable to Greece’s available that are stuck in economic limbo because they are uncompetitive. There are plenty of countries that are developing quickly, but their price levels are a small fraction of Greece’s. It’s not going to happen this generation without Greek pay cuts much steeper than the troika envisages, or an exit from the euro.”
You could substitute Ireland for Greece here if speaking about indigenous industry in the main with the exception of food.
Ireland’s competitiveness was hardly helped by Cowen raising public spending 10% y-o-y while he was in Finance. Croke Park Agreement and pay cuts, now there’s conundrum.
Ireland’s record on reform is dismal, absolutely dismal, despite literally a mini-baiout having being spent on tribunals over the years.
And as for the critical worth of human capital. Remind me again about the unemployment rate, especially amongst the long term unemployed
Youth employment in Ireland is nothing to feel to proud of. At the moment Third Level absorption plus emigration disguise the true rate of youth unemployment.
Just hope that Australia etc. don’t pull in the welcome mat anytime soon.
@ Alchemist,
In Ireland’s case, it is necessary to consider both FDI and indigenous industry.
Just focusing on indigenous industry, you are right that food is the big sector, but its less than half the total, and there is a lot of other exporting activity spread across other sectors too. Take a look at page 8 in this: http://www.forfas.ie/media/forfas101123-ABSEI_2009%20-%20Appendix.pdf
Production / tourism / services etc requires a little thing called energy.
Its clear that some colonies are being cut off from the spigot to save the central Imperium / Citadel
When we get our energy balance figures for 2011 & 2012 ours and Greek TPES should look something like this Countries TPES post 1989.
http://www.iea.org/stats/pdf_graphs/CUTPES.pdf
When Empires can no longer plan & execute long term & complex endevours they decay from the inside but try to spread the chaos outwards.
en.wikipedia.org/wiki/Juragua_Nuclear_Power_Plant
@ BeeCeeTee
About 200,000 net jobs are required.
In the FDI and indigenous internationally tradable sectors, there were hardly any net jobs added from 2000 (the indigenous exporters had a booming domestic market at the time).
@Michael,
I think we have been through that before in the past. By my reckoning, each exporting job historically supported something like four others within the economy. Allowing for the fact that public sector employment has been acting as an employment stabiliser, I’ll guess that each new exporting job created can create three more through indirect and induced effects. Based on your 200,000, that would mean that we need 50,000 net new export-based jobs.
Employment in exporting industry has been crucified by two factors since 2000. One is a loss in competitiveness caused by the bubble and its aftermath. The other is a tougher environment for FDI and for manufacturing industry. If we resolve the first of these, we will get employment growth.
Ireland and Greece are not really comparable in terms of economy, society, and institutional architecture and history. ‘Societal Effects’ – Maurice, Sellier, Silvestre – Aix-en-Provence Sources of Industrial Power – demonstrate clearly that Sarkozy’s simplistic idea of France following the German model is just that – simplistic political balderdash ……. their labour markets/skill formation systems are simply too diverse ……
The real comparison is that Greece, Portugal, and Ireland are SMALL … and with a strong European Centre [which does not exist at the mo] should be eminently … er … MANAGEABLE :LOL: …. as Axel Weber pointed out a few years ago ……..
“With the European Union (EU) heading into a double dip recession, even before the peak level of GDP of the previous business cycle has been regained (Figure 1), it is evident that the solutions adopted to deal with Europe’s economic crisis have failed. But the focus of financial markets on Greece’s debt crisis should not obscure the fact that the largest scale economic failures in Europe, with the most direct impact on world growth, are not in Greece, the GDP of which accounts for only 1.8 per cent of the EU’s, but in the UK, Italy and Spain. The latter economies collectively account for over one third, 34.7 per cent, of EU GDP. Furthermore these large EU economies, having failed by significant margins to regain their previous peak levels of GDP, are again turning down.
To give some idea of the relative scale of these problems it may be noted that the combined GDP of the UK, Italy and Spain is equivalent to 40.9 per cent of US GDP, whereas Greece’s GDP is equivalent to a mere 2.0 per cent of US GDP. Even the combined GDP of the three economies under EU bailout measures (Portugal, Ireland and Greece) is only 5.1 per cent of US GDP. In short, while they pose significant problems for financial markets the recessions in the peripheral Eurozone economies are simply too small to make a direct significant difference to global growth prospects.”
http://www.irishleftreview.org/2012/02/08/europes-largest-economic-failure-greece-uk-italy-spain/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+irishleftreview%2Ffeed+%28Irish+Left+Review%29
@An Taoiseach on Bloomberg
The interviewer clearly did not believe you …. she exhuded … er … pity.
Where have all these people gone ?
http://www.rte.ie/tv/iwantagarden/
I was wondering as well about all the decks that were built in Leinster.
Are they still in use ?
And could any of this stuff be exported to Greece?
@ BeeCeeTee
IDA Ireland’s “Horizon 2020” plan targets the creation of 62,000 direct and 43,000 indirect new jobs in Ireland over the period 2010-2014.
The estimated net direct jobs would be about 15,000 over 5 years.
Indigenous jobs would have higher value added but hardly at a 4: 1 ratio.
@Michael.
I imagine IDA is cautiously assuming that the government will continue to do its best to prevent prices in the economy falling – hence the 15k net jobs.
Just to get terminology straightened out, indirect jobs are jobs associated with supplying the businesses we are talking about, and induced jobs are jobs associated with spending by the additional people employed directly and indirectly.
It’s hard to be sure what IDA Ireland means when it talks about jobs impact, but my guess is that it means direct plus indirect as you have suggested. If this interpretation of what IDA Ireland has written is correct, then it has left out two important considerations.
1) It has quietly failed to recognise that net indirect jobs under its projections will only be about 8,800, as opposed to the gross 43,000 you have noted.
2) It has completely ignored induced employment effects.
What IDA has done on indirect employment appears to be, let’s say, “lacking in sophistication”. It looks like they just multiply the direct number by 60%, and round.
What I’m coming around to here, is that Horizon 2020, even if it is perfectly correct in its own terms:
1) Says nothing about total net employment impacts, and
2) Appears to assume an economic strategy quite significantly different to the one I have suggested.
@ David O Donnell
Sometimes you are pleasantly surprised and have to give hats off to on the ball piece of superb analysis. I’m no leftie or rightie, so I’m not picky where good analysis comes from, once I think its on the ball:
So I read your link to John Ross and curiously clicked the link in the Ross article to see what he wrote 15 yrs ago. You should read this too.
“The overall conclusion is clear. The Eurozone crisis was predictable – the present author noted 15 years ago by/
JOHN ROSS Is Visiting Professor at Antai College of Economics and Management, Jiao Tong University, Shanghai
01 September 1996”
Fundamental economic implications of a single European currency
This reality is sharply posed in the debate on a European currency. If theory and the real world do not coincide, only two courses are available. A sensible person abandons the theory. Only a fool ignores the real world — demanding that it desert its sinful ways and correspond to their abstract theory.
http://ablog.typepad.com/keytrendsinglobalisation/1996/09/fundamental-economic-implications.html
”
The only way out of this situation is that if flexibility via the monetary unit, the exchange rate, is removed, and flexibility via the price system will not occur on an adequate scale, then pliability in the real economy must be carried out via non-price means — i.e. by introducing transfer payments between regions of the single European currency area. The creation of a single European currency will only not have the most serious negative economic effects if it is accompanied by the creation of a European budget, with large enough resources to make substantial transfer payments between countries.
Who will control a European budget?
But the above leads directly to the sphere of politics. Who will control such a budget? It cannot be any of the individual countries — otherwise the budget will simply end up benefiting the states which control it. It must, clearly, be a supra-national body, composed on some proportionate basis from the EU member states. Whether this is called a federal European body or not (for fear of shocking Europhobes of a nervous disposition), is not important. Any institution controlling a substantial European budget, on a scale capable of overcoming the inflexibilities that will be produced by a single European currency, is, in reality, a European federal body. The existence of such a body, in turn, will produce all the normal political questions of control of a budget — the well rehearsed problematic of ‘taxation and representation’. A powerful European parliament would be required to supervise this budget. In short, the creation of a single European currency, if economic disaster is to be avoided by its introduction, requires substantial steps towards the creation of a single European state. ”
“This returns to the starting point. Maastricht tries to have its cake and eat it. It wants a single currency, but without significant steps towards a single state — in the form of a substantial European budget. One half of the cars will drive on the left hand side, of inflexible exchange rates, and the other half will drive on the right hand side of no state transfer payments. The traffic lights, known as prices, which are supposed to direct the resulting chaos won’t function adequately because, in a twentieth century, imperfectly competitive economy, they are significantly jammed, give green lights only in one direction, and work either too slowly or inadequately. Traffic will move increasingly slowly, and the passengers will become increasingly angry. Fights will break out between some of them, and the traffic jam will be coming increasingly overrun by pickpockets and criminals. An increasingly authoritarian police, originally called in to try to get the traffic moving, will try to do so by beating up increasing numbers of the drivers. All these symptoms are already present.”
Well done, Mr Ross 🙂 All right, you’ll told them so…
A better quote from Ross above shuda been:
“Maastricht’s proposals are, instead, disastrous. It proposes to create the most fundamental features of a common state — a single currency and a central bank. But it does not create any state budget which can deal with the huge regional and sectoral implications of this.
The process that would unfold with the creation of a single currency by this method may be predicted with certainty. Substantial parts of the EU, including Britain, will be pushed into severe recession if they join.
There will be sharply deepening regional imbalances and inequalities. The malignant expressions of economic depression — unemployment, poverty, collapse of the welfare system, weakening of trade unions, racism, chauvinism, crime — will multiply. The end will be either an economic tragedy, or the deepest crisis in the history of the EU, or more probably both.”
Pretty good for 1996
I see that Schäuble is heading into that meeting tonight shouting from the rooftops that the spending cuts the Greek coalition leaders have agreed to do not fulfill the bailout conditions. He thinks there is no deal and won’t sign it off.
He apparently told journalists waiting outside to ‘go home as there won’t be deal tonight’. It’s not clear to me though whether what he might actually be whining about is that some stuff in the first programme still hasn’t been implemented rather than the cuts agreed as part of the second bailout.
The farce continues. Maybe he was just testing the water over the past week or two to see what the market reaction was to the possibility of a Greek default and when he saw they seemed pretty sanguine he’s now going to scupper the deal and get Greece thrown out. Who knows how these people work…
@PR Guy
Look at the Dax. Where is the signal to the Germans that they have been getting it wrong?
This concentration on the production of even more finished goods for export is maddening.
We are up too our tits in finished goods , be it hotel blocks , houses , cars , consumer appliances etc etc.
What we don’t have is the energy credits to use them because guess what there is little energy remaining because everything produced is too EFFIECENT so as to maximise profits………..therefore there is little demand.
Here’s a novel concept for struggling economists…………. in a closed system exports do not create wealth.
Look much of the “Growth” in western Europe during the 1990s came directly from a pretty simple raw material resourse transfer from eastern Europe.
Nothing that complex – a basic drop in consumption in places such as Poland and a corresponding rise in consumption in Western Europe.
Now we produced far better and more Goods then communist Poland but the equation still involved a basic transfer of real resources & real negative depletion.
Now although Western Europe is still transferring resourses out of places such as the Baltics & Hungry – Poland is doing a bit better but it is nothing spectacular.
But at the moment it is all a zero sum game.
For instance imagine a Europe where Poland did not export any net Coal………..well we are getting quite close.
Poland total energy self sufficiency
Y1980 :1.0002
Y1990 :1.0074
Y2000 : 0.8930
Y2009e :0.7136
Coal self sufficiency
Y1980 : 1.2058
Y1990 : 1.2549
Y2000 : 1.2664
Y2009e :1.0976
Notice the big drop after 2000 as Poland slowed the transfer of real resourses abroad…….and burned them at home.
You can see the raw energy total TPES figures which give a countrywide overview of total consumption over these years.
Y1980 :126.6 (Peak) – strikes ?
Y1990 :103.9
Y2000 :79.6
Y2009e :93.6 (more home consumption / investment ?)
Wealth has been continually destroyed to maximise profits for some time – I know its hard to get your pretty little heads around such simple concepts but I am afraid the monetarist propoganda they taught yee lads at College was just magnificent embroidery.
With our current zero sum economic model a rise of growth in lets say Poland will result in a fall of growth somewhere else because of resourse starvation.
Capital is just using one country as a base of operations for a decade or so (think Ireland 1990s) & then moving on to another and another and another leaving a trail of destruction in its wake.
No new net wealth is being created.
Just material & sadly Human Junk that cannot be retrained when they become old dogs in a newer trick world.
@Colm Brazel
Ta for that update link on Ross’ ‘past’ – he is pretty pragmatic in the present as well.
@all energy heads (bit off topic)
Fracking Gas in Poland …. and … er .. Leitrim …
http://www.spiegel.de/international/europe/0,1518,814125,00.html#ref=nlint
@ DOCM
+ 1 thanks for insight on Greece
@ BeeCee Tee
ditto. Thank you for equally enlightening Forfas link
@ Dork
Ok.
‘Wealth has been continually destroyed to maximise profits for some time’
Can you offer a reasonably succinct definition of wealth ?
@Paul
Grain /Slaves , Grass / Horses , Coal / heat , Oil / locomotion, Gas. / electricity………………..Energy is what I call core wealth.
Although there is little point in utilizing this capital base if the finished product is endless Pig Iron as in the communist days.
The oil age could not have come about withen 18th century England of amateur inventors – although many of those guys were highly intelligent and proficient in mathematics they simply did not have the material science , knowledge , critical mass of capital to build a internal combustion engine.
It took 19th century industry before you could get the progress needed to build a functional car.
So you had capital creating more capital and so on……..
But something happened – especially in the 1960s … something very deep – when the Central bankers targeted interest rates rather then the credit money supply to control inflation the credit started to eat into the capital base over time without creating new net energy via technology to replace the depletion.
For example – The Apple I phone era technology is a joke when compared to the 1900 to 1960 period of technological development.
The capitalist world seems to be experiencing the very opposite of what the Communist world experienced of too many coal mines and not enough consumer items.
I also think it has much to do with the monopoly control of natural utilties by limited liability corporations with skin in the game of shortages.
There is no profit in creating energy gluts which has very different dynamics to finished product , only shortages.
So all effort is spent creating shortages via Keynesian or monetarist maximum demand management which is a form of high efficiency as all the goods will be consumed and therfore profits maximised.
But the efficiencies in production using the present energy base (not consumption) have reached almost their theoretical peak.
The capital /wealth base has been ignored in the race for profits.
The Labour theory of value is mixed up in this somehow.
@Grumpy
Leaving aside the Dax for a moment, is there an index that measures the mood of the near 50% unemployed youth in Greece and the over 40% unemployed youth in Spain.
Is there any sensible person, even in Germany, that in their saner moments does not believe that such rates of youth unemployment will leave a very nasty mark on the European landscape for a generation.
A nasty mark that not be of much benefit to the DAX.
The future conference tables of Europe had better not ask for too much solidarity from the generations now being destroyed in the peripheries.
@ Dork
No arguing about the fundamental role of energy, to which you continually return. But wealth is a very much more complex concept, even if one sticks to the economic sphere.
‘For example – The Apple I phone era technology is a joke when compared to the 1900 to 1960 period of technological development’
Maybe, but that is probably a social/political rather than an economic problem per se. The gross misallocation of technical resources. As you say, the oppostie of communism. Consumer choice (and marketing) raised to a supreme principle.
Here is a cracker, IMHO, for those with the time to read it
http://www.amazon.com/Mediterranean-World-Age-Philip-Vol/dp/0520203089
And here is Pierre Bourdieu on the many forms which capital takes
http://www.marxists.org/reference/subject/philosophy/works/fr/bourdieu-forms-capital.htm
A goldmine of ideas.
@Paul
Looks good but the worlds energy systems have bypassed yearly / daily , solar heating / light , photosynthesis / sailing locomotion for the power in ancient sunlight.
Therefore the power dynamics must be very different then the past.
Cities no longer trade their hinterlands with one another – its all about capturing huge monetory flows which are in fact symbolic energy flows.
These debates are a bit like talking about ancient Rome without mentioning Slavery.
People now own hundreds of slaves in their house – but they need to be feed BTUs if they are to do work.
How we perceive wealth is a very interesting subject. Why is gold the dog’s nuts, for example. However it does look as though
the continued availability of cheap energy is required to keep asset prices up. The US goes to war very regularly to ensure price stability.
I thought this was very good :
http://www.nybooks.com/articles/archives/2011/may/12/eco-elephant/?pagination=false
In the global warming debate it is seldom discussed, and is not in Bill McKibben’s interesting article [“Resisting Climate Reality,” NYR, April 7], that the primary fossil fuels, oil, natural gas, and coal, are finite resources. They are collectively being consumed at a rate equivalent to the burning of 10,000 million tons of oil (abbreviated Mtoe) per year and this rate of consumption is growing (BP Statistical Review of World Energy 2010).
Over the last fifty years, and even over the last two decades when concern over global warming was the subject of the Kyoto Protocol, growth in their consumption has averaged over 2 percent a year. A growth rate of 2 percent corresponds to a doubling time of thirty-five years, so that if it continues fossil fuel consumption will be 20,000 Mtoe in 2046. And in less than fifty years the present known reserves (about 770,000 Mtoe) will have run out. The burning of fossil fuels will come to an end.
Clearly this will not happen overnight, but at some date in the not-too-distant future prices of fossil fuels will start to rise very dramatically and alternative energy will look like a bargain. The problem then will be, what alternative energy source can reliably supply 20,000 Mtoe of energy annually, and increase it by 2 percent a year? For an idea of the tremendous amount of energy supplied by fossil fuels, 20,000 Mtoe is the amount of electrical energy supplied by 10,000 power plants each delivering 1,000 megawatts of electrical power continuously for a year.
One of the main causes leading to the present crisis of global warming is the economic philosophy of growth: growth is good, and high growth is better. So when China’s annual growth rate drops from 10 percent to 7 percent economists start to ask if China is in trouble. And poor old Germany, with a growth rate of only 3.6 percent in 2010, is not a model for anybody. Even the economists favored by McKibben in one of the books he is reviewing, Isabel Galiana and Christopher Green, are in favor of growth. Many seem to forget or refuse to acknowledge that consumption of a finite resource must end sometime, and that growth in that consumption can shorten the time substantially. Surely it would be prudent to reduce fossil fuel consumption rapidly and substantially, both to reduce the speed of global warming increase and to husband fossil fuels over the long time needed for alternative energy sources to be developed and deployed.
John J. Simpson
Professor of Physics (retired)
University of Guelph Guelph,
Ontario, Canada
@ The Dork, paul quigley, seafóid
Thanks for the exchange above – much appreciated and will take time to read the Bourdieu passage now.
I think Brian Woods Snr and The Alchemist might have some deep offers on what is wealth if they would care to contribute.
The following is from James Shirley (1596 – 1666), who died after the Great Fire of London and reminds us, that whatever wealth is, death is the leveler – first stanza and last couplet in particular.
The glories of our blood and state
Are shadows, not substantial things;
There is no armour against fate;
Death lays his icy hand on kings.
Sceptre and crown
Must tumble down,
And in the dust be equal made
With the poor crooked scythe and spade.
Some men with swords may reap the field,
And plant fresh laurels where they kill;
But their strong nerves at last must yield,
They tame but one another still.
Early or late,
They stoop to fate,
And must give up their murmuring breath,
When they, pale captives, creep to death.
The garlands wither on your brow,
Then boast no more your mighty deeds;
Upon death’s purple altar now,
See where the victor-victim bleeds.
Your heads must come
To the cold tomb;
Only the actions of the just
Smell sweet and blossom in their dust.
@seafoid,
Various organisations have looked into the matter in greater depth than Prof. Simpson’s back-of-envelope calculations. I recommend the IEA’s Entergy Technology Perspectives 2010 if you can get past the paywall. The Executive Summary is here: http://www.iea.org/techno/etp/etp10/English.pdf
The IPCC’s work in the area is also worth a look: http://srren.ipcc-wg3.de/report
Lets look at real numbers as a Alien would not GDP & other such nonsense which is more a measure of inflation – (if they treated economics as a serious science they would probally be extinct already)
The IEA TPES numbers for the entire OECD.
Between 1971 & 1980 we had 2 massive energy crisis after Yom Kippur in 73 & the 79 Revolution………….yet.
Y1971 TPES :3357MTOE
Y1980 TPES :4051MTOE
A rise of nearly 700MTOE
Y2000 TPES : 5234MTOE
Y2007 TPES : 5470MTOE (peak)
Y2009e TPES :5171MTOE
A real decline of 63MTOE
OECD Europe again similar trends
Y1971 :TPES :1243MTOE
Y1980 :TPES :1494MTOE
A rise of 251MTOE
Y2000 TPES : 1734MTOE
Y2007 TPES : 1826MTOE (peak)
Y2009e TPES :1720 MTOE
A decline of 14MTOE
Remember this is in the context of a growing population even in Europe although you could argue this is countered by efficiency gains.
Its as if Ancient Rome is losing vast numbers of slaves to a mysterious disease yet the senators will not talk about such things for fear of panic.
It is clear the Vulture Banks exported European capital to gain artificial profits from Chinese wage arbitrage and made huge losses from this venture – they then came back & shat all over the nest.
But the real shocker for a small open island economy is the international aviation bunker fuel use in Ireland. ( this is subtracted from final national energy balances using IEA Methodology)
You can be the most dynamic place in the world , whatever that means but you cannot counter these figures too easily………….
Y2007 : 1002KTOE
Y2010 : 754 KTOE
Sorry 2005 / 2006 was the peak in many cases.
Bank Credit & oil availability are the same thing………… although one is a symbolic representation of the physical.
@Paul
Sorry Paul – a bit too metaphysical for my taste.
A good dose of reductionism is in order to challenge this neoliberal gibberish.
China sees Europe as a bargain basement
http://www.chinadaily.com.cn/cndy/2012-02/09/content_14564471.htm
@ BeeCeeTee
Just a final comment on this – – the inclusion of estimates of indirect jobs in official targets in recent years has been part of PR and spin that dominates enterprise policy.
Most firms are micro ones with less than 10 employess and half the new ones are dead within 5 years.
Say a typical firm that creates 6 direct jobs, estimating the economywide impact on job creation as 24 additional new jobs seems a little optimistic.
@ Dork
If you are referring to Bourdieu, I can assure you that his (huge) body of theoretical work is extraordinarily well grounded in empirical social research. His approach is in no sense metaphysical, but as he says himself, complex matters require complex explanations.
@BeeCeeTee
Thanks for the links. It comes down to whether or not we believe that we will overcome our natural greed and laziness to invest in technology that we haven’t figured out yet while time runs down .
@Paul
Sure – the world is a complex place with many linkages that can both increase redundency or decrease it.
But energy systems is the fundamental building bloc of society and indeed increases its potential for complexity – think hunter gatherer , ancient , late medival, Renaissance ,Industrial etc.
A tribe can have the most accomplished hunters on the Savannah but if the rains fail…………….
European energy (in liquid fuels at least) now resides chiefly outside its borders – think about the fragility of such a system.
The Human capital of today has worked withen a certain energy density , their skills & knowledge are appropriate for that ecosystem.
But the ecosystem is regressing to a less complex / sparser form……………….
Watching the CNBC circus with Bill Murray and all……………. cut to a add break………. again
Then there was a advertisement about some Brain storming Energy shindig ———-there was ideas flying everywhere , lots of dramatic hand movements , deep intellectual thought , possibly free flying spittle – – – – and there ,and there amongest the lot of them was Brian Lenihans more intellectually challenged brother – Conor.
We are Doomed, Doomed I tell You Doommmmmmmmmed.
What would Freeman Dyson make of this I wonder ?
http://www.youtube.com/watch?v=5RxNxERwPUU
“Burning down cities was all we could do “
There is now a deep inertia embedded withen the market state , just as the British Nation state created Bomber Command in 1936 – withen half a decade Britain did not have the resourses for a major land war on the continent.
It could only Bomb & then Bomb the rubble.
We now get these absurd functionaires such as this chap on the FT talking nonsense.
Its as clear as Day that Europe needs 100 nuclear stations now so as to create real wealth but the chain of command and monetory / physical structure is now not equipped to churn out the modern equivalent of 10,000 bombers.
Instead we get these farcical conferences & brainstorming events which are little more then the last of the turd eaters feasting on the credit crumbs.
INERTIA can be a powerful force when it has built up enough momentum.
@ All
Very off topic.
The Philip Lane post on “Corporate Balance Sheet Adjustment”, might have been important and looked ignored so I went back, had a look and commented there.
I don’t know why the discussion of the Greek economy always ends up on tourism, perhaps because people have traveled to Greece as tourists. Some people might point out that tourism is a large percent of Greek GDP. Tourism is a highly competitive, not very profitable industry so it can never solve Greece’s economic problems.
The single industry Greece has that can be profitable is shipping. Once upon a time Greece was associated with ship owners like Aristotle Onassis so I am surprised when the discussion of the Greek economy drifts off into tourism. Shipping as measured by the Baltic Dry Index is doing poorly so it is not surprising Greece is having trouble paying its fixed debts during the downturn of its key industry.
My survey of Greek industry:
Shipping – In a cyclical downturn.
Ocean engineering – Potentially an important industry, German ThyssenKrupp recently sold 75% of Hellenic Shipyards to Abu Dhabi Mar. Maybe petro dollars (or euros?) will be recycled into Greek bonds somehow.
Agriculture & Fisheries – Profitable but too small to save the day.
Tourism – You’re kidding right? You cheap ba$#&%@s barely pay more than costs.
Oil and minerals – currently too small to make a difference, but who knows what they might find?
Another ‘service’ the Mediterranean nations provide, which is uncompensated, is securing Europe’s southern boarder. For some reason nations in the center feel that waves of persons from Africa and Asia should be stopped by Greece and others free of charge. So I think a more realistic sharing of the burdens of European defense will need to be put into effect.
@George
Yes I agree, but tourism was taxable – shipping in Greece functions a bit like Multinationals in this country – it really is outside the national sphere – although we hope to get a few scraps.
@ paul quigley
I’ve now read the Bourdieu essay. I had a pleasant chew over it on my Sunday constitutional along the Royal Canal and came up with a variety of lengthy replies – but perhaps these can safely saved to inform thoughts on another day.
The piece does offer a framework for thought about what kind of society the people of Ireland wish the state to develop into, away from defining value as simply the economisation of everything.
It may entertain you to know I am currently facilitating courses at the Lir Academy at TCD, for both actors and playwrights, and I shall bring the piece in to them to see what they make of the objectification of embedded Cultural Capital.
@ gavin
Excellent.
Maybe you should take the class down to the Four Courts to see some social magic in action. The fancy dress is a real giveaway, but there are lots of other stage effects.
‘“Bodily hexis is political mythology realised, embodied, turned into a permanent disposition, a durable manner of standing, speaking and thereby of feeling and thinking.” Bourdieu, Outline of a Theory of Practice
http://enfolding.org/theorising-practice-ii-habitushexis/
I thought this was a very interesting parallel with Ireland
http://www.nybooks.com/articles/archives/2011/jan/13/way-out-afghanistan/?page=2
Equally grave is the failure to establish an indigenous Afghan economy that is not permanently dependent on aid (Ireland : CT) handouts.
Another acute problem is that the huge profits of the drug trade are recycled into property speculation rather than economic production.
Just fancy that!
@ paul quigley
“Maybe you should take the class down to the Four Courts”
I have indeed done that, and I am pleased to say Fishamble is the first company to play for an audience of judges and barristers at the Four Courts as well as for politicians at the Oireachtas: a play about bioethical issues by Paul Meade.
I also took some practitioners to the Royal College of Surgeons once to see the dissecting room – a salutary experience.
I did send some actors in training to the protest camp outside the Central Bank, but sadly they couldn’t make head nor tail of it.
As recent as 1967 after weeks of rioting the Greek armed forces carried out a putsch against a left wing government. With violence in the streets there is a risk of another putsch by the military. The last one resulted in a military dictatorship that lasted until 1974. Hundreds of thousands of leftists were put in concentration camps on remote islands. Greeks are a volatile lot not like us dour, fatalistic bog trotters. No need to prepare the Blaskets for an influx of Irish leftists. The question to be answered is whether the EU will accept a military dictatorship, albeit one that agrees with the troika.
I found it rather dispiriting this morning to walk into a client site – the morning after central Athens was literally burning – to find out the hot topic of conversation around the water cooler/coffee machine is….. did Whitney Houston die from a drugs overdose?
Meanwhile, Papademos will now streamline and replace key members of his cabinet with non-elected ‘technocrats’ over the next few days and the Germans will say Greece hasn’t done enough and needs to make more cuts. That should keep the rioters indoors then?
Not that the masses in the rest of the EU will be bothered as they reach for their remotes to see who’s on “X-factor Europe’s Got No Talent Ballroom Skating On Thin Ice.” I wonder what it will take for them to get off their collective fat ar5es? It reminds me of that song (can’t remember who sang it): “if you tolerate this, then your children will be next.”
Perhaps they will pay more attention when they find out that Iran has suddenly announced they’ve got the bomb….. by using it.
@PR
You hit the nail on the head with “fat ar5ses”.
As long as they are fat they will be complacent it is when you go to the beach and can easily count ribs that you will hear about the injustices of it all. Hopefully that will not happen.
@ PR Guy
Ver Manics