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Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

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Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#91

Post by atmosx »

gadders wrote: post #60
luch wrote: post #9

Earlier quoted context omitted.

You're implying Greece did take Euro money without any intention to repay other countries. The reality is much more nuanced. Greek did take part of a fund destined to boost their economy, like Western european countries with the US's Marshall Plan. Whether the investments made with this money were profitable or not it's up to debate, but the end game (as for Spain, Portugal and Italy) always were to improve the greek…

I don't confuse Greeks with their representatives. However, and leaving out the current bailout, the reason for Greece to be in the situation it is is because successive governments have provided lavish benefits that they couldn't pay for.

Yes, much like Germany after 2 WW ... They did a damage that they couldn't repay. Then Marshall came but they didn't learn much, did they?

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#92

Post by simonh »

JumpCrisscross wrote: post #11

Varoufakis wrote a blog post two years ago on the history of political economic thought on the firm. It also delves into Valve's unique management culture [1]. "There is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And y…

The fact that companies do not operate internal markets is well known in economics. The theory is that there is a balance point between the scale at which activities are most efficient operating on a command model and the scale at which activities are most efficicently managed by market mechanisms. The position of the balance point is different from industry to industry, and also varies over time with economic conditions. Idealy you want efficient markets, but also a dynamically responding corporate world that can freely consolidate, diversify, merge, etc to adapt it's structure to whatever is most efficient as technology, supply, demand, etc shift in the economy.

This is why command economies tend to be less efficient, because any given market and corporate structure is only most efficient for very specific economic conditions. Heavy regulation of companies, markets and things like employment law tends to freeze their structure in place, so they are unable to adapt as conditions change.

So markets are only one aspect of an efficient economy. A flexible corporate, finance and employment environment is the other. Hence the economic flexibility and strength of the USA. Something as a Brit I'm perfectly willing to admit to. I'm not saying economic strength is the be-all and end-all of civil society. I firmly believe regulation plays an important part in ensuring markets are fair and laws are equitable, but all these things are not mutualy exclusive.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#93

Post by mdemare »

fennecfoxen wrote: post #90
mdemare wrote: post #65

Earlier quoted context omitted.

How would firing soldiers and sailors help with their unemployment rate?

Well, when you don't have to pay a soldier's salary, then you can pay the salary of someone who makes stuff, or does stuff, or supports people who do stuff -- stuff that the rest of the world economy is willing to pay money for. The whole problem is that Greece doesn't have money to do both, and hiring people to mess around with boats doesn't actually contribute to economic growth and prosperity...

I agree that soldiers and sailors are not particularly productive in a country that's been at peace for quite some time.

Nevertheless, if you've got potential candidates who make stuff that the rest of the world is willing to pay for, maybe you should hire them either way. They'll pay for themselves after all.

And if you're going to hire them either way, why fire the sailor? (Unless of course it's the sailor you want to hire for a more productive endeavor...)

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#94

Post by fennecfoxen »

glesica wrote: post #88
fennecfoxen wrote: post #66

Earlier quoted context omitted.

Germany has asked Greece's government to raise taxes to pay bonds, and spend less than they earn in taxes. This is a problem for a country like Greece, because the economy is stagnant and government services were an unhealthy amount of their economy to begin with. Before the crash, the economy was mostly growing because the government was borrowing money (unsustainably) and spending it, producing most of their recent…

No, Germany forced the Greeks into a program of austerity even though it has been shown, very clearly, that austerity simply doesn't work (see references). The economic forecasts on which the German (really the EC, ECB, and IMF) analysis relied didn't account for the fact that reduced government spending would cause a reduction in GDP. They assumed that reduced government spending would somehow (magic?) increase priv…

I don't think we strictly disagree about the ineffectiveness of austerity. The core reason the economic growth didn't show up from austerity is all the stuff I was complaining about. And it's true, you don't get a stronger economy by having the government spend less: you get it when you tax less, more money stays in the economy and it gets reinvested effectively - which it won't do in a nasty regulatory environment with high taxes, not that Greece is taxing less to begin with.

But what exactly would you have the Germans do? Say "no bailout" and oversee the exit of Greece from the Euro? Still the bad guys, and it wouldn't have made Greece any better off today. Try to demand substantial economic reforms to actually grow the economy? Sure, that's totally going to happen, never mind that pesky "sovereignty" business and upcoming elections (which are now past elections). And they're the bad guys again.

Or maybe they should have just asked German citizens to sacrifice instead, and committed to throwing bad money after good for the next N decades, subsidizing things like a socialist healthcare system where you actually have to bribe the doctor to get an appointment.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#95

Post by antientropic »

WhitneyLand wrote: post #59

Tangentially, what is the main reason for all the protest against the EU? I understand that people in Greece are suffering and that's a terrible thing. However from a lay perspective it seems Germany et al are just trying to help.

Paul Krugman helpfully explains the situation here: http://www.nytimes.com/2015/01/26/opinion/paul-krugman-endin...

In short, the EU and the IMF demanded savage spending cuts from the Greek government. Turns out that cutting in a depressed economy makes the depression worse (despite the wildly optimistic predictions by EU officials, who decided to ignore textbook economics). As a result, Greece now has enormous unemployment, a vastly shrunken economy, and a debt-to-GDP ratio that is only going up despite the huge spending cuts. This is clearly an unsustainable course, something now recognized by the Greek voters. Unfortunately, there appears zero chance that EC and German politicians are going to acknowledge that austerity doesn't work.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#96

Post by pm90 »

gadders wrote: post #72
functional_test wrote: post #38

Earlier quoted context omitted.

This sort of snark isn't constructive. The situation is obviously much more nuanced than this, and while this sort of reduction is cognitively convenient, it's not accurate nor useful. For example, when the money was obviously not going to be repaid, but the Troika continued to lend them more -- at what point does the lender become at least partially responsible? Obviously I don't advocate irresponsible borrowing, bu…

>>For example, when the money was obviously not going to be repaid, but the Troika continued to lend them more -- at what point does the lender become at least partially responsible? Obviously I don't advocate irresponsible borrowing, but certainly irresponsible lending is also bad. But that isn't the cause of their issues, that is just the latest symptom. The cause is electing a series of governments that promised b…

Yes yes the Government was corrupt. What the parent is saying is: the lender should have checked to make sure that the debtor (Greek Govt.) was actually capable of paying back what it borrowed. But the lenders didn't, because Governments are excellent debtors: they represent the nation! Governments are excellent credit risks: because they will most likely want access to more capital in the future, they cannot tarnish their image in the international community. One of the first thing the Soviets did when they came to power was to repudiate all foreign loans owed by the Tsarist government (which incidentally led to a crisis in France, which had been the biggest lender).

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#97

Post by matt4077 »

tomp wrote: post #79
JumpCrisscross wrote: post #11

Varoufakis wrote a blog post two years ago on the history of political economic thought on the firm. It also delves into Valve's unique management culture [1]. "There is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And y…

Ironically, Valve also operates "by the means of some non-price [...] mechanism". I wonder how an even more radically free-market organization would look like - where people are literally trading services for money within a company. I think that several industries already operate in a similar manner, where you have "rain-makers" who bring in the money, and "support staff" (everybody else). For example, traders/portfo…

That's actually very common. Large organisations need a way to track how departments consume various shared resources, so they start some sort of internal billing/cost assignment system. It also allows support departments to measure their efficiency.

Sometimes, the "support department" starts selling to external clients as well. Lufthansa Sky Chefs, for example, now delivers food to many airlines. I believe their maintenance operation works similarly.

The opposite also happens – where some department chooses an external supplier over the internal one, because the latter is too expensive (low-quality/inflexible/whatever).

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#98

Post by Patrick_Devine »

tomp wrote: post #87
WhitneyLand wrote: post #59

Tangentially, what is the main reason for all the protest against the EU? I understand that people in Greece are suffering and that's a terrible thing. However from a lay perspective it seems Germany et al are just trying to help.

Germany is a nation that has benefited enormously from a single currency (according to my understanding). A large source of currency fluctuations are trade imbalances. If a country exports more than it imports, its currency appreciates. If it imports more than it exports, it depreciates. For example, if USA imports from the UK are bigger than it's exports to the UK, then USA will be buying GBP with USD (on average),…

I wish more people understood this. Germany has benefited enormously because of the euro, and yet you see a lot of belly aching about the southern European countries.

Countries really only have two valves to throttle their economies. Interest rates (which Greece now has the highest in the European Union), and printing more money.

Right now because the Greek economy is in a log jam, they're suffering from deflation and a shrinking economy. Interest rates have to be high so that the government can continue to borrow money to keep the country running, but that means companies aren't leveraging capital to expand.

If Greece weren't part of the Euro, it could simply print more cash, which would reverse the deflationary pressure and allow the government to bring down interest rates. It would also mean the flow of trade from Germany to Greece would probably balance out more because the domestic economy in Greece would be cheaper than importing German goods.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#99

Post by SyneRyder »

thomasz wrote: post #62
jahewson wrote: post #34

Earlier quoted context omitted.

Germany.

Politics in Germany is an apprenticeship trade that takes countless hours from adolescence onward. You do not have the time to become a successful scientist and a successful politician in the same life.

I'm not sure if I missed the sarcasm, but Angela Merkel had a doctorate in quantum chemistry before she became the Chancellor of Germany:

"She spent the final moribund decade of the G.D.R. as a quantum chemist at the East German Academy of Sciences, a gloomy research facility, across from a Stasi barracks, in southeastern Berlin. She co-authored a paper titled “Vibrational Properties of Surface Hydroxyls: Nonempirical Model Calculations Including Anharmonicities.” She was the only woman in the theoretical-chemistry section — a keen observer of others, intensely curious about the world."

[1] http://www.newyorker.com/magazine/2014/12/01/quiet-german

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#100

Post by kimdouglasmason »

tomp wrote: post #87
WhitneyLand wrote: post #59

Tangentially, what is the main reason for all the protest against the EU? I understand that people in Greece are suffering and that's a terrible thing. However from a lay perspective it seems Germany et al are just trying to help.

Germany is a nation that has benefited enormously from a single currency (according to my understanding). A large source of currency fluctuations are trade imbalances. If a country exports more than it imports, its currency appreciates. If it imports more than it exports, it depreciates. For example, if USA imports from the UK are bigger than it's exports to the UK, then USA will be buying GBP with USD (on average),…

This x 1000000!

In the medium to long term, it's Eurozone breakup (either partial or complete) or fiscal (and thus political) integration.

I estimate the chance of the Germans ever admitting that the current system is skewed in their favor and actually taking real steps to raise their inflation rate (to counter deflation elsewhere in the Eurozone) and reduce their trade advantages at very close to zero. They're still scared of becoming the Weimar republic, even though they're staring Japan-style deflation in the face.

On the whole, Germans view Club Med as lazy, indolent, irresponsible, and deserving of their fate.

Bring on the Eurozone exits. The sooner the better. Currency unification without fiscal and political unification is a disaster and has plunged half of Europe into a depression as bad as the 30s.

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