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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

#101

Post by MatthiasP »

antientropic wrote: post #95
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 unemp…

>In short, the EU and the IMF demanded savage spending cuts from the Greek government.

Let's also mention WHY those spending cuts were demanded: Because Greece was on the verge of bankruptcy, the interest rates for their bonds were exploding and the EU and IMF had to pump more than 300 billion € into this 11 million people country.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#102

Post by tjradcliffe »

mdemare wrote: post #93
fennecfoxen wrote: post #90

Earlier quoted context omitted.

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…

It's not that soldiers and sailors are "not particularly productive", in peace or war. Its that they are what in economics is called a "deadweight loss". They contribute nothing to the productive economy of Greece and the money that pays them could be spent in many more productive ways.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#103

Post by lotsofmangos »

MatthiasP wrote: post #101
antientropic wrote: post #95

Earlier quoted context omitted.

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 unemp…

>In short, the EU and the IMF demanded savage spending cuts from the Greek government. Let's also mention WHY those spending cuts were demanded: Because Greece was on the verge of bankruptcy, the interest rates for their bonds were exploding and the EU and IMF had to pump more than 300 billion € into this 11 million people country.

I was talking to someone who knows some of the Whitehall mandarins and he was saying that bond ratings are the primary reason for austerity policies in the UK. Although we aren't actually spending less money, due to the continuing injection of capital into banking, as long as we are throwing the money upwards then our bonds are worth more.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#104

Post by bobcostas55 »

simonh wrote: post #92
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 condit…

Coase won the Economics Nobel for his analysis of why and how firms organize. The Nature of the Firm[0] is still worth reading. The answer basically boils down to "transaction costs" and how they affect economic activity at different scales.

[0] http://www3.nccu.edu.tw/~jsfeng/CPEC11.pdf

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#105

Post by fsloth »

xkarga00 wrote: post #30

Varoufakis is a great economist and his placement as the Finance Minister is a smart move from the new government. At this point I would like to suggest reading To Future And Back by I. Pitsouli[1]. Somewhere in it, there is suggested (or prophecized if you wish) that in years to come scientists will replace politicians in governments. Well, that has already started happening and is right IMO because science is close…

I think practical politics are closer to hustling than philosophy. Main problem with politicians IMO is that they often stand behind domain experts and claim that political decisions are inevitabilities of natural law.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#106

Post by sfk »

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),…

The corporations see the benefits, but the population does not. Same as in China.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#107

Post by bobcostas55 »

bradleyjg wrote: post #48
Shivetya wrote: post #35

It will be interesting to see if they can pare down some of Greece's military expenditures, they have over a hundred thousand in their military, nearly ninety thousand soldiers. Granted the politicians can always point to Turkey as a threat but I would be very curious how the new administration handles this. Side effects of closing some of the nearly 500 military and releasing troops is not having jobs for them.

I'd think the first order of business would be to get tax compliance up. It wasn't very high to begin with, but since the new year tax revenue has collapsed completely. Ref: http://marginalrevolution.com/marginalrevolution/2015/01/the...

Literally every government for the last 35 years has promised to get tax compliance up. It's not gonna happen. Beware Greeks Bearing Bonds[0] goes into good detail on the problems with the enforcement bureaucracy and legal systems that make it so difficult to actually apply the law.

[0] http://www.vanityfair.com/business/features/2010/10/greeks-b...

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#108

Post by TheOtherHobbes »

simonh wrote: post #92
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 condit…

If by 'efficient' you mean 'most consistently profitable', then no, neither markets nor a 'flexible corporate environment' promote actual efficiency.

In that kind of environment - which is not too dissimilar to the one we're in - corporations simply hoard money to no great end, and markets crash unless they're propped up by public subsidies and hand-outs.

This distorts the wider economy and makes real efficiency less likely.

Of course if by 'efficient' you mean 'providing the greatest possible benefit to the greatest number of people' that would be a very unusual aim in orthodox economics.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#109

Post by dang »

curiouslurker wrote: post #50

The site (ibtimes) is full of malware and spammy ads. Beware!

Can anyone suggest a better URL for this story?

Edit: It seems Bloomberg has the most substantive article that isn't behind a paywall, so we've changed to that from http://www.ibtimes.co.in/valve-economist-yanis-varoufakis-ap....

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#110

Post by oldmanjay »

pm90 wrote: post #96
gadders wrote: post #72

Earlier quoted context omitted.

>>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…

I have to admit to a certain confusion about your point. I guess what you're saying is that anyone who thought to help Greece should have expected to be jerked around and told to pound sand?

I feel like this is some form of victim blaming.

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