Thomas Piketty: “Germany has never repaid.” • Hacker News Board

Re: Thomas Piketty: “Germany has never repaid.”

#151

Post by chernevik » Mon, Jul 06, 2015, 1:15 AM UTC

This is just stupid. The German regime that racked up the WWII debts was destroyed and its leaders suicided or executed. The entire country was split in half by the war. The regime in power when those debts were rescheduled was a completely different entity. And Greece enjoyed similar, if not proportionately greater, economic support at exactly the same time. The Marshall Plan started in Greece, after all.

And there are enormous differences in the uses of the new debt capacity. Germany used the capacity to rebuild its economic capacity. Greece would use its new capacity to fund further welfare transfers and tax dodgers. Germany did not use the new capacity to repeat the same mistakes that created the old debt (and the vastly more important war). Greece would continue the exact same policies, and arrive at the same point of demanding debt concessions.

Re: Thomas Piketty: “Germany has never repaid.”

#152

Post by luso_brazilian » Mon, Jul 06, 2015, 1:16 AM UTC

HSO wrote: post #59

At the risk of being a moralizing bore, may I remind everybody that "Germany", "Greece" etc. are not people, and that people are not countries? I am surprised by the national coloring, however faint, of some comments here and there https://news.ycombinator.com/item?id=9834721 . "I am a German" or "Greek here" should have no relevance to the ideas put forth. "Your money" and "your banks" are not really "my money" and…

OK, I'll try to shed some light on why this subject tends to inflame some of the europeans nationalistic sentiment with a concrete example:

1. Meet Portugal (my country). Some may know us derisively as the P in PIGS because of our financial problems (much similar to the Greek one in nature and extent).

In 2010 and 2011 as one of the 14 member states of the EU that were part of the Greek loan facility Portugal contributed with 1102 million euros into the 52.9 billion loan that greece received [1].

Yes, that's correct, not all of the debt that people are so eager to expect that German forgives is from their coffers, it was actually pooled from the following countries: Belgium, Cyprus, Germany, Estonia, Finland, France, Ireland, Italy, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Slovakia and Spain.

2. As you may know, about the same time we had our own problems and also had to be bailed out. As part of the measures put in place to reduce our deficit a massive tax hike was implemented in the end of 2012 [2]

I'll draw attention to single one of those measures: the 3.5% extraordinary tax on the income paid by every single person with income above minimum wage (485€/month) including pensioners.

Now, for the money quote [3]: "Minister of Finance Vitor Gaspar said the tax would bring in 1025 million euros".

Less than what Portugal contributed to the Greek bailout fund. 3.5% of the income of every citizen in this country.

In conclusion, that's one of the reasons for the nationalistic outrage against Greece defaulting the loan. It is not only the money of the richest bankers of Europe that won't be repaid, it is the taxpayer money of each of those countries that contributed to their rescue.

To put in perspective, 1102 million euros means that default would cost every inhabitant in this country 110 euros (about 330€ per household) and not only hypothetically but in practice too as demonstrated above.

EDIT: Changed second link as it was paywalled for the same news, but on CNN

[1] http://www.rekenkamer.nl/english/Publications/Topics/EU_gove...

[2] http://edition.cnn.com/2012/12/31/business/portugal-fiscal-t...

[3] http://www.eurofound.europa.eu/observatories/eurwork/article...

Re: Thomas Piketty: “Germany has never repaid.”

#153

Post by TheOtherHobbes » Mon, Jul 06, 2015, 1:16 AM UTC

mnglkhn2 wrote: post #113

jsprogrammer wrote: post #41

Earlier quoted context omitted.

>There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead. Which allows us to provide a further distinction: the country who had everything destroyed was directly responsible for that destruction. Yet, the debt that they racked up because they tried to take over eurasia while killing and torturing millions in the process, was forgiv…

There's an argument to be made that the debt forgiveness came after the realization that maybe the WW2 was also a result of the crushing debt imposed on Germany after WW1.

It's questionable how directly Versailles caused WW2.

WW2 was caused in no small part by the Wall St Crash, which was a direct cause of hyperinflation in Germany, and by delusional industrialists who thought that financing Hitler would be a good way to avoid a revolution.

At least one of them - Thyssen - ended up in a concentration camp. So that didn't work out so well for him.

The others have never been held accountable.

Weimar could easily have been rescued if the Nazi party hadn't received literally millions in external funding and other forms of corporate support. In a counterfactual reality, Europe would probably have united more quickly and peacefully. Technology wouldn't have developed as quickly, but there would have been an arms race and perhaps a war with the Soviet Union sooner or later.

Some background:

http://www.businesspundit.com/10-global-businesses-that-work... https://en.wikipedia.org/wiki/Fritz_Thyssen

Re: Thomas Piketty: “Germany has never repaid.”

#154

Post by sgnelson » Mon, Jul 06, 2015, 1:17 AM UTC

MaysonL wrote: post #147

sgnelson wrote: post #73

Earlier quoted context omitted.

I'll put it this way. World War I: Germany loses, is forced to pay not just debt, but reparations. Huge economic and political instability as a result leads to a new leadership which leads directly to World War II. World War II: Germany loses, is split up, due to the Marshall plan (in part do to a fear of Communism, so not solely due to compassion), West Germany given millions of dollars to rebuild, a rather thriving…

In other words, Greece should declare war, and get occupied? (It probably would be better for them than what's going to happen). If only there was a way to resurrect Marshall and Ike, and make them dictators over Greece…

https://en.wikipedia.org/wiki/The_Mouse_That_Roared

Re: Thomas Piketty: “Germany has never repaid.”

#155

Post by csense » Mon, Jul 06, 2015, 1:22 AM UTC

According to this guy's argument, we have:

- People and businesses who save money instead of spending it, get their wealth confiscated by the state indirectly through inflation or directly through the "special tax on private wealth"

- People, businesses, and other countries who help the state out by loaning it money have those loans retroactively converted into outright gifts by debt relief measures.

So the solution to fiscal irresponsibility is to turn the fiscally responsible into...I believe the technical term would be "suckers," or maybe "bag holders."

Re: Thomas Piketty: “Germany has never repaid.”

#156

Post by deciplex » Mon, Jul 06, 2015, 1:23 AM UTC

chernevik wrote: post #151

This is just stupid. The German regime that racked up the WWII debts was destroyed and its leaders suicided or executed. The entire country was split in half by the war. The regime in power when those debts were rescheduled was a completely different entity. And Greece enjoyed similar, if not proportionately greater, economic support at exactly the same time. The Marshall Plan started in Greece, after all. And there…

> The German regime that racked up the WWII debts was destroyed and its leaders suicided or executed.

Yes, but most of the people who enabled that regime to do its work, were still around. It's not as though the entire population of Germany was swapped out for a different one, after the war. The average German was not a murdering genocidal maniac, but he did fall under the sway of idiotic fascism, and while it would have served no one's interest to force him to pay the price, there is nothing wrong with pointing out that he did not, in fact, pay the price.

> Greece would use its new capacity to fund further welfare transfers and tax dodgers.

Let's talk about those tax dodgers, then. You make it sound as though the Greek government has some sort of policy in place where they encourage people not to pay their taxes. Rather, the Eurozone is set up in such a way that it is very easy for the rich to avoid paying taxes by putting all their asset in tax havens e.g. Luxembourg and with very little oversight. And the wealthier nations in the EU tend to support this status quo, not the poorer ones.

Re: Thomas Piketty: “Germany has never repaid.”

#157

Post by vacri » Mon, Jul 06, 2015, 1:25 AM UTC

TheOtherHobbes wrote: post #141

vacri wrote: post #107

Earlier quoted context omitted.

But they are thinking "how can we prevent this again?" with respect to Greece - for example measures against corruption, unaffordable levels of welfare, and high tax avoidance. Without those measures, if they just hand over money with no strings attached, it will just be kicking the can down the road.

No, they're thinking "How much money can we rescue tomorrow." And that's all they're thinking. Piketty is right - it's atrategic idiocy of the first order. As for tax avoidance - some countries, including the UK, have based significant sectors of their economy on tax avoidance. In the same way that it's immensely hypocritical of Germany to lecture Greece on debt, it's equally hypocritical of the Eurozone to lecture G…

A little from column A, a little from column B. Of course creditors are after their money, that's what loans are for. And anti-corruption measures do have the ability to work well.

For example, during the early 90s, Australia had a recession. Due to this recession, more stringent banking laws were introduced. Fast forward to the GFC, and the entire globe is running for cover. The Australia dollar tanked because everyone thought that the economy would die and the banks would collapse. On the contrary, due to the tightened banking laws, the 'big four' Australian banks all kept their credit rating. All of them. At a time when most banks were slipping.

Times of national pain like this are the times to slip in significant reform. Greece has an endemic corruption problem, and independent of anything else, this is a good excuse to 'stop the rot'. Or we could just point fingers everywhere, make it no-one's problem and no-one's responsibility, and not progress at all.

And if you've been watching the news lately, the big economies are all looking at ways to counter tax avoidance by corporations, as it's a significant problem. It's a complete misrepresentation to say that there's no concern or effort being made there.

Re: Thomas Piketty: “Germany has never repaid.”

#158

Post by cb18 » Mon, Jul 06, 2015, 1:25 AM UTC

i_s wrote: post #132

HSO wrote: post #59

At the risk of being a moralizing bore, may I remind everybody that "Germany", "Greece" etc. are not people, and that people are not countries? I am surprised by the national coloring, however faint, of some comments here and there https://news.ycombinator.com/item?id=9834721 . "I am a German" or "Greek here" should have no relevance to the ideas put forth. "Your money" and "your banks" are not really "my money" and…

> The theory of complex systems reminds us that aggregates can have properties that are not traceable to any individuals themselves. Game theory tells us that incentives and constraints can get so messed up that developments take on an eigendynamic which was nobody's intent nor interest. I'm interested in those ideas. Can you give a link to any information about them?

https://en.wikipedia.org/wiki/Emergence

Re: Thomas Piketty: “Germany has never repaid.”

#159

Post by tsotha » Mon, Jul 06, 2015, 1:25 AM UTC

SoftwareMaven wrote: post #106

sgnelson wrote: post #21

This makes me lose respect for Piketty. There's a very clear difference between a country that comes out of two world wars, with everything all but destroyed, including millions dead. I'm sorry, no matter how bad 2008 was, it was no World War. His inability to grasp this just boggles the mind. There's a very big difference between war caused debt and economic caused debt (note that I'm basically making these two "deb…

You'll excuse me if I express some skepticism about the "downfall of the US Industrial might". Only China produces more and only a handful of G20 countries' industrial base is growing faster.[1] 1. https://www.quandl.com/collections/economics/industrial-prod...

Yeah, it's more the rise of China than the downfall of the US.

Re: Thomas Piketty: “Germany has never repaid.”

#160

Post by peterfirefly » Mon, Jul 06, 2015, 1:25 AM UTC

vegabook wrote: post #103

Tehnix wrote: post #86

I feel sorry for the Greek people, but I personally favour throwing them out of the Eurozone if they default on the debt. It will be a very dangerous signal to send that you can borrow money, and not pay it back without any retribution. This is particularly important since more countries are going in the same direction as Greece (I think Spain and Puerto Rico are close, but I might be wrong). Besides that, it also hu…

Pikkety's case is essentially that debt is not sacrosanct, and that treating it as you are is counterproductive. Sometimes the creditor must share some of the pain, in order to save (even himself) more pain down the line.

They did. They took a hefty haircut of more than 50% (some sources say 70+%) in exchange for near certainty of getting paid, i.e. basically the rest of the EU taking over the remaining debt.