Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece • Hacker News Board

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#161

Post by tomp » Wed, Jan 28, 2015, 9:34 AM UTC

shazow wrote: post #121

Patrick_Devine wrote: post #98

Earlier quoted context omitted.

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 an…

> 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. I read this a lot but I don't quite understand why--How does a unified currency prevent the domestic economy in Greece from being cheaper than importing German goods? Why can't the local Greece industry lower prices (as it would effectively…

> The only thing I can think of is that it's hard to synchronize the discount of an entire industry, and nobody wants to go first. Having a local currency and printing more money allows you to do that across the board.

Not only that, but if you want to "lower the prices in Greece" (i.e. deflation), you would have to lower the wages of everyone at the same time. That is politically very hard to do.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#162

Post by lmm » Wed, Jan 28, 2015, 10:09 AM UTC

fennecfoxen wrote: post #154

lmm wrote: post #120

Earlier quoted context omitted.

Where's the loss? Soldiers and sailors are notorious for spending their money as soon as they get it, so that money goes right back into circulation. They could be wasting the labour of those able bodies, but at 25% unemployment, any company that needs labour can get it cheap. If the greeks were putting scarce resources into the military, e.g. using metal that could build productive machines to build useless ships an…

"Resources"? At the end of the day, a soldier needs you to put food in him -- just like anyone else. That food comes from somewhere. It is scarce. It is not free. This is aside from all the things he'll expect to be able to buy with his pay that use resources, or the uniform / weapons / boats / fuel / et cetera. While an army is a useful insurance policy in a variety of situations, the best case scenario is really th…

> At the end of the day, a soldier needs you to put food in him -- just like anyone else. That food comes from somewhere. It is scarce. It is not free.

Sure, but a person needs food and clothing whether they're serving in the army or sitting around unemployed. Arguably the army can feed n people (who have to follow orders, show up at the mess hall at the same time and so on) more cheaply than those n people would by themselves.

> More broadly, though, the economy is about producing valuable things (or services), not about money. It is trivially obvious that an idle soldier is not producing much of value at his post and cannot assist the economy in any way.

Sure. But what would the soldier be doing if they weren't in the army? As I said, if labour in Greece were scarce then I'd be worried about the army wasting it. But 25% unemployment.

> And nowhere in the history of the world has ever been able to fix economic stagnation or crisis by spending more money on the military

What about the New Deal / WPA? I mean sure, they built some bridges and so on, but that was a pretty marginal benefit; the big value of the programme came from the Keynesian stimulus effect of giving money to those who were otherwise unemployed.

Re: Valve Economist Yanis Varoufakis Appointed Finance Minister of Greece

#163

Post by crdoconnor » Wed, Jan 28, 2015, 11:39 AM UTC

lmm wrote: post #127

crdoconnor wrote: post #24

Earlier quoted context omitted.

>Not to justify the practice, but pretty much every periphery country fudged the numbers in order to be admitted to the Eurozone because none of them had a strong enough economy then to be let in. One did it, then the next looked at the last one and said "If them, why not us?" The real fun starts when Greece defaults and Italy/France/Spain/Ireland/etc. go... If them, why not us?

The conspiracy theorist in me suspects that's the reason Greece is being forced to go through painful austerity measures even though everyone knows they won't work. The system survived a Greek defaul^H^Hvoluntary restructuring, but it wouldn't survive every country doing that, so the Greeks have to be seen to suffer.

That's not really a conspiracy theory - it's pretty much all in the open. The ECB and European Commission (even the IMF!) don't pretend that austerity works, they just pretend that there's no alternative and periodically tell us that the seeds of recovery have sprouted.

Why they do it is another matter. Theories I've heard:

* (like you said) They want Greece to be an example for the other periphery countries. * It is used as a pretext to chip away at Greek sovereignty and give the (unlected) European commission additional powers over the country. * The core banks' insolvency becomes totally apparent if Greece defaults, so they pressure the ECB to keep up the charade that it's all necessary. * It's used as an excuse to sell off valuable Greek state assets on the cheap to politically connected individuals and companies. * Or all of the above.