Noah denkt™  -
    Project for Philosophical Evaluations of the Economy
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Is the Greek austerity plan too severe?
On the need for self-made leadership, first drafted on May 3, published on May 4, 2010

Some economists are criticizing the second austerity package that is now being imposed on Greece as being too
severe and therefore counterproductive to the overall goal of a quick recovery in Europe.
(See footnote ** ) This
criticism is certainly worth looking at.
And since we have previously defended the idea of a second austerity
package, it is only fair that we should go the extra mile to defend our prior analysis. We would, therefore, like to
go on record by stating the following

  1. It is in deed of utmost importance that a harsher austerity program in Greece is very cleverly crafted and
    does not pursue savings just for savings’ sake only. Much rather does it seem imperative to us that any
    cost-cutting program shall be inspired by an overall restructuring plan that lays the foundation for future
    growth in the Greek economy.
  2. Obviously such an overall restructuring plan would have to aim at increasing the incentives for private
    sector initiative in that country. And there are a number of policy measures that probably need to be
    implemented in order to achieve that goal (such as the reduction of red tape, the simplification of labor
    laws, more transparency in the tax system (What about working towards a flat tax system?) and so on….)
  3. It would be a huge mistake though to believe that the rebuilding of the Greek economy depends on policy
    initiatives only. For what is primarily needed is a rediscovery of the incredible ingenuity that a self-
    made, entrepreneurial leadership can bring to bear. After all, Greece is not the only country in the
    world, where the idea of a self-made leadership has been increasingly marginalized. Instead it has become
    a worldwide phenomenon by now, that credibility is being distributed according to the price tag of one’s
    attire or the prestige of one’s university or career choices. To get back though to a world, where it is the
    merit of an argument and not the appearance of recognition that determines the prospects for one’s
    success we need political leaders that understand and personify this mentality change. In other words, it
    would be helpful to find politicians in Greece and elsewhere that stop celebrating their political correctness,
    that challenge conventional wisdom and that inspire others to believe in their personal version of the
    American dream. Fortunately enough for Greece and for all of us, the Greek prime minister is as close as it
    gets in Europe to being such an inspiration. What’s needed though is that he takes his accessibility a step
    further and converts his open-mindedness into a true political credo.
  4. Any other approach however, that simply wants to address the matter by enacting this or that technocratic
    counter-measure misreads what is at the heart of the Greek and European malaise. And so its rescue
    attempts will ultimately have to fail. This is particularly true for any approach which wants to suppress the
    anti-Greece speculation by either prohibiting it or by dissuading its attempts through an overly generous
    supply of cheap credit. After all, you just have to look at the budget deficits that countries like Britain,
    Germany and others have incurred fighting the markets last time around to understand why it’s way too
    expensive to take on the powers of freedom time and time again.
  5. In this respect, it is also completely off track to compare the current situation in Greece with that of
    Germany, at the time the Versailles treaty. (See footnote) Contrary to what was intended in 1919, no one
    wants to castigate another country or take revenge for anything this time around. Much rather is there an
    international effort going on at present which aims at finding the best possible way to solve and remedy a
    problem of whom everyone knows that its outcome will affect all of us. Such an understanding of the
    interdependency of our common and individual fate was however quite absent at the time of the Versailles
    Treaty. And so we can also be pretty hopeful that our current attempts at problem solving will entail
    somewhat less tragic consequences than that was the case in 1919.
  6. And finally, Noah denkt™ is quite baffled by the fact that it is precisely Prof. Costas himself who alleges a
    certain German arrogance here. After all, it is Mr. Costas himself, who has so far not deemed us worth
    crediting us with a reply to our earlier correspondents to him (from Dec. 18. 2008 and Dec. 10, 2009). It therefore
    comes as a surprise to us that he would be prepared to judge others on their degree of snobbishness
    given that he himself has not been able to overcome such attitudes either.

Footnote **: In fact, some commentators go as far as invoking John Maynard Keynes’ blasting of the Versailles treaty in order to
defend their argument in favor of a more lenient and generous credit provision by EU member states. (Take for instance, Prof.
Anton Costas’ (University of Barcelona) article “Humillación griega, altivez alemana” published in El País, May 2, 2010). In this
article Prof. Costas writes: “Al confundir causas con consecuencias, Alemania propone para Grecia una medicina que la
empobrecerá durante al menos una generación. Y al hacerlo empobrece también al resto de Europa, y a sí misma. Es como
escupir al cielo. Déjenme citar una fase del gran economista británico, John Maynard Keynes en un opúsculo escrito en 1919, que
merece ser vuelto a leer, sobre Las consecuencias económicas de la paz, que se derivaban del Tratado de Versailles, que, como
dije, humillaba a Alemania. ‘Si lo que proponemos es que, por lo menos durante una generación, Alemania no pueda adquirir
siquiera una mediana prosperidad; (….) si deseamos que, año tras año sea empobrecida y sus hijos mueran de hambre y
enfermen, y que esté rodeado de enemigos, entonces rehacemos todas las proposiciones generosas y particularmente las que
puedan ayudar a Alemania a recuperar una parte de su antigua prosperidad material. (…) Si aspiramos deliberadamente al
empobrecimiento de la Europa Central, la venganza, no dudo en predecirlo, no tardará.’”)
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