Two Separate Views About Greece’s Future

Tuesday, October 20, 2015, Observing Greece

The Greek university professor Eleni Louri-Dendrinou visited the US and collected views from Americans. She seems to have been taken a bit by surprise by the „Views from the other side of the Atlantic“ because she felt it necessary to contrast those views with her own at the end of her report.

Views from the other side of the Atlantic
„Look at the cumulative loss of GDP in Greece since 2008, they said. You’ve lost a quarter of your GDP and your debt is still increasing. It is now close to 200% while it was 120% in 2008, they pointed at my diagrams! So your adjustment seems to create more problems than it solves and where does it lead? And the banking sector has such a limited time and resources to get recapitalized until the end of 2015! Such questions full of doubt about Greece’s progress were equally expressed by academics, students, bankers and ‘think-tankers’.“

Reaction of Prof. Eleni Louri-Dendrinou
„With political stability in place, this adjustment framework looks quite capable of pushing Greece back into positive growth, especially if a first positive assessment of the program implementation leads to opening up negotiations on debt sustainability and restructuring. A virtuous circle can then start provided there is no hesitation, delay or endless and aimless discussions. If focus, clarity and decisiveness prevail, Greece has the potential to recover within the Eurozone faster than many people in the other side of the Atlantic think possible.“

I would truly love to share Louri-Dendrinou’s view but I also have to remember Goethe’s verse „I hear the message well but lack Faith’s constant trust“. Not that I consider her assessment wrong. On the contrary, it all sounds very logical. It’s the soft facts which have made me doubt of late. Not only a society’s willingness to change but also, and foremost, its ability to change. Five years of adjustment don’t really spread much confidence that willingness and ability are very high. One would literally have to feel the winds of change by now and I, for one, don’t feel much in this area.

I remember reading some time ago the catching phrase „For Tsipras to succeed he needs no less than turn into a capitalist“. Well, I don’t think he needs to become a capitalist Wall-Street-style but certainly a believer in the workings of a market economy with private economic agents. Put the word ’social‘ in front of it and you have the ’social market economy‘ of Ludwig Erhard. Perhaps it’s due to my insufficient Greek language capability but I never hear anything about markets, competition, private investors, profitability, etc. from members of the current government. Instead, I hear much about the distribution of the fruits of a market economy.

Regarding the views of the Americans, I had to chuckle a bit. They seem to have read very well everything Anglo-Saxon economists have published in recent years. Nevertheless, I will let it stand there because, otherwise, this article would get to long…

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