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Wednesday, May 16, 2012

Propose ideas for growth!

Today's Ekathimerini published the following, very interesting letter to the editor.

In a lot of comments and articles I read that austerity without a perspective on growth will not work and that Mrs. Merkel therefore should correct her position. What is wrong with that equation is that Mrs. Merkel has never said there should be austerity without growth. There are just different ways and opinions on how growth should be created.

Basically we have two main trends in the moment. Growth created by debts or growth created by liberalization and deregulation. Mrs. Merkel clearly belongs to the second group and I think in large part she is right. Since the EU was founded in 1981 and the Eurozone in 2001 we have witnessed a dramatic increase in debts in almost all member states of the EU.

Since several people revert to Keynes, I would like to bring up the thesis that the last 30 years have been nothing else but a badly managed and uncontrolled version of Keynes’ concepts. Growth created by debts and subsidies controlled by EU states. So instead of calling now for Keynes we have to realize that we may have reached already the end of Keynes.

The EU (and that means all member states and not just Germany) has failed to set up an effective control system and continually stands still, rewarded with generously granted subsidies.

Let’s take agriculture as an example. A lot of EU subsidies are spent on agriculture all over Europe. Subsidies were obviously calculated and granted without being double-checked so that a lot of farmers (and controllers) could make a nice living on that without the urge to increase competiveness. Instead of investing in new machines, methods and distribution concepts, the money was spent on lifestyle. This could only happen because there was no control and money was granted year after year without pressure or decrease. If a product needs to get subsidies for several years and there is no chance that it will ever be competitive, subsidies need to be stopped.

If we take a look at the public debts in Europe and the comments around, one could imagine that all those debts were created by the banks themselves and that everyone else is a poor victim of an international money conspiracy aimed at enslaving the people.

That is nonsense since most of the debts have been manifested in state expenses like salaries for public workers, military, useless infrastructure projects, Olympic Games etc. This has allowed people to build houses, buy cars, consumer electronics, travel etc. And this goes not only for Greece but also for Germany, France etc. Germany has 2 trillion Euro of debts but useless 6-lane highways in East Germany that lead to perfectly renovated historical cities where no one lives anymore since there are no jobs around.

Therefore the basic conclusion is that right now any debt-driven growth program will create nothing else but more debts since we will feed more money into a dysfunctional system that led us into the current crisis in the first place.

Before we should make more debts, create a ‘Marshall plan’ for growth or even talk about ‘euro bonds’, all EU countries have to agree on and implement an investment-friendly, deregulated and liberal policy framework.

Furthermore EU bodies must have the right to access and control all financial data of member states. If a member state fails the targets or does not implement EU Regulations, EU bodies must have the right to control, correct and limit state expenses. That means states will lose sovereignty towards the EU.

On top of that, EU subsidies must be effectively controlled and the mindset of the receivers must be changed towards competitiveness and innovation.

I still haven’t seen any solid program concept or idea from any of the big Greek parties on how sustainable growth could be created in Greece. It is your politicians and elites that have to detect areas of growth, tear down all of the red tape and ask the EU for funding and assistance. If you are able to name just one successful example that was based on the initiative of Greek politicians, I will dance naked on the Acropolis.

Sebastian Schroeder
Patra

2 comments:

  1. As you may know, I was put out of work by a bureaucrat. I had no certificates for my job which I did very well according to my clients. The problem was that they had no certification to be clients, so their judgement had no credence. Without hard facts, I was deemed to have insufficient business abilities.

    I closed with more business abilities than when I had started five years earlier.

    A bureaucrat cannot make a decision for themselves: it must always be based on facts that everyone can read on a piece of paper. That way, they are free of all possible blame. That way, they escape any responsibility.

    This is a very important point. If, like me, you set up in business, you do so with a passion and a vision. You take the responsibility first, serve your clients first and ensure their satisfaction. The money follows. Well, it did until 2008. I was not alone in seeing my income steadily fall. People who would not get out of bed for less than 200 euros a day were offering their services not for 100, nor 90 but ... I can do it for 85! Yes! I can do it for less than anyone else.

    What do you mean? The paint is peeling? What do you expect for such a price? (The standard Dutchman's answer to poor quality work).

    ALL OF THE ABOVE WILL NOT GET US OUT OF TROUBLE.

    We need to put this on its head. We need to think not of money, but of what you do to get more clients. What is certain is that doing a rotten job for someone will not make you many friends. I was registered with Werkspot, the toughest cattle-market in Holland. The competition is frantic. Sure, I didn't earn much - but I got some good clients. I did them a good job, and I slowly built a client base.

    Out of nothing. Thin air and a passion for quality.

    I was very upset to be put out of work by a paper shuffler whose idea of making work was to wait for it to come their way. It simply does not happen like that. If you want work, you make it. Literally. Do something. Make something, see if anyone wants to buy it. If not, ask the people looking what they do want. Tell them how much it will cost. If they like that, and you can do that a few more times, you are in business.

    From nothing.

    That is what humans are for. The problem is that if you want it where you are, it is you that you have to start with.

    To be fair, I should have thanked that poor bureaucrat. They taught me a real lesson that tied up a lot of loose ends in my thinking. They taught me that I could listen where they were deaf. They showed me to my face what a bureaucrat cannot do - and that is create jobs.

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