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Saturday, March 12, 2016

Refugees & Growth

There is no doubt in my mind that, in the shorter term and strictly from an economic standpoint, the current refugee crisis will cause a small economic stimulus for the Greek economy. This, of course, presumes that the EU will keep its word and provide up to 700 MEUR to Greece over the next 3 years, 300 MEUR of which immediately. Those will be non-interest bearing, non-repayable funds. Subsidies, in short. And the second assumption is that the money which the EU provides will be sufficient, i. e. that Greece will not have to use its own resources for the purpose of handling the refugee problem.

The money which the EU transfers to Greece will, presumably, be spent primarily domestically. Temporary homes will have to be built, infrastructure for those homes, medical services, general shopping, etc.

Sweden and Germany are already showing that the 'refugee business' is quite an interesting new industry where many private players find profitable business opportunities.

As I have pointed out before, the trick will be that the money will be spent properly and wisely. Examples of unwise spending would undue profits of intermediaries or remittances by refugees of money they receive to their relatives in other countries. They wisest spending is when the money is spent on domestic Greek products and services.

As I said in the beginning, this is a short-term, economic view. The longer-term implications of having a huge inflow from the Middle East and Africa can be quite different.

By why should Greece not take advantage of the short-term benefits to the fullest extent possible?

14 comments:

  1. This is a rather economistic view of the world. In any case as similar studies in the UK have shown the economic effect of migrants is modest either way. They do pay in, but especially in greece most of them will be part of the unofficial economy and not pay contributions for anything. There is an army of people who are undocumented immigrants already and live and work in greece, however because they do not pay any taxes and they remit most money back to the 3rd world where they came from they are not even paying the taxes to pay for healthcare etc although Tsipras has given them coverage. Basically Tsipras is giving access to greek hospitals irrespective of if they have paid contributions or not. This must stop. If the immigrants pay taxes and there are no deals under the counter then the competitive advantage in greece largely vanishes. Rich greeks use them like slave labour and avoid taxes and bureaucracy by using them. It creates unfair competition for good employers, and the nature of the only viable business in greece -tourism- relies on this modern slave labour.

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  2. I propose a law that would remove all property from any greek business owner employing illegal immigrants. No fines or appeals, a complete nationalisation without any recourse to any greek that employs undocumented immigrants.
    This would force them to seek other countries to go to where this is tolerated, the bad employers would be punished and corrupt officials would suffer the same fate if they get bribed to allow illegal work.
    Bonus, youth unemployment would be massively reduced.
    social insurance system would be greatly helped by all these lost contributions
    pension system would be boosted from all these contributions.
    economic migrants would lose interest in greece and go to slave employing countries like the UK where I have personally seen illegal workers being used a lot in the same way.
    It would create a level playing field.
    The biggest losers are going to be the over 50es who already have a business and rely on illegal labour. Usually it is the same people who get other benefits and pensions illegally.
    The final result is that the feeling of injustice will be greatly reduced which in turn will make the hard times much more bearable.

    There are alot of empty apartments in athens that receive no rent. any refugees that want to seek asylum in greece should be housed in them, there is no point in building temporary camps, when this renting out could boost the real estate sector and the economy.
    The long term is not good for greece however. I am of the opinion that muslim families should be discouraged from settling in greece and the rest of europe. The reasons are complex but for anyone that has experienced the ultraliberal regime in the UK re: refugees in the UK these reasons will be familiar.
    1. In sweden after great efforts to educate, house and adjust immigrants and refugees to Swedish society, the results have been pathetic. After 5 years of retraining and language teaching, free housing, and grants, the result has been 20% of them have gotten a job. It might be because they were injured in the wars, or they are psychologically messed up etc. But the result is the same. The numbers are tragically low.

    2. In greece without any support or grants probably a higher percentage will resort to crime to feed themselves. Respect for private property is culturally not big thing either.. so this is bound to cause conflicts.

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    1. Your suggestions are deeply problematic.

      Nationalizations? Bad idea in Greece. Everything the state touches it turns to ashes.

      Youth unemployment wouldn't be reduced. The simple truth is that most Greeks still refuse to do unskilled low-paid physical labor.

      You assume that insurance contributions would increase. There is nothing to suggest that they would. The problem with them is that they are insanely expensive (because pensions are too high), not that they aren't policed or regulated enough.

      The feeling of injustice would be reduced and that would make the hard times more bearable? Oh please. But if you do want injustice to be reduced, then equalize the public sector with the private sector and reduce high pensions.

      The empty apartments belong to someone. Have you asked them whether they want to host refugees? I myself have an empty apartment and refuse to rent it to anybody (Greek or foreigner) until legislation protects me against non-payers and people who damage property. A register of tenants and quicker eviction procedures would be a good start, but so far Greek governments have refused to implement them. Why? Because modern Greek culture rewards crooks and lawlessness. Which is why Greece will never progress towards becoming a real European country.

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  3. 3. The clash of values in a series of matter, e.g. the extremely hypocritical and oppressive sexual mores of islam for example creates a very aggressive youth culture, where even rape is not seen as such a bad thing, and where the victim should be blamed, and whoever does not wear a hijab is fair game. Imams countenance this, not all but many do, especially the ones paid by the wahhabis, and of egyptian, and afghani origin.

    4. Girls are raised and sold to the highest bidder and like in the UK a systematic marriage industry so people from the old country can get a passport will surely follow as it has in the UK.

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  4. 5. Basically i find greece as a ridiculously socially conservative society already and i want it to move to a direction of the principles of the englightenment. Unfortunately most of the immigrants are brought up with the values of the middle ages, reinforced by their religion.

    Just so i am clear. I see the christian religion just as backward, but the difference is that we in europe don't take our religions seriously and don't apply their medieval teachings in our daily lives which is a wonderful result of the enlightenment.

    Personally i want to see Danes and Germans and other europeans live in greece and start completing the conversion to the values of the enlightenment, but this influx is reversing violently any progress made since 1981.

    The Europeans are selling their villas and don't retire in greece anymore, and they are being replaced by poor illiterate and angry people who fought in wars and in some cases have killed to survive. With values totally opposed to european ones.

    So for my country greece, i tell you honestly, i will stay in europe forever and naturalise in a european country to avoid living with a strong minority trying to spread sharia values.

    If their countries have failed it is because their religion is leading them to fail and causes recurring wars.
    If they wanted to come to europe and be like europeans, i.e. de facto atheists by their standards and productive members of society that would be one thing. But as we see from jihadi recruits and terrorists with cockney and french accents, even if the parental generation integrates it seems that their children then do not.

    Perhaps we europeans do not want to marry them and reject them, perhaps some of the jihadis converted to extreme islam because they felt rejected. But in practice we will not stop these deep seated differences, so the only way to stop the problem is to do what austria did.

    close the borders, and simply change the refugee laws to say, european refugees welcome but the middle east needs to equally host refugees from the middle east.

    Indeed if there is a country that should be taking these people should be the UK that was participating in toppling saddam and other military escapades. Neither the EU or Greece, or austria or Germany under Schroeder had anything to do with it.

    Equally a maximum quota per year should be selected by each eu country.

    Finally anyone who has acquired an eu passport and then engages in illegal activity, sloth, or jihadist views, propaganda, or terrorism needs to automatically lose their passport. They can go and live with their friends in the mess called the middle east and the rest of asia if they feel they have a superior civilisation, and stay there.

    Besides the middle east always has wars, it has never changed, are we in europe going to take refugees all the time every time there is a massacre there? why?
    Have europeans ever fled to Syria to avoid persecution?

    Europe needs to become a federal union in the image of Australia or Canada. We need an australian migration strategy too.

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  5. Read on twitter:

    Ioan Smith ‏@moved_average 27m27 minutes ago
    #Sweden | LOL... *STATS SWEDEN: REFUGEES CONTRIBUTED 0.4 PPT TO 4Q GDP GROWTH Y/Y ..who needs monpol?!

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  6. Mr. Kastner,

    At what cost will the refugee crisis, affect our tourism industry? Especially in the Aegean? From what 5 main East Mediterranean island tour operators state, on these islands we have 70% reduction in reservations. Do you think the 700mil euro over 3 years cover this loss and difference?

    It is bad enough that the quartreto increased the service tax to the highest in the eu for all hotels and services industry, now we have the refugees. The government can indeed take advantage of these funds but at what cost to the private sector, who is creating the real economy and contributing to maintain this country afloat.

    Sincerely,
    V

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    1. You are right. There will be many indirect costs which are not covered by EU subsidies. Regarding tourism, instincts tell me that 2016 will be another banner year for Greek tourism despite the breakdown on some of the islands. Just instincts at this point but we will see soon enough.

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  7. The funds for the refugee crisis will not be given to the greek goverment, but to operating in Greece NGOs. If we are to believe SYRIZA ministers, Greece has already spent more than 700 million euros since last year.

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  8. Whether the 700 mil euro are coming to Greece directly or indirectly, it helps and it is most welcome. The fact remains is that by the summer the 250 mil euro for this wont cover squwat. By the peak summer season we will have 500 mil refugees in Greece as Turkey has no intention to slow the flow of refugees with or without agreement. BTW, we most certainly not gain an agreement tomorrow.

    It is in everybody's best interests, besides Greece as to not have an agreement. Turkey has stated it will not take any refugees back before the signed agreement. All eu countries, without an agreement gain the ability of having a blocked Balkans root which works out great for them. Even with an agreement can you trust Turkish leaders who state that there are 3 million refugees in Turkey who want to come to the eu and we will not stop them.

    The nato plan is a flop. The refugees come at night and are driving the patrols crazy by sending refugees to different islands everyday. Maybe eu people can get a glimps at how difficult it is to patrol waters likewise how little Turkey does as to control the flow.

    Sincerely,
    V

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    1. I don't know if the agreement with Turkey will be signed this week (I have doubts also) or if Turkey will play ball, but what I read recently is that even in case the 1 for 1 agreement is in place, migrants will still have opportunity to apply by saying they are at risk if sent back to Turkey. And to appeal to a Greek court if rejected. So the return to Turkey can take several months instead of 48 hours.

      Regarding NATO flop, I am still unsure what they intend to achieve. At worst, German flagship is in fact Germany advanced hotspot for asylum in Germany. Because NATO ships, unlike Frontex, have no agreement from Greece to send migrants to Greece shores. And it is not sure Germany will take the responsibility to send migrants to Turkey

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    2. Hi Jerome,

      Whatever the deal or no deal, the refugee crisis will be a mess for the coming years. I would like to add that the inflows will further increase considering that Russia is pulling out of Syria. This gives way to Turkey to opening at Kurdish positions and populated areas. Soon we will have Kurdish refugees as well.

      In my opinion a deal will not be made, as regardless how much pressure is applied to various countries, to close the deal. meanwhile, Turkey wants one thing. They want no visa's to eu. It is why they have tabled 3-4 prerequisites to assure they get this one point. They do not care for the money as they are already profiting from the trafficking. Giving turkey money is only an extra profit to cover the costs of holding refugees for a while. They want no visa's for their population to the eu. I do not believe Austria, France, Holland, Balkan nations, Poland will agree to this. Likewise Cyprus has no interests to agree to this as their issue is to be resolved through the UN. Greece is punching bag, and we will simple do what we are told.

      For the patrols there is a set agreement with both frontex and NATO. When refugees are found on any side of respective waters, the coast guard is informed respectively to pick up migrants and process them formally on the respective side. In practical terms though it will not work for the simple reason that the international waters between Greece and Turkey do not exist as they are so close to each other. By the time Turkish coast guards make it to a migrant flow they are already in Greek waters. Who is to say that the Turkish coast guard wont take its time to intercept the migrant boats? I say it and they will simple say that we could not intercept in time.

      The refugee crisis will continue, it will get worse and above all it will get very bad for Greece.

      Always remember though. Its Greece's fault for all this mess.

      Sincerely,
      V

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  9. That the funds for the migrants will be distributed by NGO's is the most sensible thing I have heard lately. NGO's are far from being perfect, but they are a lot better than any Greek government body. It demonstrates how deep Greece has managed to install distrust in EU countries and organizations.

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    1. I don't think money distributed to NGOs should be interpreted as distrust to GR govt. ( and resented by Greeks)
      Simply said, Greece institutional setup for refugees (or asylum seekers) does include hosting/feeding to the limit of Greece capacity but no subsidies to asylum seekers or even refugees if accommodation can not be provided by the state.
      And it would certainly be an impossible measure to vote in parliament to allow for subsidies to refugees/asylum seekers who can not be hosted by the state when Greeks without revenue or pension get nothing. GR government and parliament have enough difficult measures to put in place already.

      And also, some NGOs are really very good in that domain. Recently a French municipality asked MSF (Doctors without borders) to create a refugee camp because they have more experience than the local townhall

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