Analysis paper from Levy written a year ago here in .pdf with the title "PROSPECTS AND POLICIES FOR THE GREEK ECONOMY".
Nice paper with some detailed analysis of the Greek trade balance and the product compositions and some details wrt the composition of Greek exports and imports both with European nations and non-European nations.
Looks prescient as there is a conclusion that a reliance by ECB policy people on a forecast increase in Greek exports was not manifesting (a year ago) and in hindsight we can now see that the situation also did not improve markedly from that point in time either.
Somewhat in consonance with Warren's constructive criticism (down thread) of Yanis' apparent proposal of a Greek default and follow-on adjustments under the current arrangements vs. a primary policy of supporting domestic consumption (perhaps) at all costs.
From the conclusion of the paper:
What we can now clearly observe is that the harsh fiscal consolidation measures imposed on Greece show no convincing signs of a “light at the end of the tunnel.” Most, if not all, short-term indicators of economic activity show the performance of the Greek industrial sector to be very weak, absent demand from the rest of the world, both from within and outside of the eurozone.
The dramatic fall in unit labor costs—a result of the troika-imposed strategy aimed at increasing exports through internal devaluation—has not brought about the anticipated effects on a sufficient scale, as the statistics on the balance of trade confirm, despite the minimal growth of exports (primarily in highly unstable oil-related goods) and falling imports due to the deepening recession.
The strategy has instead brought deteriorating living standards and a precipitous decline in domestic consumption—the most important driver of economy stability.
10 comments:
Not sure how a jobs guarantee can be accomplished given YV has explicitly ruled out a parallel financial system?
"Not sure how a jobs guarantee can be accomplished given YV has explicitly ruled out a parallel financial system?"
In a country with a primary surplus there is no net leakage to the rest of the Eurozone.
So you just have to circulate what is there faster.
Pay people on the Job Guarantee and control the primary surplus by increasing taxation on the wealthy. The injection from the Job Guarantee should replace what you have to confiscate via the multiplier.
The problem is that the primary surplus has come about by demand suppression of imports.
YV talks about tax credits. How would that factor in here?
So you just have to circulate what is there faster.
Pay people on the Job Guarantee and control the primary surplus by increasing taxation on the wealthy.
This is the crux of the problem. With the countries of the EZ not being sovereign in their currency, they have to get the currency since they cannot issue it in unlimited quantities, that is, the amount they can issue is limited by the EMU institutional arrangements.
This limits the policy space of the governments of the EZ, as the policy space of state governments in the US is limited by their ability to get USD either by federal transfers, taxation or borrowing, or net exports.
There are no federal transfers available in the EZ and any support has to be approved by the eurocrats, who are under the thumb of countries like Germany whose leaders and voters don't want to "pay for" other countries. Other countries are expected to either tax or borrow, or net export to get the euros they need for public spending.
Greece is limited by the amount it can borrow for the obvious reason that it is maxed out, and so far it has been unable to get the wealthy to pay their share of taxes. So that leaves either net exporting or selling or renting assets.
I think that a big issue is that Greece has not been able so far to rein in the oligarchs so as to collect taxes from the wealthy and reduce the flow of funds to corruption. Obviously, other nations don't want to fund this leakage. So Greece has had to borrow and now that avenue is closed.
So a big part of the problem for Greece is getting control of the country domestically. Unless Syriza can address this, it will not any more successful than the governments that preceded it in getting Greece running financially.
It's ridiculous, since the real resources are available. The problem is not chiefly economic or even financial; it is political, caught in the grip of neoliberalism.
As professed Marxists, the leaders of Syriza have to understand this very well. We'll see how that do in addressing it.
The dramatic fall in unit labor costs—a result of the troika-imposed strategy aimed at increasing exports through internal devaluation—has not brought about the anticipated effects on a sufficient scale, as the statistics on the balance of trade confirm, despite the minimal growth of exports (primarily in highly unstable oil-related goods) and falling imports due to the deepening recession.
The neoliberal myth is that competitiveness is increased by decreasing the wage bill which improves productivity by reducing the cost of labor enabling a reduction if price, thereby stimulating exports.
However, this is not the case with either Germany or Japan, which are held up as neoliberal models. Wages and benefits (total compensation) is not low in those countries and their productivity advantage arises from technology and innovation. Both Germany and Japan are quite paternalistic wrt employment and compensation rather than scrouges.
yeah but Tom even if you put the austerity on (via lower public spending...) and they have to lay off the gal who was in maintenance at the Univ. Yanis talked about, how does that effect export prices?
iow I could see if instead of laying off the maintenance worker at the public Univ. they would directly go to the workers in their petroleum exports industry and tell them they had to take a 15% acros the board hit, then MAYBE that reflects in unit export prices and they can increase volumes but even this more direct scenario has a lot of variables to deal with...
but they didnt even suggest this... thye just propose some ham-handed "competiveness" dogma slash public spending and then even when it doesnt have the predicted outcome theyre still too stupid to acknowledge this and look for another policy....
rsp,
"We have to reduce export prices!"
"I got it! Lay off the maintenance workers at the public Universities!"
"yes!"
?????????
In the neoclassical model, workers are fungible, so increasing unemployment means more workers bidding for the same work and therefore lower bid. So get rid of government workers and lower the government's wage bill and passing this along through lower taxes to increase investment and letting the newly unemployed enter the labor market, increasing labor supply relative to constant demand, thereby lowering wages. Makes perfect sense give the assumptions.
Whaaaaaaattttt???? LOL!
"This limits the policy space of the governments of the EZ"
Not as much as you'd think.
You can't force the liabilities onto the population as you can with a floating currency, but you can sell them the liabilities using psychological manipulation techniques.
So what you create is 'National Savings' and 'Liberty Bonds' designed to ensure that Greek savings end up in Greek government liabilities.
Essentially the Greeks are at war with the Germans - financially this time. So the financial techniques used in the First World War - at least initially - would help ensure that there is a bid for liabilities.
That and clobbering the rich for tax by taxing their Greek assets. I'd particularly target anything that was recently privatised and therefore by definition can't move anywhere. To the point of bankruptcy if necessary.
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