Wednesday, January 11, 2012

The Greek Crisis: Austerity is Not Working. Is anyone listening?

In answer to the question does austerity work you only have to look at the Greek crisis and discover the dismal news. In one word No--in fact it makes this short sighted policy makes things worse--much worse. Take a look at the Washington Post report today:
Unemployment has surged to 18.8 percent from 13.3 percent only a year ago. Overburdened public hospitals are facing acute shortages of everything from syringes to bandages because of budget cuts, with hiring freezes forcing the mothballing of operating rooms even as more unemployed are relying on the public health system. Rates of homelessness, suicide, crime and HIV cases from intravenous drug use are jumping."
There is more:
“Conditions have deteriorated so dramatically that doctors in this country now believe that the Greek crisis is no longer just a financial crisis but a humanitarian crisis,” said Dimitris Varnavas, the president of the Federation of Greek Hospital Doctors’ Unions.
Is anyone listening? No. Certainly not the Germans who now control the fate of the Greek people--they want more suffering:
On Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy turned up the heat on Greece, suggesting that its bailout deal is in danger of unraveling if Athens does not press ahead quicker with pledged budget reforms and seal a deal with bondholders to voluntarily restructure its massive debt. But they also acknowledged that new steps are needed to combat slowing growth in the euro zone, where economists fear a looming regional recession as other indebted nations from Italy to Spain to Ireland also make deep spending cuts to reassure worried investors.
To the people who like to blame the victim--it appears from the Wall Street Journal's evidence that the Greeks work harder than the Germans and the Americans
The most recent data from the OECD covers 2008 and shows that in that year, Greek workers on average worked 48% more than their industrious German neighbors. The OECD data shows the average Greek worker spent 2120 hours at work compared with 1429 hours in Germany. Moreover, Greece is one of the only OECD countries in which workers were working longer in 2008 than in 1998. With 1802 hours at work, the average Italian employee spent more than 25% more time at work than the average German worker.
The question is as the Wall Street Journal reminds "is not the industriousness of the people, but the relative productivity of the economy, which derives from some structural issues that the people can’t help and some that maybe they can (unit labor costs, including those benefits that get people in Germany and the US all worked up). " How about a proper debate about what to do in these circumstances that does not end up causing long term damage to the people and country that you say you want to help.

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