Right on Larry!

Blimey, an economics article in The Guardian where it is possible to agree with every word. Even the \”and\” and the \”the\”.

The euro, in short, is ripe for what Joseph Schumpeter called creative destruction. Capitalism, according to Schumpeter, was the story of constant, normally gut-wrenching change, in which innovation put established firms out of business and made whole sectors obsolete. Anybody working in the music industry, publishing or newspapers in the past decade understands what Schumpeter was talking about.

Does Schumpeterian theory apply to the eurozone? In a way, it does. The centre of gravity in the global economy has moved from Europe, which looks old-fashioned and lumbering in a world of rapid innovation and loose networks. Tweaking the flawed model in the way François Hollande is suggesting will not do the trick. The only real solution is to rip up the blueprint and start again with the small group of countries that could hack it together. Making the eurozone work is like finding a long-term business model for HMV or Thomas Cook. Like them, monetary union is the past, not the future, an analogue construct in a digital world.

18 thoughts on “Right on Larry!”

  1. “An analogue construct in a digital world” How old is this cliché? I seem to remember my grandma using it as she milked the cow by hand.

  2. See, he can talk sense when it’s not about the UK. Mind you, it doesn’t take a rocket scientist to work out that the euro was doomed from the start, is now terminally ill and should be put out of its misery.

  3. Every political party in Greece supports continued EZ membership.
    75-80% of the Greek people also wish to remain in the EZ.
    Germany wants Greece to remain in the EZ.
    In fact, it seems the World and his wife wants Greece to remain in the EZ. (at least, those that matter)

    I think Greece will remain in the EZ.

  4. Which crystallizes a nagging question that’s been forming in my mind.

    The MSM and PTB are sounding like Private Fraser- if Greece leaves the Eurozone WE’RE DOOMED!

    Now Greece’s economy is, as far as I can see, about 2% of the Eurozone.

    If a random metorite crashed on my company and killed the least effective 2% of the staff, the other 98% would carry on. Indeed, if a random metorite crashed on my company and killed the most effective 2% of the staff, the other 98% would carry on.

    So why, if Greece should drop out of the Eurozone, would all the rest be DOOMED? How exactly would the DOOM spread from Greece to elsewhere? Would Germany invade France, or something?

    Tim adds: Quite frankly, no one gives a toss about Greece. It’s if Spain and then Italy went as a result that gives everyone the shits.

  5. Don’t Greece owe German and French banks something ridiculous like a trillion Euro? To paraphrase JP Getty “If you owe the bank $100 it’s your problem, if you owe them $100 million then that’s the bank’s problem”

  6. KJ. I want a Bentley. Bentley wants me to have a Bentley. Therefore a Bentley I will have? I think you missed out the price mechanism from comment 3

  7. blokeinfrance, forgive me, I’m one of Tim’s thick Northern blokes.

    Could someone explain to me (keeping it simple, no jargon!) how Greece leaving the EZ would produce a better outcome than remaining? Or is it a suck it and see scenario?

  8. Whether they stay or go, there does seem to be this tiny, niggling little issue of money. Do they follow an austerity plan and have money to pay for some services? Or refuse any austerity and have only what money they can raise themselves to spend? Or are there other alternitives besides those options?

  9. Perhaps they need to sell the country to a landlord. The EU perhaps – then get charged rent….

  10. So Much For Subtlety

    Martin Davies – “Perhaps they need to sell the country to a landlord. The EU perhaps – then get charged rent….”

    We could give it back to the Turks. Supporting Greek independence was always a mistake. Seems better than the last two solutions we tried – allowing some Germans to run it. Plus they had a third go in the 1940s. Never seems to work out well.

    We can tell the Turks we will throw in half of Cyprus for free.

  11. Pingback: The Greek solution

  12. “Could someone explain to me (keeping it simple, no jargon!) how Greece leaving the EZ would produce a better outcome than remaining? Or is it a suck it and see scenario?”

    The new Drachma would be very weak. Greek exports would be cheap to buy for the rest of the world. It would be tough for them; imports into Greece would be very expensive for Greeks to buy. But “austerity” is also tough – and involves a loss of independence.

    For the world as a whole the biggest good effect of Greece leaving the Euro would be that it would shame the Eurocrats and destroy the aura of historical inevitability they have tried to create for their projects.

  13. How much food, fuel and medicine does Greece import?
    I wouldn’t bet on shame for anyone – I would bet on people dying.
    We moan in Britain about plenty but we usually have sufficient income to pay for some food and heat.

  14. Greece produces quite a lot of food (and some of it is very good, I must say), and wheat is still cheap enough to keep people going. There are much poorer places than Greece who can feed the population. People also don’t mostly die of lack of medicine. Regarding fuel, I expect the Greeks are nowadays using more fuel to cool things down in the summer than to heat up in the winter.

  15. Here’s a strange little bit of info. I do a lot of building refurbishing, often converting from hot air to hot water heat.

    The hot mater is best piped, by my criteria anyway, via oxy-pex tubing. The best (price vs. quality) I have been able to buy comes from Greece.

    Why do I suspect that, no matter what sh*t goes down, I’ll still be able to buy my beloved cheap, effective, Greek red oxy-pex?

  16. “Tim adds: Quite frankly, no one gives a toss about Greece. It’s if Spain and then Italy went as a result that gives everyone the shits.”

    Hmmm… are there a couple of elephants in the room, then?

    Is “if Greece leaves” code for “if there’s a plan for Greece, Italy and Spain to leave together”?

    I could understand the DOOMED if that happened.

Leave a Reply

Your email address will not be published. Required fields are marked *