Thursday, February 11, 2010

Greece's Economy

I was doing my research as to why Greece's economy is in the tank on the simple account I keep hearing about it's financial problems in the news, but never an explanation for it (further leading me to believe the reason may be being buried). However, I found this interesting;

It behooves the question of our fine authors at the CIA,

"If government spending was 60, 70 or say 100% GDP, would Greece still be capitalist?"


K T Cat said...

Of course! To be capitalist, it just has to claim that it is.

Great catch, by the way.

PeppermintPanda said...

A logic professor once told me that he was in an argument where the person he was debating eventually got irritated and claimed that he was "Arguing Semantics." The logic professor (who was obviously pretty good at logic) pointed out to us after this story that the definitions and premises of an argument (the semantics) are essential to the truth of the argument.

One of the greatest strengths that the progressive movement (in particular the progressive media) have demonstrated is an ability to repeatedly re-define something in a way to make a point to get what they want. You see it with Global Warming in that any extreme weather event is caused by Global Warming (regardless of whether it is caused by warmer temperatures at all); you see it in the economy in that any economic crisis is caused by capitalism (regardless of whether government intervention caused the crisis); and you see it in everyday news stories where conservative activists are portrayed as wingnuts and progressive activists are portrayed as heroes.

Unknown said...

Ah, ambiguity. As Emo Philips once described it - "the Devil's volleyball!" This is why precise terminology is critical when we discuss anything pertaining to mixed economies. The correct way to describe Greece would be a "capitalist leaning mixed economy." The problem with looking just at public/private split in economic activity is that it does not show the scope and extent of government regulation.

Though it is a compliment that overly socialist economies are labeled "capitalist" by the detractors of free enterprise. The economic benefits and wealth creation by the private sector is so disproportionate to it's small representation in the economy that it seems to be the dominant element.

Unknown said...

Can the US be far behind? Substitute Greece with USA and ~~ think about it.

Anonymous said...

Ok, I'm going to ask a dumb question. If I understood it correctly, the government contributes 40% of the GDP of Greece.

I don't get how government spending actually increases GDP - especially when so much of the government spending isn't in producing anything of value, its mainly paying out entitlements.

Ryan Fuller said...

Anonymous, GDP includes government spending as a matter of definition. It doesn't have to actually produce anything; it just has to spend money. It's one reason that GDP isn't a perfectly reliable measure of productivity.

DC Handgun Info said...

Hilarious: An Associated Press article (2/16/10) reported that European finance ministers "bluntly told Greece to prepare tougher spending cuts and new taxes in an attempt to snuff our a government debt crisis that has shaken the entire eurozone."

This is not a crazy idea from the right wing, President Obama!

Anonymous said...

Ryan Fuller - thanks for the reply.

That's my point - government spending on entitlements actually doesn't seem to help the strength of the economy - in fact one could argue that huge welfare spending (and the high taxes that result and debt) actually impair and inhibit economic strength.

So, maybe we need a new, better measurement such as PSP (Private sector product) with the government spending taken out of the GDP or something else like RDP (real domestic product) which is the GDP - government spending on entitlements - government deficit spending - interest government paid on the debt.

Or something like that.

It doesn't surprise me that the GDP is a somewhat bogus measurement.

Susmita said...

Us government spending is about 45% of US GDP. Yet few people know that under central banking government borrows its money from Federal reserve - a private banking cartel.

But US national debt is now over 100% GDP.
National debt is the total money supply. And the interest owed is more than GDP - does it make sense. Is that why banks are failing? Government is bailing out with more borrowing, since government is ultimately 'we the people' who are ignorant about the 'money masters' and how its comes into circulation as debt and goes off circulation when debt is paid off.

Yet total debt can never be paid off under present money/credit as debt'system interest compounded keeps exceeding principal issued at any given time as in mortgages. Is there a way out of this collective mess?
Search for Deep Conscious capitalism blog.