Thursday, February 23, 2012

John Carney — Can America become the next Greece?

The most important difference between the U.S. and Greece, however, is not where we are in our economic cycle or our monetary system.
It’s the gap between the productivity of the American economy and the Greek economy.
Read it at CNBC NetNet
Can America Become the Next Greece?
by John Carney | Senior Editor

John joins MMR, or MMR joins John? In either case, neoliberals and the political right, for whom the cause of social, political and economic problems is the lazy, profligate (fill in the blank), will be pleased.


Ryan Harris said...
This comment has been removed by the author.
mike norman said...

Greece ran into problems when it changed its monetary system. Period. Let's not get all wrapped up in inapplicable analyses here.

Greek workers may not have been the most productive workers and their nation may not have been the wealthiest, but it operated fine with the drachma, never defaulted on anything and had a service economy that mostly catered to tourism. What's so bad about that?

And by the way with all their "unproductiveness," Greeks still live longer than Americans with total life expectancy at 80 years compared with 78.49 for Americans. Isn't that what it's all about? It is for me.

Leverage said...

But Mike... socialism! (some people will scream).

Apparently life is about productivity and living less and worse to consume & produce more crapp which is not needed.

About time damn economists start to ask and answer the important questions, but they won't because they are clueless.

So you have higher GDP per capita, doe sit matter when you are in a grave? Does it matter when you look back at what you have done in your life? No it doesn't.

Only things you remember is the travel and your emotions, when you were happy, sad or were living a full life.

A lot of greeks were doing fine even with their dysfunctional system before entering the euro, probably had one of the highest life qualities in the world, despite all their shortcomings, yes they were not hard working Germans, Japanese or Americans so what? (BTW that's wrong but I'm playing the wrong stereotype card here, even if it were true, does it matter? No it doesn't.)

Sad indeed. After you reach certain development status productivity gains matter less and less and other things start to count more. It's simply a lie that you need constant increasings in competitiveness or productivity to have a fuller & better life. But when everybody is brainwashed since you are born trouble happens.

Bob said...

Thank the corrupt and fallen state of man for allowing Goldman Sachs investment bankers to broker the deal to get Greece in the European Union. If you want to fence stolen goods you go to fence. Greece sold their insolvent country to the Eurozone and Goldman Sachs were the fence to get them in for a fee!
Now GS and several of the other banks? will get first dibs on the so called worthless mortgages, no bid squad from Geithner. They will rent these worthless properties after they crash the markets again! time line just after the election 70% drop coming. Then the no bid TBTF banks can become slum lords and complete the anniliation of the american middle class.

PeterP said...

Greece's productivity didn't collapse during the last 10 years, it had huge current account deficits which brought its debt close to the levels of Japan. Yet Japan can handle those (productivity doesn't matter here, because we are talking about the debt DIVIDED by GDP), so why? - because it has a different monetary system, this has nothing to do with productivity.

PeterP said...

Thanks to MMR we are going backwards: now it turns out is is not the monetary system, it is the economy - back to worrying we can be the next Greece! Ugh.

reslez said...

What good is productivity and GDP growth if it drives your population into poverty while enriching a few billionaires? At least a JG creates a mechanism to ensure fiscal transfers to workers. MR is morally bankrupt.

reslez said...

MR reminds me of the hokey fake controversy stirred up by biologist Stephen Jay Gould, who insisted that mainstream biologists believed all evolution happens gradually, in contrast to his own theory of "punctuated equilibrium". In fact mainstream biologists believed no such thing, but that hardly prevented Gould from loudly exclaiming how revolutionary were his own ideas and how out-dated were these imaginary biologists.

MR backers stir up fake controversy by imputing false beliefs to MMT adherents, but unlike Gould they are also in danger of making fundamental errors of analysis. The louder they pretend there is controversy (or flat out get things wrong), the more attention they garner for themselves.

Gould was quite successful and became rather wealthy as a result of his convenient misunderstanding. MR adherents have the additional advantage of espousing the sort of beliefs that will attract wealthy backers at the expense of average workers.

mike norman said...

Good point.

Matt Franko said...

" It tells us we must zealously guard our productivity, protect our culture of competition and enshrine market processes almost as if they were the gifts of benevolent gods."

Carney here wants 3 things:

1. Productivity

2. Competition

3. free markets

You cant have all 3 John.

How can you protect your productivity (goal 1) , when you compete (Goal 2) with foreign economies in the "free market" (goal3) whose workers will work 12 hour days for 2 rations of dog brain soup?

This focus on "productivity" by these people is nonsense because our moron policy makers never "cash the check" and harvest the productivity into real benefits like earlier retirements and more days off... rather our morons will simply take any productivity enhancing lessons or technology that we have developed and let the neo-mercantilists ship them offshore to the lowest bidder in Asia.

You cant have all 3 John in an open economy sorry try again.

Matt Franko said...

When a country goes "FF" it's workers get "effed". When you go FF it means you are entering into the race to the bottom.

If you want the citizens to benefit from domestic productivity gains you have to either close the economy or make all trade settle in real goods or implement high tariffs. You cant compete with a highly desperate zombie population.

Trixie said...

MMR launched its debut by reducing a couple decades of MMT work into two metaphors taken literally (starving children, gun to head) and the Buckaroo System. And then drawing the worst possible conclusion.

You know, when they say "it's raining cats and dogs", they don't really mean it's...oh never mind. What's worse though is to conclude that anyone who uses that figure of speech is demanding that kittens and puppies get slammed into the pavement from 30k feet.

As for the Buckaroo Program? I'd be outraged too. At the name. But I wouldn't take it any further than that.

Dan Kervick said...

I wrote this in response to Carney:

"The problem with this analysis is that once one turns one's gaze away from Greece, one quickly notices that there are other countries in Europe, not nearly so enamored of market processes and the culture of competitiveness as the United States, but equally devoted to industriousness, and much more devoted to intelligence, sound government, social responsibility and thoughtful planning, that have been out-performing the United States for years on many measures of individual happiness and social well-being.

"Greek laissez faire and American laissez faire are two unsustainable deviations from sound social and governmental practice.

"The Europeans are now stuck in the rut of their inflexible monetary system, which yokes extremely well-governed countries to poorly governed countries in an embrace of common decay. But the origins of the debt and income crisis the Europeans are in trace back to the bomb that was dropped on the global economy by the bloated and disastrously unregulated American financial sector."

paul meli said...

The Greek economy is functionally equivalent to that of the State of Florida - tourism and beer.

Does that mean that we Floridians are profligate moochers and should be punished?

Actually we are - we have Rick Scott.

paul meli said...

@ Matt

"This focus on "productivity" by these people is nonsense…"


Seems to me increasing productivity increases unemployment.

paul meli said...

btw, you guys are so far to the left over here you couldn't find the center with the Hubble telescope.

So says the MMR bunch.

Matt Franko said...


Perhaps I should rephrase it's nonsense because our policy makers dont protect our workers commensurate.

Beowulf over there (if not the others) knows this I'm pretty sure.

I like the JG in MMT because it at least does something for our workers who get thrown out of their jobs due to productivity gains and/or the external zombies that we work with via the "free markets".


btw as far as L/R I would like to see habeas corpus suspended and people literally locked up at GITMO for deficit terrorism in this country ("who's going to buy them now" would have gotten Gross 12 months at Club Fed) (I'm only half kidding)

paul meli said...


I guess I need the Hubble telescope too.

Ironic in the sense that as recently as the GWB final year I was a card-carrying Republican and despised Democrats. Now Democrats seem like the center-right to me.

If you care about humanity you're a radical in this political environment. Something has to give.

paul meli said...


You've summed it up pretty well.

Tom Hickey said...

btw, you guys are so far to the left over here you couldn't find the center with the Hubble telescope.

Thanks for the compliment.

paul meli said...


Just to be clear, I'm with you guys. It was meant as a compliment. I would hate to be misunderstood.

I was relaying what has been said repeatedly in the monstrous thread over at MMR, which has morphed into a forum debate, in which I have made maybe 100 comments, none of which has been received very well.

Cullen Roche has also gone on record over there as being mainly in the "horizontalist" camp. How he thinks that relates to MMT is beyond me.

Letsgetitdone said...

I think Cullen will soon tout the productivity to public debt ratio, and say that the public debt must not grow faster than productivity and that we ought to have a new IGBC based on this ratio.

Carney's analysis is dumb, especially since there all kinds of problems in measuring productivity and its current measurement doesn't take non-monetary value into account.

As for Greece, it is being looted and transformed into a colony by the French and Germans. It needs to tell them to drop dead and to go back to the drachma.