Tuesday, February 28, 2012

"Productive" Potential of Greece vs. Germany

I'm getting kind of tired of all of the mainstream comments disparaging the "productivity" of the nation of Greece as measured by the usual orthodox methods.  Pictures are sometimes worth one thousand words.

Here is a topo map of Greece:

And here is a topo map of Germany:

Large, contiguous areas of green = good for "productivity"; small, discontinuous areas of green, separated by large impassable mountainous formations and wide non-bridgeable seas, archipelagos and long ismuths  = bad for "productivity".

Okay let's review:  Large green: good..... small green: bad.  Which area has more modern day "productive" potential?

Here below is a low orbit photo of Greece, seems like a tough place to get around in.


Matt said...

But wait a hundred years or so...

And the North German plain will be the North German Sea.

Meanwhile, the Parthenon will still be jutting defiantly out of the Aegean!

LVG said...

You MMTers should change your slogan.

"MMT - The government can give you everything you need!"

Ryan Harris said...

Being a vacation and retirement destination probably doesn't help apparent productivity either because they both create human service industries that can not become much more productive. Haircuts, home health care, and resorts can only be improved so much.

Matt Franko said...

Right TB,

And sectors that are the most ripe for automation, like manufacturing can really pound out the GDP in the first place.

If you look at the forms of transportation that existed in the past, seems like first was sea going ships, which Greece probably excelled at. Then it went to horse drawn vehicles (forget Greece there), then canals (forget it) and then rails (forget it).

This is a canal they built at one time across the ismuth of Corinth:


Looks like a lot of "productivity" to make a 4 mi passageway to me... I wonder if there is such an equivalent man-made earth structure in Germany... or did they just have to ride the rivers...


Tom Hickey said...


"MMT shows how the government's currency monopoly makes prosperity a practical possibility by implementing a economic policy based on policy options that MMT demonstrates as feasible based on a correct understanding of macroeconomics in light of the existing monetary system and operations."

Matt Franko said...

LVG has it backwards... MMT has a lot to do with the systems we have set up for the government to obtain provision from the non-govt...

So LVG has it 180 degrees wrong, it's not what the govt is going to do for us, it's mainly about what we will do for the govt...

Tom Hickey said...

Productivity is measured in terms of output per worker hour, but it isn't "hard work" that causes rising productivity. Rather it is from the side of capital (investment), management (effectiveness and efficiency), and technological advance. As productivity increases, the same output is achieved with fewer worker hours, making greater leisure possible. Under the current system the gains from increased productivity go to the owners of capital, top management, and entrepreneurs innovating. Workers get increased unemployment, underemployment, and lower skilled manual work that it is not yet profitable to automate.

Increasing productivity drastically in a sector exacerbates the employment problem. Productivity is inversely correlated with employment, and technological innovation puts a ceiling on wages, since when wages rise high enough, then reduction or elimination of workers becomes a more profitable option, where choice is based on opportunity cost.

This is the Achilles heel of contemporary late-stage capitalism. Early-stage capitalism drastically reduced the percentage of agricultural workers in a modern economy, expanding the industrial work force. this resulted in urbanization and then suburbanization. This greatly increased economic growth with a broader degree of distributed prosperity.

Now the industrial work force is being replace by knowledge work, automation and robotics. The global economy will adapt to this as it did to previous transitions. However, the phase transition between stable states will be disruptive socially, politically, and economically, especially since it is accompanied by globalization issues and sustainability challenges, especially global warming owing to energy sources.

I find it doubtful that contemporary capitalism will be carried across this boundary between states without significant changes.

Leverage said...

I'm very tired about this discussion on productivity. It's an other manufactured discussion by the neoliberal dogma that has infiltrated everything and every mind.

I posted this on Mosler website, on what of the threads about John Carney:

"How much does the CNBC contribute to ‘productivity’? I think the world would be fine without CNBC and its reporters which in any case are more about propaganda than real objective information.

CNBC and its employees contribute to a waste of resources, in an era where information is easily accessed for free, most networks are redundant, we could use agencies like Reuters and left all the rest to blogs like this one which are way more informative and FREE. Probably all the money channelled to support dead structures like the CNBC is a waste of capital.

What I mean with all this is all the talk about productivity is bollocks, economists don’t have even a consensus on what productivity is, much less how to measure it right. What you think is productive I may think is a total waste of resources and viceversa. Who says that apparently wasteful government spending is not necessary and we would be better without it? Who says spending money on toys for grown ups (I’m fine with toys but I’m not hypocrite about calling them for what they are) like iphones a few months apart is not a waste of resources?

Yeah right, you can’t. And Greece was perfectly fine about 10 years ago, it wasn’t a paradise, it had (and still has) its own idiosyncrasies and inefficiencies, but its population still had probably better quality of life than the average american, plus it had balanced trade (not living above their productive capacity). All this obsession over productivity, competitiveness etc. is just a chimera of the market fundamentalists, in which by the perfection of the market eliminating any sort of public choice and democratic control you will achieve the Nirvana of capitalism.

Life is about living, not about ‘productivity’ or ‘competitiveness’, and living is not only about money or production, its about needs and how you satisfy them. I don’t see more satisfaction by increasing production and consumption of goods. In modern societies productivity is not a problem (and will be less and less), if anything we have overproduction, it’s a problem of how wealth is shared and which use we do of it.

Greeks were perfectly fine with their way of life without all the need for ‘productivity’ and ‘competitiveness’ and trash talk European elites are using to suppress demand and labour. And better yet: they had perfectly balanced trade! It was the manufacturing of these problems by the means of propaganda that got them into trouble in the first place."

Productivity is only a problem if you enforce a gold standard thought authoritarianism. And then it's only a RACE TO THE BOTTOM for labour, which is exactly what the establishment wants. MMR is doing them a favour jumping on that camp.

And no amount of demand suppression is gonna change the fact that we are running out of oil, that has nothing to do with making people starve to death to solve the problem in the name of 'competitiveness' and 'productivity' gods. There are resources to feed and have a decent quality of life in Greece, there are no resources for constant productivity gains & competitiveness getting us out of trouble.

If you think there is a contradiction in all of the above is that you haven't thought hard enough about it. Again, is pure class warfare about distribution (and ownership) of wealth. Some people thinks increasing productivity (by some magical means) is gonna solve our trouble, but this is being used to wage war against labour to suppress demand so some people can still have McMansions and awful waste of resources + owning all the capital).

Matt Franko said...

Seminal post here Leverage... right on!


Adam2 said...

Geography matters!!

ESRI slogan..

PS - I am a GIS practitioner by day. A MMTer by day too.

Matt Franko said...


Do you think it could be correct that you could basically predict how "productive" a nation could be just by looking at the geography? (I bet you could come within 80%)...


Adam2 said...

Matt, I don't know what the percentage is. I am not trained in economic geography. Just geography with an emphasis in GIS.

Although economic geography was something Krugman got a Nobel prize in, the foundations of economic geography are still in its infancy or at least not widely known.

The following is one of my favorite articles on geography and how it has been neglected over the years and how it is coming back (thanks to GIS and GPS).


Also if you haven't read it yet, Guns, Germs, and Steel is a great book on geographic history. It should be read by all high school students.

Matt Franko said...

Adam thanks if you ever come across something interesting (articles/pictures, etc) contact me here and I will post them up...