Greece – Dole and delusion do not work

Hi

Dole, handouts, “go away and don’t bother me” money, a.k.a. transfer payments from one part of a currency union to another, rarely work.

In a crisis, a war, a flood, a fire, a tsunami, they can work.  Like Elastoplast and tourniquets, they are useful, essential.  Where the problem is cultural or structural, doles destroy.

Wolgang Nowak of Deutsche Bank, a politician and an economist, says:

“Of course Germans are aware that fiscal transfers can work: we became a successful nation after the Second World War because such transfers took place. . . . . cannot extend or tolerate the current lack of discipline, in for example Bremen or Westphalia, to Greece or Portugal or Italy.”

The German wirtschaftswunde of the 1950’s and 1960’s was the product of necessity, of a unifying plan and of self-discipline.  A self-discipline that Mahatma Gandhi called swa raj and Presidents Adams and Jefferson called virtue.  Germans and Germany still share language, culture, self-discipline and organisation, but no longer can they make transfer payments effective, even within Germany.  What chance has Brussels and a euro currency area?

There is a secret.  Politicians, helped by some economists, try to hide it.  After about three years of transfer payments, the rich, paying areas, grow richer.  The poor, receiving areas, become poorer and more dependent.

Used inappropriately or for too long Elastoplast or tourniquets can damage and kill.

Paws4Now

Jock