Tuesday, 19 June 2012

Greek productivity: the opposite implied by absurd racial stereotypes

One of the most depressing things about our present economic crisis is the way that it's turned Europeans against each other. To listen to some of the vox pops coming up from the street in Northern Europe, you'd think that Spaniards, Italians and Greeks were all a bunch of lazy, good-for-nothing subsidy junkies  just waiting to rob German taxpayers of their last euro. There's a nasty racial edge to this, brought out rather well by Polly Toynbee of The Guardian today:

Look at the venom – the sneering at Greeks, Italians and Spaniards, lazy southern layabouts: blaming ineffective governments nastily morphs into blaming whole nations of inferior people. Germans are again represented as spike-helmeted automatons, bidding for a fiscal and political union that would reduce proud nations to town councils under Berlin's thumb. Germany v Greece on the Euro 2012 football field may be a comic coincidence this week, but nobody should dismiss the seriousness of the EU's 'never again' founding purpose.

 In fact, the tedious racial stereotypes about Mediterranean workers are ridiculous, ahistorical and just plain wrong.

Of course Italy has to clean up its nepotistic labour market. Spain has to make sure it never has another property bubble like the one that's just burst - not that Brits are anyone to go around lecturing about this. Of course upper middle-class professional Greeks should pay their taxes.

But these are all structural problems with those economies, that have grown up over many decades (and in some cases, over centuries). They won't be solved overnight.

And they're certainly nothing to do with working harder.

Take Greece. The balance of her trading account, and the mix between assets and liabilities held abroad, was actually rather modest and conservative before the country was encouraged to go pell-mell for foreign buying by the apparent stability leant by the Euro. That alone shows that the country's long-run competitiveness was actually rather good. Greeks actually work longer hours than most Europeans. Greece's problem is not anything to do with the laziness or fecklessness of its largely blameless workforce: it's that it has a vastly overvalued currency which means it can't export the low-end produce (e.g. tomatoes, feta cheese) that other Europeans want. In the meantime, other and colder countries force-grow Europe's vegetables and stuff them down southern Europeans' throats. What a great idea - in terms of carbon release, if nothing else.

Oh, and by the way, have a look what austerity does to labour productivity. Greece had an exactly average labour productivity in 2002, when the Euro was launched. That wasn't far behind Germany's rating. And for the first few years, all went well, with the Greek figure running at 98.4 against an EU average of 100 in 2009. Since then? Er, the figure has fallen off a cliff, to 93.4. Take a look at the graph above, which just tracks relative labour productivity. The Greeks were, you might agree, doing pretty well until crazy economists arrived to give them a kicking. A relatively developing country, with a weak high-end exporting sector, can't cope with this drastic surgery, and the IMF-EU Troika are making things worse every day.

Laziness? Don't you believe it. Policy failure? Certainly.