When I was a kid, my grandmother always used to tell me various folktales. Being from a small village, she was more used to hearing folktales, which she passed on to my mother, and then to us (grandchildren). One of the stories that she kept on telling us was the folktale version of Midas touch.
What is the story of Midas Touch?
As per Greek mythology, there was a King by name Midas, who got the boon to transform anything and everything that he touched to gold. What was his boon that resulted in a boom also resulted in his eventual downfall with Midas dying of starvation. This story tells us that we have to be careful even with our prayers, and our wishes. Further, my grandmother always mentioned that this story shows us that anything in excess, gold and for that matter even water, can consume or drown us.
How is this story relevant to current times?
Let us say that there is Country X, which has 20% of the world population, and where the country's residents (on an average) save (let us say) more than 50% of their monthly earnings, and the country's GDP is one of the highest in the world. At the same time, the country is limited on resources, and have to depend on the world to feed the increasing consumer demand with 20% of the global population being in that country . In that case, how is this country going to act? Would excess savings be sufficient to meet the consumer demand for common household amenities? Can this country act on its own or does it need to work with rest of the global ecosystem? The point being that, too much savings can hurt in the same way as excessive debt.
By the way, any country which has 20% of the global population needs to figure out a way to optimize the country's population. Moreover, if that country happens to be in a continent with almost 60% of the global population, it certainly needs to work out a global solution by working with other major players around the globe to optimize the population. This optimization process again requires understanding the demographics around the globe. I prefer emigration (I believe - best avenue: education) over acquisition of land, which I believe, might provide a more, longer-term global solution. (Remember, we all are nomads, and the world map has gone through repeated changes over time). This emigration process should also consider the impact of money flow due to first generation's varying levels of allegiance to both the countries.
Moving on from excessive savings to excessive debt, we need to certainly discuss the current issues in Europe pertaining to Greek debt. Is there a solution? What can be done?
First and foremost, please cut down your egos, and both sides present what you are conceding to the other side for the sake of EU rather than focusing on pointing fingers at each side. Let us look at a scenario -
Let us say you loan money to your neighbor, and now your neighbor does not want to pay it back, and also has given the impression to you that (s)he wants to get away from the loan without taking any effort from his side. – How would you feel then?
From the neighbor’s perspective, (s)he feels that (s)he is doing her/his best to improve her/his personal finances, and also has cut down on her/his expenses, and also trying to find avenues for improving personal finances, but in vain due to limited opportunities in the marketplace – How would this person feel when (s)he is being told that (s)he is not trying at all?
Does it mean that the loan needs to be waived?
No, not at all. Instead, figure out solutions that would improve the position for both the sides.
First of, to work out an amicable solution, avoid unnecessary statements/remarks about each other. For example, I saw a signboard in a news article that tied Greece situation to colonization. Countries around the globe should understand that the world has come a long way since the colonization days. For example, I have a family member, who is married to an Australian with Greek-Italian parents, and resides in another country. That’s the world we are in.
Secondly, Greece, please point out your strengths, and give confidence to your neighbors that you will be able to improve the economy, and reduce debt of the country.
WHAT CAN GREECE DO?
1. Unemployment amongst 15-34 year old appears to be a major concern due to limited opportunities. With that being a problem, don’t stigmatize those individuals who are staying with their parents through news articles, and other media channels. In a way, it should help the economy in reducing accrual of additional debt.
2. Tertiary education appears to be a concern in Greece, and hence, calls for improvement in the educational system in Greece. Advanced countries in Europe with better educational system can consider offering scholarships to high caliber students in Greece. This action will serve two purposes: a. it will reduce consumer demand within Greece, and scholarships would make these individuals self-sufficient, and even help their family members back in Greece. This action also aligns with OECD findings about the social good that can come out of educated masses.
3. For a country with 11 million people, offering opportunities to even 1-2 million people in countries seeking increase in consumer demand should help both the sides. For example, I was surprised to know that there are only 300-400000 Greeks in Canada, and around 600000 in Australia.
4. Your country’s economy appears to over-rely on service sector, where there is so much competition. Focus on diversifying your area of focus by expanding your trade with countries having other industries, and by opening up your economy to bring in talent from other places to accommodate expansion into new areas.
5. On the brighter note, your country’s household debt is stacked in the middle, and is much better than many other OECD countries.
6. Also, with a per capita income of around $26000, which is much better than majority of the countries around the world along with a household debt of around 112% with respect to net disposable income, which I guess is primarily from real estate, I think that your country’s shape is not as bad as what it appears. As long as the government debt is controlled through right policies, and through reliance of universities and experienced, polymath individuals, your country should be roaring again soon. This is where EU can jump in, and work out a financial structure along the lines of what I had suggested in the first part, and I am positive EU is already offering something along those lines.
7. By the way, if an individual of Turkish origin can manufacture and market Greek yoghurt to become a billionaire, Greeks should be able to do it too. By the way, figure out a way to seek this person’s expertise on how to market products in the way he did – basically work with him rather than against him to understand how to market new products.
To relate the text with actual data, I have included two of the figures extracted from the OECD site, and have also cited it below. Please let me know, if OECD prefers to remove it from this page.
OECD DATA - HOUSEHOLD DEBT:
OECD DATA: GENERAL GOVERNMENT DEBT