Archive for the ‘economics’ Category

By Con George-Kotzabasis June 28, 2016

Since the economically profligate Whitlam era, the only Labor government that was bracketed off from Labor’s inveterate stupidity was the Hawke-Keating government. The present leadership of Shorten-Bowen taking a leftist turn in its politics, like the Rudd-Gillard administrations had done, as adumbrated in its pre-electoral commitments of “big-government,” is repudiating the prudent policies of Hawke-Keating and wilfully adopting, retrogressively, the stupid and disastrous paradigm of European socialism that had sunk Spain, Portugal, Ireland, Greece and Cyprus into the abyss of bankruptcy, economic crisis, and political instability. Moreover, it is doing so in the face when even the Scandinavian haven of the social democratic Welfare state is severely clipped of its largesse, as at last has been realised to be no longer economically viable. Anders Borg, the wunderkind as finance minister of Sweden, initiated the incremental dismantling of the Welfare state, lowered taxes in the private sector, which has galvanized the creation of new jobs.

But returning back home. The leftist political editor of The Sydney Morning Herald, Mark Kenny, is forecasting “dire trouble” for Labor on the debt and deficit front. Terry McCrann, of The Daily Telegraph, ominously declares “Shorten would plunge the country into greater debt”. And Henry Ergas, of The Australian, claims that even the latest backflips of Labor will not be sufficient to close the deficit gap and its “mythmakers” will be tempted “to conjure revenue increases out of thin air, just as the Rudd-Gillard governments did pointing to a golden future time when receipts would soar.”

But to believe in myths and tales of future increases in revenue, when The World Bank and the International Monetary Fund slash hopes of economic growth in the near future, is highly precarious, as it would lead the country into complacency and prevent it from taking the necessary measures to countervail a looming long recession. Furthermore, such a possibility is strengthened with the present event of Brexit, which could ominously beget both the dismemberment and the disintegration of the UK and the European Union, whose widespread ramifications upon the geopolitical and economic spheres of the world would devastate any prospects of economic growth for many years. And it is most unlikely that there will be, like in 2008, another China to save Australia from woeful economic distress.

Further, Labor with egregious lack of imagination and foresight is not factoring-in such imponderables as a precipitous fall in world prices of minerals in a context of world recession and the calamitous consequences that would follow, hitting public finances to smithereens and engendering a seriality of deficits with no hope of being reduced, with the outcome of plunging the country into the abyss of bottomless debt and insolvency. Is Bill Shorten going to be the “Maduro” of Australia, who, as the world price of oil dropped to lower depths, as a socialist president of Venezuela, continued the dissolute economic policies of his predecessor, Chavez, that turned the country from contrived prosperity to real poverty, once the government coffers were emptied, and indeed, into a hunting ground for dogs and cats to feed his people?

It goes without saying, of course, that this is an exaggeration and one could hardly imagine Australians shooting dogs and cats to feed themselves. It is merely used as an example to emphasize the dangers overshadowing an economy, when its Stewarts, the government, insouciantly do not take in consideration future possible events that could dramatically affect the economic course of a country and do not take prospective measures that would shield the country from such catastrophic effects.

One asks the question why the smart as they come politicians of Labor, such as Andrew Leigh, the assistant shadow treasurer of Labor, let their guard down and are reluctant to prepare themselves for these uncertainties of the future, believing that Australia somehow is protected by divine mandate from the ills of world recession and that Australia’s “economy is indestructible”, to quote Rex Connor, a minister in Whitlam’s government? For people who have studied the policies of Labor over a number of years the answer is simple and obvious. All their major policies are motivated by their passionate belief in the socialist utopia. And the implementation of these policies requires, according to this ideological schema, big and interventionist government and hence, high taxes; and the redistribution of wealth and not its greater increase are their priority. Despite the glaring evidence showing that augmenting the size of wealth is the only and sure way to enhance the standard of living of the ordinary people. The latter proposition has indisputable historical precedents, as it was the flourishing and ever increasing wealth of capitalism, that for the first time in history, pulled millions of people from the hovels of poverty onto peaks of prosperity. But Labor is blind before this historical fact. Like a drug addict Labor is fixed to its socialist doctrine and lives in a stupefied world of unreality and wishful thinking.

The matchsticks foundations of socialism are collapsing all over the world, especially in Europe, yet Bill Shorten’s Labor continues adamantly to believe that from this wreckage one could still build the just and equal society as envisaged by Labor’s quixotic visionaries. It is under this standard of socialist ideology that Shorten undermines and repudiates the prudent and pragmatic policies of the Hawke-Keating government, whose “Accord” between employers and workers engendered a congenial milieu for investments and the creation of new jobs with the consequence of increasing the living standard of Australians. Bill Shorten’s silence about these productive structural reforms and fiscal frugality of the Hawke-Keating era that had put Australia on a track of prosperity is a contemptuous affront to the two architects of these reforms. It was therefore rather surprising and amusing to have seen the two conductors of this inimitable political and economic performance sitting on the front-row of Shorten’s Launch of the Labor campaign, clapping at a leader who had mockingly renounced their wise policies. For Paul Keating, especially, standing next to Bill Shorten who had adopted and announced policies that would lead to a “Banana Republic,” it must have been an exceedingly painful occasion. Perhaps as painful as replacing Placedo Domingo with rock-and-roll.

I rest on my oars: You turn now

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By Con George-Kotzabasis October 14, 2015-

The Tsipras Government’s performance since its ascension to power on January 25 can be described by its three basic characteristics, infantilism, naiveté, and insouciant irresponsibility, which, as its finance minister, you embodied to the highest degree. Don’t expect to be treated kindly, at least by me, for the most unkind cut you inflicted upon the Greek people. Within the short time of six months you managed to destroy the economy by closing the banks and bringing in capital controls, and nipping in the bud the positive results of the Samaras Government that slowly but decisively were pulling the country out of the crisis. For the first time after the long economic stagnancy and recession, growth was recorded to be 0.8% and expected to be 2.5%-2.9 of GDP for the years 2014 and 2015 respectively, according to the IMF; also, unemployment was prevented from rising to 35%, as was predicted by eminent analysts, and indeed, had fallen by 2%, from 26% to 24% by the end of 2014. And all these heartening results happened within two and a half years under the prime ministership of Antonis Samaras. But you, like a revengeful immortal Olympian god full of envy of these mortal achievements of the Samaras Government, destroyed them with ambrosial delight. Your ludicrously eccentric policies and your barren and inflexible arrogant stand in your negotiations with the European Union brought the country back into recession and you capped this with a bill to Greece of an extra 90 billion to be paid to its creditors, which would come from the pockets of future Greek taxpayers. This was your enviable success story in contrast to the real success story of Samaras.

And yet blind and callous before this stupendous calamity that you delivered upon Greece, you proudly and insensitive claim to be “sitting on top of the world.” (I would add in your first word “sitting,” an h, so to make it a better fit to your ravishing pleasure: It must have been a relishing sensation to you, almost an aphrodisiacal one, defecating on “top of the world”.) You should be instead sitting in a dock charged with high treason for the great hurt and harm you afflicted, with such insouciant irresponsibility, upon the ordinary people whom with unheard hypocrisy you claim to represent. And no wonder that your European confreres were not listening to the bullshit you were emitting in your negotiations with them on the Memorandum, and their justifiable rebuke of your crank economic policies delivered to them in the form of lectures, in an aura of omniscience.

You claim to be a “liberal Marxist.” But you seem to be oblivious of the dismal fact that “Marxism” with any epithet before it, is “a skull that will never smile again,” to quote the ex-Marxist Polish philosopher, Leszek Kolakowski. You are not a denizen of the real world but a denizen of the phantasmagorical world of Marxism whose legacy left behind not the Eden of Marx’s polytropos, many-sided, man, fishing in the morning, playing the flute in the evening, and writing poetry at night, but the police state of the NKVD, Gulag Archipelagos and Killing Fields.

In a footnote of the history of the twentieth-first century you will be described as a crank economist, a cowardly chicken gamester–taking risks not with your own but with other peoples money– and intellectual highjacker, who filched the writings of Marx and Keynes for the purpose of making your hybrid mulish economic doctrine, on whose back, as finance minister, you carried Greece to perfidious treasonable economic and political destruction.

The conjunction of dreaming and ruling generates tyranny.

Michael Oakeshott

By Con George-Kotzabasis January 22, 2015

All the pre-voting polls show that the radical party of Syriza leads the liberal party of New Democracy by three to four percentage points up to this moment. This is because a sizable part of the electorate has been gravely wounded by the austerity measures of the Samaras’ government that were necessary for Greece’s economic resurgence, and therefore has been easily duped by the populist spurious promises of Syriza in its fixed-all campaign that will presumably pull out the country from the quagmire of austerity. If there is no reversal of this lead of Syriza in the next few days, then this party of neo-communists by taking power will throw the country into the vortex of economic destruction and bankruptcy, as a result of their barren, sinister, and deadly ideology, whose consequences will plunge Greeks into mass poverty and political enslavement for at least a generation.

This intransigent Marxist ideology is readily encapsulated in the  preannounced inflexible and inexorable hard stand of Syriza’s position toward the negotiators of the Troika, i.e., the lenders of Greece, by threatening to repudiate and shred basic tenets of the second Memorandum that had already being agreed by the Greek government and its European partners. The latter have made it limpidly distinct that any action by a future Greek government that would imperil fundamental clauses of the Memorandum, could lead to the cessation of funds going to Greece that are so vital for the economic stability and resurgence of the country, and indeed its survival. Hence any unyielding rigorous stand on the part of Syriza’s negotiators with the European Union would lead to the economic rigor mortis of the country. Therefore, the elections of Greece next Sunday are tragically Shakespearian, “to be or not to be.”

Is there a force that could prevent this tidal wave of Syriza from destroying the country? My answer is in the affirmative. It is the force of intelligence that is embodied in that part of the electorate that has not decided as yet for which party to vote next Sunday. The major part of this undecided part of the voters consists of former supporters of New Democracy who are grievously angered with the policies of the Samaras government but who nonetheless perceive the small improvement in the economic magnitudes that have been accomplished by these policies in the short span of two and a half years since New Democracy was elected. It is inconceivable to imagine that these voters will let fly the one bird that they have in their hand for the two birds in the bush promised by Syriza. Nor could one imagine that this middle class would cut their nose to spite their face and vote for the neo-communists. It is on the wise vote of the undecided part of the electorate that hangs the hope of Greece. The return of New Democracy into the government benches under the insuperably strong and astute leadership of Andonis Samaras will ensure that Greece will overcome all obstacles to its economic recovery. In times of severe crises only the strong and intelligent can indulge in hope.

By Con George-Kotzabasis November 19, 2014

The Greek Opposition and the media in general by demonizing The Memorandum with its austere measures that has been imposed upon Greece by the Troika, i.e., the European Commission, the ECB, and the IMF, as a condition for the flow of funds from the latter to the Greek Treasury for the purpose of saving the country from insolvency and gradually placing it on a trajectory of economic recovery, has made it impossible for anyone to reasonably argue, or even to imply, that this necessary austerity, after a mindless profligate spending by previous governments that sunk Greece into an unfathomable debt and debarred it from the financial markets and threw it into an unprecedented spin of economic crisis since the ending of World War II, would generate beneficent results and would pull the country eventually out of its economic crisis.

History has repeatedly shown that countries in critical situations, almost like a law of nature, give rise to extraordinary men/women of stupendous wisdom, mettle, and will power that saved their nations from destruction. Themistocles at the battle of Salamis that saved Greece from Xerxes’ despotism and his barbarian myrmidons, Lincoln in the American Civil War, and Churchill in World War II, are outstanding examples. Likewise in contemporary Greece from the ashes of its economic holocaust, a phoenix, in the figure of Antonis Samaras, had risen to salvage the country from its tragic economic mess. In the short space of two years the Samaras government accomplished an unprecedented feat, that no other government in the world was ever able to consummate, i.e., to draw the country from the edge of a precipitous calamity and place it by gradual firm steps on the solid ground of inchoate economic recovery. This was achieved by a series of structural reforms that made the country more competitive, and by painful cuts in the budget that generated for the first time a primary surplus in the current year, after many years of budget deficits that was the embedded malaise of the policies of previous governments and were the major cause that pushed Greece into bankruptcy. Also, for the first time after forgetting, but not forgiving, many years of negative growth, the country’s GDP in 2014 has increased by 0.7%, and unemployment has decreased from 28% to 25.9%, in the same year, and is estimated to decrease to 25% by the end of 2014.

It is because of these achievements of the Samaras government, that I believe that the TROIKA will be compelled to back down from its severe and apparently unyielding demands, in its impending negotiations with the Greek government in a few days, and will render a positive review of the policies implemented by the latter as stipulated in the Memorandum, which is the sine qua non of Greece’s exit from the strictures of the Memorandum by the end of 2014. It is inconceivable that the TROIKA will persevere with its hard position and put in jeopardy these successes of the Samaras government, that after all, emanated from its own austerity measures that were contained in its own directives as designated in the Memorandum. The TROIKA cannot be so foolish as to throw a spanner in its own works! Hence, the nonsensical fear, that has been so gloomily and frivolously fanned by the Greek media that the TROIKA will continue its hard-line toward the government and place in predicament, and waste, all the sacrifices Greeks had made to turn their country into a modern economy and fecund with prosperity, will dissipate with the softening and compulsion of the TROIKA to withdraw its hard stand.

I rest on my oars: your turn now.

                 

By Con George-Kotzabasis—October 03, 2014

A reply to “of markets and minds” –by professor Peter Bossaerts

Melbourne University Magazine

Economics is the application of scarce means for the attainment of countless abundant ends. Since all ends cannot be fulfilled because of the scarcity of resources, human choice selects those ends that are more needful or pleasurable to man than those that are less so. The attainment of those more needful ends is a result of human action. These ends, however, are the fruits of the future and the inevitable uncertainty that is riveted upon it. Therefore human action is always speculation based, however, not upon the throw of the dice but upon ratiocination. Furthermore, actions are determined by the value judgments of individuals i.e., the ends they are eager to attain. These valuations differ among individuals due to the different circumstances and living conditions of these individuals and to the variable desires and wishes that emanate from the plethora of their personalities. There is no constant relationship between these valuations, as they emanate from the different wishes, desires and caprices of an umpteenth of individuals, and are therefore beyond the bailiwick of science to measure them; what scientific method could measure with precision the capricious longings of man and the uncertainty that surrounds his existence?

Professor Bossaerts’ attempt therefore, to identify and control the ‘cells’ of the economy and finance and the complex interactions that determine their course by the scientific method of neuroscience for the purpose of rationally directing the process of the economy to a more beneficial path, is in vain and is bound to fail. Science measures constant relationships in the controlled experimental environment of the lab but cannot measure uncontrolled innumerable variants that determine, in our case, the process of a free market economy. The search, therefore, of finding the inexorably elusive quintessence of the economic process by the tools of the hard sciences, though a laudable task, is purblind, as it cannot see nor understand that science is incapable of measuring the measureless.

The endeavour to supplant and redress, on the one hand, the imperfections of the free market economy, and on the other, the failures of government dirigisme to regulate and direct the economic process of the free market to a more optimal state, by the powerful algorithmic tools of science, will be found to be another futile attempt to direct the economy from a central command post, this time by the methods of neuroscience and not by an omniscient cabal of socialist planners.

In an imperfect and uncertain world, the free market economy will proceed and move by trial and error and continue to spread its benefits to mankind. But the intervention of man’s reason and understanding will substantially diminish the errors by increasing their correction in time by the power of man’s imagination and ratiocination.

As the superb and strong statesmanship of Antonis Samaras is pulling decisively Greece out of its economic crisis, I’m republishing this piece that was written in the midst of 2012, for the readers of this blog.

Government intervention always wills the good and works the bad.

By Con George-Kotzabasis

The European Union’s sovereign debt crisis was neither an act of fate nor an act of a free self-dependent man but an act of deluded ideology whose sails were blown by the long-lasting winds of government dirigisme, i.e., intervention, and welfare dependency. Once again it was the work, the social engineering, of the bien pensants in the form of a state directory of planning that would put a floor of security for the masses and protect them from falling into abject economic privation that was always, according to their thinking, the omnipresent and inevitable result of the unjust, harsh, and unequal regime of the capitalist competitive free market. The trouble was that this floor was made out of straw and at the first jump of an economic crisis–whose seeds were planted by government intervention,  loose monetary policy and low interest rates–would open a gaping hole through which this security would disappear and drown in a massive pool of unemployment and poverty.

The Eurozone’s one dimensional foundation of monetary union without banking and fiscal union could not sustain the European edifice in the long run with the differentiating regime of taxes, social benefits, and pensions that existed among its constituent states. The proliferation and prodigality of unsustainable Entitlement Economies, which have been the characteristics of the welfare states of Europe especially in the south, could not have been continued without cracking the economic underpinnings of the Eurozone. Also, the European Central Bank’s enabling of low risk premiums on interest rates of government debt, encouraged Greece, Portugal, Spain, Italy, and Ireland to go on an orgy of borrowing and overspending. The inevitable outcome was a stampede of budget deficits that were unsustainable and the eventual loss of all credibility in the financial markets that the afflicted States would be able to pay back their debts and thus the shutting out of the latter from the global financial lending pool.

Since no private person would hazard to lend money to states lassoed in sovereign debt the only alternative left was for the richest countries in the Eurozone, such as Germany, to become the lenders and continue to finance the former for their economic survival. But such help would be given under very severe terms encapsulated in strict Memoranda to the receiving countries with the stipulation that the latter would adopt and implement stringent austerity measures that would decrease substantially government expenditure, would restructure and reform their economies making them more competitive, and privatizing public enterprises, whose inefficiency and lack of a diligent working ethos can only be sustained by a continuous expensive staple of government subsidies.

These austerity measures, however, whose formulators have been the European Commission, the European Central Bank, and the International Monetary Fund, the so called Troika, are forcefully rejected by the people of those countries who for decades have been inured to the social and economic comforts and benefits engendered by the reckless spending of their governments, and are refusing to accept any cuts to these benefits even when some are aware that the latter can no longer be provided since the governments’ coffers are empty and the convenience of funding these benefits by borrowing, as they have done in the past, is no longer available due to their nation’s sovereign debt. Moreover, these austerity measures initially had not being complemented with policies of economic development and thus led to the worsening of the economic conditions of those countries that adopted them, such as Greece, leading to unprecedented massive unemployment by the closure of large and small business enterprises and to the smashing of the middle class which is the cornerstone of free societies.

This situation is dangerously engendering the fragmentation of social cohesion in those countries and giving rise to political parties of the extreme right and left, coming out of the foam of waves of violent demonstrations that imminently threaten democracy. A latest illustration of this danger are the attacks by petrol bombs and other incendiary devices by hooded youths of anarchists and extreme leftists in Greece against the homes of outspoken journalists, offices of the governing coalition of New Democracy, Pasok, and the Democratic Left, and the burning of Bank’s ATMs. And of particular significance are the attacks on journalists, which are a blatant violation of free speech and a sinister attempt to intimidate them from expressing their opinion about events and criticizing politicians of Syriza, the official opposition, of whom obviously the fire carrying mobs are its ardent supporters.

This will be the tragic legacy of European big government and its ill-considered, indeed, destructive intervention in the processes of the free market that for at least two centuries have delivered prosperity and an unprecedented increase in the standard of living of the masses; as the socialist politicians from Francois Mitterand to Jaques Delors–the architects and enforcers of the European Monetary Union that forced Germany to succumb and pay the price of the unity of west and east Germany as demanded by France–and their present disciples of  etatisme are in the process of killing the goose that laid the golden egg, i.e., the unimpeded free market, and by doing so unconsciously and unwillingly are generating and  unleashing the brutal forces of fascism and leftist directorates of totalitarianism on the landscape of Europe.

To avoid this slide to the hell of totalitarianism only the rise of statesmen who “can act beneath heaven as if they were placed above it” is consummated. The fiscal and balance of payments crisis can only be remedied by substantial cuts in government spending and the euthanasia of big government, and by the privatization of debt ridden public enterprises–that are the last strongholds of obtuse and doctrinaire unions– and by the freeing of private enterprise to pursue profit by competition and entrepreneurial creativity and dynamism, respectively. These ‘bitter’ remedies can only be administered by statesmen of the calibre of Lee Kuan Yeu and Antonis Samaras. The latter, indeed, might not only be the progenitor of the Greek Renaissance but also the paradigmatic leader of other European politicians to imitate for their own European Renaissance. The Newtonian apple that will stop the European ‘discord’ that currently threatens the demise of the EU will fall to the gravitational force of such statesmanship.

Hic Rhodus hic salta

 

By Con George-Kotzabasis-May 22, 2013

The Marxistoid professor of economics Yannis Varoufakis (In his keynote speech in the Subversive Festival of Zagreb, Croatia, on 14th May, 2013, confessed himself to be an “Erratic Marxist”), whom Marx himself would have placed under the category “vulgar marxist” for following the footsteps of the great man erratically and loosely, in a choleric and ideologically tendentious article on his website, argues, that the “The Greek Success Story” is “The latest Orwellian Turn of the Greek Crisis.” All the favorable indices by which the “international press and the money markets seem to concur,” to quote him, that the country is on the road to recovery, are to the professor a contrived fiction and “vile propaganda” by the Samaras government to deceive and fool investors and to inveigle them to make “cheap investments” in the country with the prospect of high profits.

According to Varoufakis’ argument, among the deceived and the fools are not only investors but also renowned credit rating agencies, such as Standard and Poors, and Finch, which have upgraded the Greek state’s credit worthiness and four Greek banks, a number of serious economic commentators who foresee the reigniting of the Greek economy the following year and a growth of 0,6% in 2014 –some indeed write about a “booming” economy in the near future—and a bevy of the best and brightest of the European Commission that praises Greece for its rapid and effective reforms that enhanced its competitiveness. And to top it all, the ‘trickster’ Samaras was even able to deceive the economically astute and hardheaded Chinese and lure them to make investments in the infrastructure of the country and in real estate.

Only Professor Varoufakis is disabused of this deception and remains realistic about the dire prospects of Greece in the midst of this fictional euphoria that was able to entice cerebrally reputable institutions and people to see in this ‘mirage’ a “Greek Success Story.” It is rare to see such arrogant omniscience, of a second rate economist and Marxistoid to boot, attempting to trump all other economists and institutions that on a factual basis prognosticate an economic recovery of Greece.