IT’S THE ECONOMY
What Greece Makes, the World Might Take
Published: July 3, 2012 12 Comments
(Page 2 of 2)
One of the most destructive developments, Ventouris says, came when Greece joined the European agricultural-subsidy system in 1981. Money from richer European taxpayers flowed to Greek farmers to upgrade their farms, “but the Europeans and the Greek government had no control mechanism,” he says. Instead of investing in new tractors, “the farmers were taking the money and buying things like Mercedeses.” Entrepreneurs who avoided the easy riches of government contracts or E.U. subsidies were often punished by Greece’s nonsensical regulatory system. Megan Greene, of the research firm Roubini Global Economics, once famously recounted visiting a bookstore and cafe in Athens only to learn that it was not allowed to sell books after 6 p.m. or coffee — ever. At the same time, those breakthroughs in olive-oil and feta technology were taking place everywhere but Greece.
Deep thoughts this week:
1. Greece was once one of Europe’s fastest-growing economies.
2. Seriously.
3. Now it can’t compete.
4. Its best shot at a comeback may be grabbing more of the global Greek-food market.
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Ventouris, whose boss was recently named Greece’s new finance minister, also happened to advise McKinsey on its report. So I asked him if he thought the country might adopt any of its recommendations. He sighed and said that Greece was locked in a vicious cycle. After all, growth requires investing in the future, and investment requires faith in the political system. And right now, nobody has faith in anybody. Sales of olive oil and feta cheese and tourism packages might provide a short-term spark, but the McKinsey report is notably vague about who might be willing to provide the capital. “It would be very useful if we had an inspiring leader,” Ventouris says.
It’s easy to mock the Greeks with their inefficient businesses, lifetime government jobs and absurd public-sector projects. But average citizens have been beleaguered for too long by forces beyond their control. They were occupied by three different countries in World War II. Afterward, Europe’s richest countries subsidized Greek farmers. When Greece later joined the European Union, it was lent huge amounts of money. (As many Americans learned, debt-fueled spending can feel like hard-earned success, at least for a while.) Now Greece is again waiting for other Europeans — especially the Germans — to decide precisely how miserable their next decade will be. The problems are overwhelming, but it’s somewhat satisfying to know that the solutions might be based on things the Greeks have long known how to do themselves, like processing olives and brining cheese.
GO, GREECE LIGHTNING
Greece’s natural resources are profoundly underused. According to the pressed-spring theory, that may be good news for a recovery. Percentages are the products’ share of total Greek exports.
2%: Fresh Fish
Exports of fresh fish, mainly to neighboring countries, have grown by double digits, but fish exports are still a meager piece of the country’s export portfolio.
2%: Feta Cheese and Extra-Virgin Olive Oil
Rather than ship raw olives abroad, Greece could process and package the goods at home and sell them for a premium.
2.5%: Aluminum
A mainstay of Greece’s export economy. The country has rich deposits of aluminum ore.
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