I, Adam Smith, find the root of the Greek Financial crisis to be government intervention. In a free market, served by self interest, individuals will make decisions to make themselves better off, while also increasing the wealth of their own nation. The governments role is to provide national defense, administer justice, and maintain public institutions, NOT to interfere with trade, labor, wages, and the free market.
To help spur economic growth, the Greek citizens need to revert to a free market, deregulate when possible, and strive for innovation. Innovation is the key to a wealthy nation. The sudden growth in wages was also an hinderance in Greece's economy. Labor needs to be set through a free market, not government imposed wages. When a worker and employee negotiate the rate of payment, with each persons self interest in mind, an efficient conclusion will be made.
Graphic from http://cinical.wordpress.com/2010/03/16/life-with-a-law-student-the-invisible-hand/.
Dear Mr. Smith,
ReplyDeleteWhile I have to admit it was only boredom that made me pick up your Wealth of Nations during a particularly boring vacation, I find your argument above compelling. Indeed, I think we agree on the point that government intervention can derail the natural benefits of a free market. I would add to your argument that Greece cannot just rely on its own free market (or even the market of other Eurozone countries). Instead, Greece, its policymakers, and the general Eurozone need to reduce economic interventions that lessen incentives for importing foreign goods.
While I believe we may disagree on other points that are not presented in your post, I think we can both agree that government interventions that are passed in the name of economic protection often lead to economic inefficiencies and stagnancy.
Yours,
Mr. Ricardo
Dear Mr. Smith,
ReplyDeleteI find your argument utterly inaccurate and your ideas hopelessly classical. Have you been eating moldy bread? I do agree the government did not act as they should during the crisis. However, if the government deregulates as you so ignorantly suggest, that provides no incentives to consumers. The market will continue to be in shambles. The country's pessimistic mood will continue with neither consumer willing to buy, nor producer willing to produce or innovate as you again suggest. Governments must structure the economic system of their country effectively. In order to end the recession in Greece, the government must provide funds to the consumers and producers. These funds will allow them to reenter the market, which the government must continue to watch and regulate. Then, an optimistic and confident mood will return both to the investors, producers, and consumers.
The esteemed,
John Maynard Keynes