WE NEED GEEKS NOT GREEKS

“I would love to change the world, but they won’t give me the source code”.

I have had 5 weeks skiing this season in Switzerland, Austria and the US. In Europe it was one of the best seasons that we have had in over 30 years.

When we were in Verbier across Xmas we had an interesting encounter in a gondola one morning with three young Greeks who were there for a two week vacation. We were chatting about how Greece was disintegrating, and how they were putting the whole Eurozone at risk. They proceeded to tell us how tough it was in Greece at the moment, and when I questioned them about the whole “sport” of tax evasion in Greece, one of them laughed and candidly stated that if he had to actually pay the taxes that he should have done, he certainly would not be able to take a two week holiday in an expensive Swiss ski resort.

Author: Roland Zumbühl, Arlesheim; via Wikimedia Commons


It took all my strength to stop my wife from strangling him and throwing his lifeless body out of the gondola to at least add some value from a Greek to the European ecosystem as carrion fodder.

When we then suggested that in fact, as we were people whodid pay our taxes, we were actually paying for his vacation, all he could muster was a stupid grin. If we had not then arrived at the top of the mountain I have no question that he would have ended up with one of my ski poles embedded in his heart, and I would now be in prison somewhere, serving a sentence for justifiable homicide.

I have long believed that we should not waste our money on the Greeks (see “It’s all Greek to me” posted June 20, 2011) when they actually have no desire, nor ability, nor concern about ever paying us back … ever ?

Author: Ggia (own work); via Wikimedia Commons


If we have 200 billion euro to spare, surely we could find some better ways to use the money than just by supporting the lifestyles of people who have absolutely no intent of cutting back on anything, and particularly on giving up pay and benefits that are far beyond the rest of the Eurozone countries, butwho expect the rest of Europe to keep subsidising them so they don’t actually have to change anything about themselves, in particular actually giving the Greek government the recently re-estimated € 70 billion in annual tax evasion (see “God save the Euro” posted December 6, 2010).

So if we are not going to give it to the Greeks, where could we better put our money ?

When I started playing with computers in 1965 my first “beast” was an Elliot 803 manufactured by a British company Elliot Brothers. They merged with English Electric in 1966 and were than taken over by ICT in 1968 to become International Computers Ltd (ICL), supported by the UK Government who then believed that the UK needed a strong national computer company. ICL survived until 2002 when it was taken by the Japanese company Fujitsu, when all the members of the British government were busy attending the funeral of the Queen Mother.

Author: HendrikHAM; via Wikimedia Commons


Actually in the latter half of the 20th century Europe had a reasonably viable hi-tech industry, including some serious software players like SAP, Business Objects (1990-2007), Baan (1978-2003), Sage and Intentia (1984-2006), just to pick out a handful.

The only global players left in this list today are SAP and Sage, and the latter is struggling.

Our Hi-tech industry has all but disappeared, and we are now dependant mainly on the US for our technology.

There are however thousands of small start-ups all round Europe who are creative, innovative and promising, but who find it hard to get funding without giving their companies away to the VCs, nor to organically gather the money needed to take their products to the world, rather than just remaining a small regionally localised player.

Author: Wikimania2009, via Wikimedia Commons


We have actually so far committed to give Greece over € 200 billion, that is 200 thousand million.
The majority of small “proven” hi-tech start-ups would be thrilled to be given a € 1 million loan from a caring government agency and it would make a massive difference to their ability to actually get over the initial business hurdles, such as globalising their product and helping them go to market.

We wouldn’t even have needed to spend the full € 200 billion that we have spent on Greece.
If the other 16 countries in the Eurozone had just left Greece to fix their own extravagances and had chosen even as many as 1,000 small companies each to help out, the total cost would only have been 16,000 million, a mere spit in the ocean compared to what we have already given Greece, without even considering how much more it will take to keep supporting a country that has no intent in driving their own recovery, just to keep it in the Eurozone.
Not only would this be a way to try to revive and revitalise the European technology sector but would go a long way towards creating badly needed jobs particularly amongst the young, where the worst unemployment exists.
Even if only a tenth of these 16,000 Geek-driven companies were actually successful and were able to pay back their loans, it would still be a significantly less risky investment than giving money to Greece.

So why give more money to the Greeks, when we should be giving it to the Geeks instead ?

After all, there are 10 types of people in the world, those that understand binary and those who don’t.

Author: Cjangaritas (own work); via Wikimedia Commons


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8 Responses to WE NEED GEEKS NOT GREEKS

  1. Nick Baile says:

    Les,
    I enjoy reading your weekly posts and, much as I fully sympathise with your ire about bailing out the feckless in general and paying for their skiing holidays in particular, you should do yourself a favour and check your figures – for fear of discrediting your own worthy rant.
    The Greek bailout fund is indeed €200 billion (US short scale). If it weren’t then we would have to assume that either (1) the projected size of the ESM rescue fund, €940bn, will be larger than the total world GDP, Wikipedia: $78.95 trillion, or (2) the ESM figure is in short scale and therefore smaller than the size of the Greek bailout – hmm, unlikely.
    Keep up the good work,
    Nick Baile

  2. Thierry says:

    I agree with the “lets not throw good money after bad”. No doubt this is not the best allocation of funds at the Micro level.
    At the Macro level and Geo Political level it might be seen in a slightly better light although I think there are other options to attain this objective as well such as Euro Bonds and making the ECB as the lender of last resort.
    At the social/individual level try not to be too harsh with your Greek ski companions, it has been a long time since the equilibrium in the Greek economy was about not paying taxes. Not only is it an ingrained traditions build, among others on a well deserved distrust of governments in that region but also at a Game theory level it obviously makes little sens to be the only one sticking your neck out (-,
    Now food for thought, have you ever wondered who in those skiing resorts really deserves to be having a good time there ? Think a bit about the Russian Oligarch community spending there winters there as a easy stereotypical example, far worse things have been made in the name of Skiing and after Ski “Raclette” and I am not even getting into the morals of agency costs at company board level !

    • leshayman says:

      Thierry, my issue is that we have thrown billions at the Greek problem in the belief that in the worst case we could manage their “controlled” exit from the eurozone. There was never any question that Greece would actually be able to pay back the loans as their economy was contracting and only an impossible miracle could change that position. The Greeks have taken the option of a controlled departure out of the game through the political process, leaving a country in even more disarray and with no other real avenue, and with even harsher impact on the rest of the eurozone than if we would have just accepted it at the beginning. Les

      • Thierry says:

        Hi Les, thanks for the response. Always great pleasure reading your thoughts on business and economy. I just thought there was a hint of morale judgement about the Greek ethics, which I can understand and especially if your cultural roots are somewhat “Nordic” but I also understand the situation of the Greeks; the real corruption and lack of ethics has been with the politics which have governed Greece, they are corrupt and in the hands of a few families and have for many years favored these interests allowing for example Tax armistices for those having undeclared Offshore assets even over the course of this crisis.

        Tax rates have been high but on both sides it was consensually agreed that only a small part of that tax would in fact be due, lets say that the tax process needs to be seen through the lens of culture, an example I can think of is how we define a price, in Northern Europe we like to have a fixed price while in the South it can be more the result of a bargaining process ( agree some generalisation ). Same attitude to taxes which translates also in punishment, Tax evasion is a very serious crime in the US while not so much in most of Europe.

        Regarding the ways the EU could have managed this better I think there will be many books written about this. In essence it was there first time, they were unprepaired they got scared and they messed up.

      • leshayman says:

        Thierry, the problem is that we rushed in, saddled them with massive loans/debt, made them cut back on everything, but did nothing to help them build value to be able to recover. It was a waste of EU money and did nothing to help the Greeks or ourselves. I agree about the corruption and political immorality. A Greek friend of mine said he would have needed to pay €20k in bribes to get approvals to build a pool, so he built the pool without the permits, and when he got caught he was fined €5000 but kept the pool. Madness ! Les

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