http://www.theaustralian.com.au/business/wealth/greek-default-crisis-is-all-about-cultural-differences-in-the-eurozone/story-e6frgac6-1226144883522
I came across this article when I googled business in southern Spain. This article is exactly what I believe to be the problem with the financial crisis in EU. Within the EU you have countries doing financially well like Germany and France, but then you have the complete opposite when you look at the PIGS countries (Portugal, Ireland, Greece and Spain). I don't know much to comment on the first two countries, but I do believe the working mentality of Greece and Spain have a lot to do with the financial crisis the EU is undergoing right now. Spain, especially southern Spain, and Greece both view the social life as more important than your work life. The author of this article comments about how she saw a group of men out smoking and socializing like there were no worries in this world. I would see the same in southern Spain when I was living there. I asked a professor about it while I was over there who was from Scotland so he had an inside and outside view of Spain (having lived there for the past twenty or so years of his life). He said that the crisis wasn't effecting the Spaniards personally enough for them to notice or care. I imagine Greeks have the same mentality towards the crisis. While I was traveling in Greece I saw many unfinished and abandoned buildings. It took me a bit to realize that these were being built until Greece filed for bankruptcy forcing builders to stop because they had no money to continue. Towards the end of my stay in Spain I saw this exact same problem along the coast of southern Spain. Building after building half finished and abandoned. Do you have any personal experiences to add to this topic? What do you think it will take to get these countries back on the right track financially? Or do you even think this is possible? According to the article, "Greece is heading for an orderly default" and basically, these debts will probably never be repaid.
Alyse Fischer and Ashref Murfiq
9 comments:
I have never been to any of these countries but my take on the matter is not laziness but just a different more laid back lifestyle/work ethic that Greek and Spanish people have. On the other side you have the hard working Germans. Each culture just has different priorities in life which apparently has pretty grave financial effects on the entire EU and world. I suppose they didn't see this coming in the formation of the EU. I like this quote from the article "You cannot turn a Greek into a German, nor would you want to." This quote kind of sums things up because each culture is truly unique and you wouldn't really want to change them. So, I think it is going to take an out side of the box approach to fix the problems that they face.
I recently read an article in The Economist that talked about this financial issue as well. It said that another bankruptcy was imminent for Greece. Countries such as Germany and France are not exactly happy about this because being part of the EU with the "PIGS" holds them semi-responsible for all of their finances. The article basically ended by saying that the Germans aren't happy about writing a check to cover Greek debt but they would have to in order to save their own economy.
When I was studying abroad in Spain this summer I did notice signs of the financial crisis. I stayed with a host family over the summer and the husband had recently been laid off as a result of the crisis. The family had turned to hosting students as a main source of income; I was one of three students (in a very small apartment). They were very nice and our host mother would often talk to us about how the financial crisis was affecting the country, a lot of her friends had lost their jobs. I saw civil protests in the parks by our apartment. I would agree with the statement though that the people of Spain recognized something was wrong, but most not enough to worry. I am not sure what it will take to fix this but I do think it would be better to start repair now before it becomes too late.
Courtney Moradipour
I was in Italy over the summer and part of the problem there is that they have way more representatives than need. I did notice some places would not accept tips because they were so happy that you chose there cafe over another one. I think Italy among other countries are starting to take steps to improve things for the long term. These steps may be painful at first but will be beneficial in the long run.
Something to consider is that Ireland has actually been making a turn around in efforts to improve its economy. It has been doing much better at stabilizing. Another country to consider which coincidentally fits into PIGS is Italy. The Italian economy has been sluggish in recent reports, and it has a lot to do with the South. Italy is very diverse between its north and south. The southern part of Italy is financially weak and has major issues with the mafia. With Italy being the fourth largest economy in the EU, that will definitely add to the financial crisis amid the EU. I think that Italy fits well in with Greece and Spain in highly valuing social life over work life.
Personally, I do not see Greece getting back on track. They've been struggling for a while. I think that they should just default, then try to rebuild their country. I think that would be the best for the Euro zone. However, if Greece continues to fight, then Spain, Portugal, and Italy add onto the pressures, then the euro will be in a lot of trouble. The EU will be struggling regardless, but it may be best to take a hit and rebuild then keep dragging along.
I saw the same thing when I visited Portugal earlier this year. Porto looked like it was literally crumbling into the ground because the buildings were in such bad shape. However, I think Portugal is trying to turn their economy around, focusing more on exports and trying to become valuable to the international market.
In general, I think the creation of the Euro zone had good intentions, but now it seems like there are more cons than pros. I don’t think it’s really fair for countries like Germany and France to have to bail out sluggish economies like Greece, especially if those countries aren’t taking the problem seriously in the first place. I don’t think Greece will get back on track anytime soon, and in the meantime, the bailouts are causing Angela Merkel to lose support in Germany because the taxpayers there are getting fed up.
I encountered many of the same sentiments when I was living abroad in Germany. As one of the two countries you mentioned with a strong economy, a good portion of the population of Germany is aggravated at their supposed carrying of the EU and the euro as a currency. This was transposed more on the newest countries, including Greece, and also on the possibility of Turkey entering the EU. Turkish people are the largest minority in Germany, and therefore there are wildly different views on whether Turkey should be allowed entrance. There are obviously those of Turkish descent who would enjoy having the ease of travel back to their homeland, or their parents' homeland, to visit relative that being an EU member grants. There are also the Germans who see the Turkish economy as being a potential burden on the rest of the EU. With the crises in Ireland and Greece the sentiment of the latter party has only been magnified.
I do not really have any expert advice on this financial topic, but in Spain I did notice the importance on life rather than business as what is said above. I do not necessarily think this idea of life first is a terrible thing. For example, it could harbor better quality and productivity through happier and satisfied employees. It seems like in the Eurozone fingers are being pointed rather than figuring out how to solve the crisis before it paralyzes the stability of the Eurozone markets.
I really enjoyed this article because I had never thought about it this way. I knew Greece was in financial trouble and that their woes were affecting the entire EU zone. I even understood some of the reasons for it. One reason that the article pointed out was that tax evasion is a huge problem in Greece. Not to mention the relatively early retirement age and high retirement benefits. Another problem which was referenced in a recent Wall Street Journal article was the discrepancy between real productivity and real wage. The article concluded that in this heavily state-run economy, the average Greek worker was making 15-20% more than he was producing. So here's my question: Can outright financial irresponsibility be passed off as culture? Paying workers at a loss is not culture, it's irresponsibility. If they live slower, less efficient, less productive lives, that can be called a cultural difference. And that lifestyle has admiralbe qualities and merit of its own, but it should be understood that there is a trade off. You can't sit around all day like the guys a the coffee shop and have the same standard of living as someone who works all day. Less real labor input and lower productivity equals less government spending and a lower standard of living.
I agree that work ethic in these countries tends to be more lax than in others. Two summers ago, I worked in Madrid, Spain, where my workday began at 10, with a coffee break from 11-12, as well as lunch from 3-5, when I returned to the office to work from 5-7. Obviously, the Spanish workday was devoted to socializing almost as much as working. However, I do not think changing to a more rigorous workday would cause more productivity; traditions such as the Spanish "siesta" are engrained in the culture, and eliminating such cultural staples may cause a backlash that would only serve to worsen productivity. Furthermore, it is not simply a matter of work ethic that gives some countries an advantage over others. Geographic and political restraints, resource availability, infrastructure and human capital are also key components to determining a country's productivity.
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