Photo: Todd Martin
My dumb economics question for the day is regarding Greece. The country has a population that isn’t much larger than the Chicago metropolitan area. Greece, like Chicago, is part of a currency union. Greece, like Chicago and surrounding suburbs, has borrowed a lot of money via issuing bonds.Suppose that the citizens of Chicago decided that they didn’t want to work very hard and then retire at age 50 and probably weren’t going to bother paying back their creditors.
Would that be a crisis for the entire U.S.? For the dollar? For worldwide stock markets?
If the U.S. could suffer the, well, relaxation of Chicago, why can’t Europe handle one country whose citizens take a more relaxed view of work than their creditors would like?
[Separately, events in Europe seem to reward caveman-style investing. Italians and Greeks have a wonderful lifestyle that doesn’t include too much hard work. England has a set of entrenched interest groups (see Mancur Olson) that would appear to make sustained economic growth impossible. Absent a lot of fancy data from investment banks such as Goldman Sachs, an investor would run away from any opportunity presented in these countries in favour of investments in Germany, Korea, China, etc. In the last year or two we find out that England is in fact more or less broke and that the numbers the investment banks and Greece put forward were simply false. Japan, I suppose, is the best counterexample to this caveman-style investing approach. People there are highly skilled and work very hard, but investors haven’t done well in the past couple of decades.]