Monday, July 20, 2015

The Greek drama

Prof.T.T.Ram Mohan of the Indian Institute of Management has an interesting blog that discusses many events passionately and at times dispassionately ( Regarding the Greek crisis, the professor has argued that the lenders must agree for partial waiver so that the country can be back on its track.

This view attracted the following comment:
"Will debt forgiveness not amount to incentivisation of indolence? Greece entered Euro Union by faking its financials. The basic moral and legal principle that fraud should give no advantage to the fraudster cannot be transgressed. Waivers now will snowball into major disasters in future. The choice is not between forgiveness and failure, but between discipline and disaster."

Mr.Ram Mohan responded as follows:
" Whatever Greece's original sin, the rise in the debt to gdp ratio is the result of austerity policies forced on it. Debt has to be reduced for growth to resume. Do we want to punish Greece for its past sins or do we want a way out of the present problem?"

The professor has presented the problem as past vs present. Are we to focus on past sins or present problems? 

We may arrive at a different answer if we frame the problem as one confronting the present and the future. Do we want a temporary way out of the present problem and get into a bigger soup in future or do we want to painfully negotiate the present and evolve a better future? Pandering to the Greek greed for serial bailouts is not a panacea for its ills; on the contrary, it only serves to defeat its aspirations for a better future.

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