Greece: The need to have a more concerted approach to solving economic recession

Greece is still in trouble financially. Its government and people continue to face dire straits in returning to positive and decisive economic recovery and growth. Almost everyday we read reports of actions and negotiations going on to salvage the situation. Much of all that revolves around the traditional austere approach to leading a country out of recession. I do think more can be done to see better results in the short term and over the long term.

Now I do hope Greece and its Eurozone ‘allies’ find a win-win solution soon: first for the benefit of the common people, second for the overall progress of the state of Greece, and then for recovery of the Eurozone.

It appears that the international economic community is still stuck with the idea that when state economies go into crisis, all you do is make the government cut back on spending, raise taxes and interest rates, and embark on other austerity measures, and then you give measured loans with interest over a period of time.

This crisis started evolving since 2008/9. 6 years have passed. If this approach is working and delivering successful economic recovery, growth and prosperity, surely we should know it by now. Maybe the approach is getting some gains for the severely affected states, but clearly they are not good enough.

I believe it is time to make meaningful adjustment to the standard approach the international community takes when trying to save a flailing economy. A government may embark on cutting its spending and raising taxes and all such actions to conserve wealth, curb financial leakages, and keep the crisis from escalating. But what happens to the prices of goods consumed by that country? Do they fall as well so as to even out the playing field? What of foreign investments: are there structures or policies in place that make sure they keep coming in?

Clearly, Greece has a debt problem. But do we seriously think that merely giving them more interest loans [more debt] amidst austerity measures will indeed get them out of their debts? Is that the best and most sincere approach we can think up?

Capital investment, not just liquid cash, has to flow into Greece. Prices of goods consumed within the Zone, especially by troubled economies, must find a way to drop. In the end, the equation would be: capital investments plus cheaper goods plus loans plus careful government spending equals real and sustainable economic recovery and growth.

As it is, very few investors may be willing to bring in their capital to Greece. But the Eurozone can think up and provide incentives for companies to do so. This may mean that better faring states would give such investors temporal tax breaks, or tax reductions within their own borders as reward for investing in Greece, as well as easing up access to bank loans for investors willing to establish grounds in Greece. That shouldn’t be difficult since ECB continues to speak confidently about Greece’s return. So it must believe that investing in Greece is not an effort in futility, and it must find ways such as this to act out that belief.

Countries like Germany and France in the Eurozone, can of their good will, if they have plenty, help to subsidize goods being purchased in Greece. In other words, let the stronger states, within and outside the Eurozone, give targeted economic aid to Greece.

What will be the gain of such liberality for the giving states and the Eurozone? Well, Greece will definitely recover and grow and be able to settle its creditors. Its recovery would also mean an addition to the Eurozone and the global economy in general. I hope those in position to act will muster up enough trust and political will to do all that is possible to turn the situation around.

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About Johnson Boyede

Johnson Boyede, B.Sc in International Relations. He wrote 'Addressing terrorism in Nigeria and possible spill over into West Africa' for his Long Essay. He contributes scholarly writings to an open facebook group, 'League of Diplomats'. He agrees and runs with the opinion of Paul Romer that, "Knowledge is a non-rival nature and only partly excludable... In an open society, knowledge's non-rival nature means that a piece of new information can be used over and over again, by different people, in varying contexts and to make new things...one good piece of knowledge will live several lifetimes, undergo different iterations and be put to ever more unique purposes."
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