INSIGHTS: IN UNDER 2 MINUTES, HERE’S WHAT YOU NEED TO KNOW ABOUT GREECE’S FINANCIAL CRISIS
The world has its eyes on Greece right now, as the country’s financial crisis has hit a peak after more than five years of instability.
Greece defaulted on a $1.8 billion payment to the International Monetary Fund, which was due at midnight on Wednesday. On Sunday, July 5, Greek voters will vote on a referendum to determine whether the country will continue with austerity measures or move to reissue its old currency. Should Greek voters vote in favor of the latter, it would effectively separate Greece from the eurozone.
Greece’s banks closed Monday for six business days, and the country limited the amount of money citizens could withdraw from ATMs.
For those watching the events unfold in Greece, here’s what you need to know, explained in under two minutes.
ON THE ECONOMY: EVERYBODY WINS
Take care of yourself, there’s no mystery. Try to understand everything’s planned, its more than you or me. Magic may come, magic may go, it’s not the end of the show. Ahh, everyone wins. The light that’s shining out from you will touch everything that you see. Ahh, everyone wins. When Ringo Starr wrote these words in 1992 for the song that was eventually pulled from his comeback album Time Takes Time, the Millennials were starting to get their first “participation trophies,” and now these trophy kids are starting to have their own kids.
Since I don’t have children, I have never paid much attention to what seems to me to be a ridiculous idea – giving trophies even to kids that lose. However, I recently attended a Little League game that my niece was playing in, and I was shocked to see parents cheering their kid’s as they struck out. These parents were actually encouraging mediocre play. Ok, so the kids are only 9 or 10 years old, and they are still learning to play, but striking out is not the same thing as hitting a home run, and losing is not winning. One of the other uncles in the stands laughed and said to me, “Wow, I hope these kids are learning Chinese, because they are not being encouraged to make much of themselves.”
This really got me thinking. Will there be an economic effect of encouraging mediocrity? Are the Trophy Kids destined to be left behind?
There is a lot of discussion of this topic in the blogosphere, both on the left and on the right. For example, a post by Michael Sigman in the Huffington Post, When Everyone Gets a Trophy, No One Wins, suggests that America’s “everyone gets a trophy” syndrome has become a national joke. The more conservative site, The Daily Beasttook a different attitude with Brandy Zadrozny claiming that, My Loser Kid Should Get A Trophy. But these are opinions, and there does not seem to be a huge amount of academic research on whether or not narcissistic rewards have an economic effect. In fact, a thorough search of the JSTOR database found not one economic article addressing the issue. Maybe that is because there is a very old economic adage that “incentives matter.” Let’s go back to the Little League game. For years, parents have told their kids that winning is not as important as playing. And if you hit a home run, well you have to run, which can be tiring. Why not just miss the ball three times, receive the accolades of your parents and peers and go back to your juice box. In other words, the incentive is to strike out. Same thing if everyone gets a trophy and running a hundred meters quickly is tiring, while just limping along in last place is more relaxing, then why run?
If members of the Trophy Generation are always awarded a prize regardless of performance, is it not reasonable to expect that this attitude will also enter the workforce, a place where competition between individuals, companies, and countries matters?
With little existing academic literature to turn to JDA took a quick look at labor productivity during the last 48 quarters – Millennials started turning 21 about 48 quarters ago, and compared the average quarterly productivity growth with the 48 prior quarters. Admittedly, this is not a great analysis and there are a lot of factors that are not being controlled for, but there is a substantial difference. Productivity has grown by 0.405 percent per quarter since the Trophy Generation started working, compared with 0.62 percent in the prior 48 quarters, a remarkable 35 percent reduction. And this is in spite of the fact that the economy experiences rapid productivity growth when coming out of recession.
Without further analysis it is not fully possible to tell if lower productivity is a result of the newer kids on the block running slower, batting worse, or waiting to be praised. But one thing is certain, everybody is not winning right now.
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