Valve's Economist Yanis Varoufakis Appointed Greece's Finance Minister

eldavojohn writes A turnover in the Greek government resulted from recent snap elections placing SYRIZA (Coalition of the Radical Left) in power — just shy of an outright majority by two seats. Atheist, and youngest Prime Minister in Greek history since 1865, Alexis Tsipras has been appointed the new prime minister and begun taking immediate drastic steps against the recent austerity laws put in place by prior administrations. One such step has been to appoint Valve's economist Yanis Varoufakis to position of Finance Minister of Greece. For the past three years Varoufakis has been working at Steam to analyze and improve the Steam Market but now has the opportunity to improve one of the most troubled economies in the world.

Comments

Honestly...

[Anonymous Coward]

I don't know how to feel about this one...

Re: Honestly...

[ultranova]

This certainly explains the observed tendency of economies to collapse randomly no matter how they're run.

However, unlike in game economies, decisions in real economies affect people in addition to economy. Even if austerity actually was a cure to euro's problems, it cannot continue without destroying EU itself. People aren't going to tolerate endless misery just to boost some number, no matter how necessary politicians (who don't share the misery) deem it.

Either EU gets euro to work without austerity, or it has to abandon it. Demanding sacrifices from the common people who's reward is having less say in their own local affairs is quickly discrediting the entire union.

Re: Honestly...

[jonnyj]

What Europe calls austerity, everyone else calls living within one's means. Which, in the long term, is non-optional.

Quite apart from the politics and economics, this is a really complex moral issue.

On the one hand, the Greek people repeatedly elected governments that failed to collect taxes or eliminate corruption, spent money that they didn't have and borrowed money that they couldn't afford to repay. On that assessment, the Greeks deserve every bit of misery they've endured since their creditors decided to stop pouring good money after bad. But the trouble with that view is that a different bunch of Greeks are having to pay the bills: an entire generation is growing up with a broken economy because their parents voted for jam today.

It's the same with the creditors. In pursuit of political gain and a quick buck, banks and other eurozone governments supported successive corrupt Greek governments in their act of intergenerational theft. They deserve to lose their shirts as the Greeks default just as surely as a payday lender that fails to assess the affordability of its loans deserves to go bust. The problem is that the bill ultimately gets picked up by innocent bystanders - mostly German taxpayers. True, those same German taxpayers voted for their inept government that failed to regulate their banks' exposure to Greece, but that was hardly a major electoral issue at the time.

So Greek voters and Greek governments connived with European bankers to profit from the German population and younger Greeks. I have no sympathy with any of them. A plague on all their houses!

Badges

[space_jake]

EU trading cards to the rescue!

Re:Badges

[netsavior]

And hats, hats, as far as the eye can see!

Brave Man

[jratcliffe]

Finance Minister of Greece ranks pretty high on my list of "you could pay me enough, but it would be A LOT" jobs.

Re:Brave Man

[Flavianoep]

Preferably in a foreign currency, right?

FYI, there is no "national currency" in Greece, anything is paid in Euro.

Valve's time

[Kinwolf]

If he's working on "Valve's time", then he'll produce the first draft about possible solutions around 10 years after Greece has ceased to exist as a country.

Soon: Greece abandons the Euro

[Anonymous Coward]

and transitions to a diversified, hat-based economy.

This doesn't sound... sound

[medv4380]

I don't really want to compare Yanis to a gambling murderer, but I am anyways. This sounds a bit too much like John Law getting appointed to fix the French Economy. That turned out great for everyone didn't it. Appointing someone to run your economy who's primary job in economics was to make a bunch of gambling addicts to improve steams revenue doesn't sound like the kind of person who should be fixing an economy. But who knows, maybe he'll do something good and be crowned a genius.

Re:This doesn't sound... sound

[Gaygirlie]

I know it's fashionable to jump on the Valve-hating-bandwagon, but would it be too much of an effort to, you know, not follow the flock and use some common sense instead? https://en.wikipedia.org/wiki/... lists a lot of reasons for why he seems like a good person for this, like e.g. the following exerpt on his academic career:

After training in mathematics and statistics, Varoufakis received his economics doctorate in 1987 at the University of Essex. Before that he had already begun teaching economics and econometrics at the University of Essex and the University of East Anglia. In 1988 he spent a year as a Fellow at the University of Cambridge. From 1989 until 2000 he taught as Senior Lecturer in Economics at the Department of Economics of the University of Sydney. In 2000 he moved to his native Greece where he is still Professor of Economic Theory at the University of Athens (currently on leave). In 2002 Varoufakis established The University of Athens Doctoral Program in Economics (UADPhilEcon), which he directed until 2008. Since January 2013 he has been teaching at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.

This guy has written several books, he appears as guest analyst for news media like the BBC, CNN, Sky News, Russia Today and Bloomberg TV and he seems to be quite well-respected everywhere. But no, you just focus on the fact that he also happens to work for Valve.

Re:This doesn't sound... sound

[tnk1]

I'm not going to judge based on what his last job was, if he's actually technically qualified to do this one.

I just wonder what their plan is. Austerity is not a happy thing, but it is definitely possible to make things worse. With their economy in its current state, the usual leftist option of borrowing and spending their way out of it may be very limited. Not to mention that it sort of got them there to begin with. And the people likely elected these guys because they want their benefits back, somehow. Sadly democracy does not always make for good economic policy.

It would be interesting if there was some clever model that could get them out of this mes.

Re:This doesn't sound... sound

[xevioso]

And yet some economists, like Krugman or Greenspan, are quite prescient with their predictions, and were/are right more often than they were/are wrong about what will happen in the future. It makes more sense to pay attention to someone who has a good track record...Krugman didn't win a Nobel prize because he was lucky or didn't know what the hell he was talking about...

Economists are like poker players. Yes, there's a lot of luck involved and half the time no one knows what they are anyone else are doing, but it IS possible to be a good economist.

Re:This doesn't sound... sound

[HornWumpus]

You realize Krugman and Greenspan have more or less opposite views?

Have you been paying attention to recent Nobel prizes? They (peace and econ anyhow) into political popularity contests.

Re:This doesn't sound... sound

[Prune]

They need to leave the euro (as does every other member). Monetary union doesn't work unless you have fiscal and economic union as well, and Europe is too diverse for that any time soon. Trade imbalance results in the most efficient exporter (Germany) beggaring their neighbors and accumulating cash, since the rest can't adapt by floating exchange rates -- it's classic merchantilism. What's worse is that only the heads of the German economic engine really benefit from it, due to wage suppression at home (which is part of what fuels their trade surplus).

borrowing and spending their way out of it may be very limited

I don't think you understand macroeconomics. There is a too limited money supply that is significantly worsening a recession/derpession. Greece gave up one of its primary rights as a sovereign -- issuing its own currency -- and so lacks one of the most powerful policy tools for intervention in its own economy. If it wasn't part of the euro, it wouldn't have to borrow from anyone but itself. Even the US mainly borrows from itself: the majority of its debt is not held by foreigners but is simply a number registered between treasury and federal reserve, which is an accounting fiction akin to debt between husband and wife. There are primarily political reasons some of the US debt is held by others, but it's not a basic requirement of its monetary system. The typical argument against government spending is inflation, but that doesn't happen if the spending is targeted as to decrease unemployment and thus increase aggregate demand -- which is exactly what's needed in a recession. The devil is in exactly how the spending should be carried out (things like a job guarantee http://en.wikipedia.org/wiki/J... come to mind) and should not be carried out (Bernanke's quantitative easing).

Re:This doesn't sound... sound

[gstoddart]

Economics isn't an ideology.

Bullshit, it sure isn't objective science, it's models, based on dubious assumptions which aren't reflective of anything other than the beliefs of the person who made them, and then using mathematics of dubious quality to "prove" what your ideology tells you.

Are you retarded or just ignorant?

Are you an asshole or a douchebag?

I'm saying that when people say "if you cut taxes it will stimulate the economy", that is a purely ideological position, not grounded in objective fact. And economics serves no purpose if it isn't down to implementing policy, which is inherently idological.

And again, it is like you are saying physics cannot be a science because there is many unproven theories that coexists.

No, I'm saying physics still boils down to actual objective reality, and in no fucking way shape or form does economics do that, and never has.

Frankly, you are an idiot.

Frankly, you're an asshole who thinks too highly of his own opinion.

So far you've failed to offer anything intelligent, just the cowardly ad hominem attacks of a worthless moron with nothing new to add.

So, I'll tell you what, here's a piece by someone who has a fucking Nobel prize in "economic science".
One problem with economics is that it is necessarily focused on policy, rather than discovery of fundamentals. Nobody really cares much about economic data except as a guide to policy: economic phenomena do not have the same intrinsic fascination for us as the internal resonances of the atom or the functioning of the vesicles and other organelles of a living cell. We judge economics by what it can produce. As such, economics is rather more like engineering than physics, more practical than spiritual.

There is no Nobel prize for engineering, though there should be. True, the chemistry prize this year looks a bit like an engineering prize, because it was given to three researchers - Martin Karplus, Michael Levitt, and Arieh Warshel - "for the development of multiscale models of complex chemical systems" that underlie the computer programs that make nuclear magnetic resonance hardware work. But the Nobel Foundation is forced to look at much more such practical, applied material when it considers the economics prize.

The problem is that once we focus on economic policy, much that is not science comes into play. Politics becomes involved, and political posturing is amply rewarded by public attention. The Nobel prize is designed to reward those who do not play tricks for attention, and who, in their sincere pursuit of the truth, might otherwise be slighted.

Why is it called a prize in "economic sciences", rather than just "economics"? The other prizes are not awarded in the "chemical sciences" or the "physical sciences."

Fields of endeavour that use "science" in their titles tend to be those that get masses of people emotionally involved and in which crackpots seem to have some purchase on public opinion. These fields have "science" in their names to distinguish them from their disreputable cousins.

So, seriously, fuck off and grow up.

Economics is descriptive how what complex systems involving humans do. But is is NOT measuring some innate natural properties of how that actually works.

As soon as economics goes from measuring and describing, and steps into applying policy .... it utterly ceases to be a science.

Re:This doesn't sound... sound

[T.E.D.]

I just wonder what their plan is. Austerity is not a happy thing, but it is definitely possible to make things worse. With their economy in its current state, the usual leftist option of borrowing and spending their way out of it may be very limited

Austerity for an entire government simply sucks. Cutting expenses is a great idea for an individual, but for a government that's more like trying to balance your checkbook by taking a lower-paying job close to home (Hey! Gasoline expenses are way down!). Or more accurately, a company trying to balance its ledger by selling less products. Adherence to this idea is why Europe is still deep in recession while China and the USA have been back to economic growth (and in the USA's case, falling real dollar deficits) for over a year now. If it needs to do so, a government should cut expenses during a recovery, not during a recession.

Greece has some systemic problems that helped get them into this mess (eg: tax cheating is practically a national sport). But when faced with a recession they have 2 basic problems. The first is that they aren't AAA borrowers like the USA, so their government can't just borrow money at will. If they want to borrow large sums, they have to cajole it out of someone (like the EU). The second is that they are shackled to the Euro, which means all the monetary policy options that the US relied on to pull itself out are not available to Greece. That means leaving the EU, or borrowing more money from it, are really their only 2 options.

It would really behoove the EU to develop some analog to the US's Fed to run their monetary policy. The problem is everything there seems to run on consensus, and I simply don't see how that's possible when you have such divergent members. They'd have to get themselves a semi-independent policy board, like the US has, or unify all their national budgets and expect to have to regularly pour EU tax dollars into poorer members, like the US does every year with Mississippi.

One thing is pretty clear though. The current middle ground the EU is trying to run just isn't working.

Yanis Varoufakis

[cheesybagel]

He basically wants Eurozone banks to have a single rescue fund, for the ECB to issue bonds, and the EIB to invest into the periphery economies to get out of the crisis.

There's just one problem. Even if they make sense none of those things can be done by Greece alone. I hope he has a Plan B.

You can see him explain his views on the current economic crisis in this video.

Radical Left allowed to run a country...

[mi]

What can possibly go wrong?

Re:Radical Left allowed to run a country...

[PolygamousRanchKid]

Here's a better link to an article from The Economist: http://www.economist.com/blogs...

AS one country after another on the periphery of the euro zone had to swallow painful reforms and fiscal austerity as the price for their bail-outs between 2010 and 2013, the surprise was that by and large they accepted the medicine without a large-scale populist revolt. But Sunday’s result in the Greek election marks a turning-point because Syriza, the radical-left party that has prevailed at the polls, campaigned on casting aside austerity, backtracking on the reforms and renegotiating the vast debt that Greece owes its European creditors. These policies are unacceptable to the euro-zone countries, especially Germany, that have lent Greece so much money. The outcome of the election could also have wider implications. Why does the Greek result matter?

A clash is impending because the Greeks see their recent history in a very different light from that of the Germans and other Europeans who have bailed them out. From the perspective of Northern creditor nations, Greece was the architect of its own misfortune by mismanaging its public finances on a staggering scale. It has been lent an astonishing amount of money in not just one but two bail-outs, amounting to €246 billion ($275 billion), worth more than the country’s entire economic output. From a Greek perspective, however, the country has suffered a calamitous decline in GDP, which at its low in late 2013 was 27% down on its pre-crisis peak. Harsh spending cuts and tax rises have been imposed again and again as conditions for further economic support. Greeks feel that they have lost control of their country, which is now instead being directed by the hated troika: the European Commission, the IMF and the European Central Bank.

Syriza won on Sunday because Alexis Tsipras, the party's leader, offered a message of hope to a country still in despair, even though the economy is now recovering. But the difficulty with his plan for Greece is that it requires other Europeans to finance it—or to countenance a reversal of reforms they regard as vital for Greece to cope with euro-zone membership. If Mr Tsipras makes good on promises of higher spending and lower taxes then Greece will fail to meet its objective of running a big primary budget surplus (ie, before interest payments), which would make it far harder to get its debt down from 175% of GDP. And if he reverses reforms such as the ones that have brought down wages, then Greece will head back towards the uncompetitive economic mess that, along with budgetary mismanagement, got it into trouble in the first place.

In the negotiations that will now occur between Mr Tsipras and Greece’s creditors, Germany will give little ground. Angela Merkel, too, must pay attention to domestic opinion, which would be hostile to any concessions. The German chancellor also has to reckon with the wider impact of any deal that appeared to reward Syriza in emboldening populist revolts in other countries in the euro area, notably in Spain. For any country to leave the euro will be destabilising because it would break the supposed irrevocability of membership. But if Mr Tsipras were to get his way then the euro area would become a club where borrowers rather than lenders called the shots, which would be unsustainable. That is why Mr Tsipras will, before long, face a difficult choice between backing down on his demands—or presiding over a ruinous Greek exit.

Re:Radical Left allowed to run a country...

[hibiki_r]

That article hits the nail in the head. For Europe, this is not about Greece: Their economy is small, and by itself, if they sank nothing would matter. It's what it says to Spain, a country with a general election coming pretty soon, and who has its own new, populist left wing party that runs against corruption and austerity.

The Eurozone can handle anything that happens to Greece. But if Spain decides to ignore the troika, beware.

Why the atheist mention?

[TodoRojo]

The fact that he is atheist has nothing to do with the story. Why mention it?

Hat Act 1732

[tepples]

And hats, hats, as far as the eye can see!

There'd be precedent for that in the European Union. England had a law in effect from 1571 through 1597 to make failure to wear a British-made wool cap in public a crime.

Re:Greeks Act Like Children

[Ash-Fox]

What they really don't like isn't austerity, it's living within their means.

Wrong, the austerity measures implemented a dependency on living outside the means of the country, without the ability to devalue their currency in a controlled fashion like Iceland did, this makes recovery not possible. You don't get a man out of debt by lending more money to him and forcing him to accept it while following specific terms on how to make use of it.

Greece's problem is lack of ecumenic freedom

[TheSync]

Don't be mislead by the debt problem. If Greece had economic growth, it would not have a debt problem.

Greece rankes "mostly unfree" on the Index of Economic Freedom:

Greece's economic freedom score is 54.0, making its economy the 130th freest in the 2015 Index. Its score has declined by 1.7 points since last year due to a substantial deterioration in the control of government spending and smaller declines in business freedom, labor freedom, and fiscal freedom. Greece is ranked 40th out of 43 countries in the Europe region, and its overall score is below the world and regional averages...the rule of law remains problematic, with property rights weakly enforced, tax evasion on the rise, and corruption pervasive. Despite efforts to create a more business-friendly regulatory environment, the labor market remains rigid and slow to adjust to market realities...The overall pace of regulatory reform lags behind other countries. With no minimum capital required, launching a business takes five procedures and 13 days. However, completing licensing requirements still takes about four months on average...

By the way, regarding "austerity", Greece's public expenditures equal 58.5 percent of domestic output. That does not sound very austere to me.

Re:Greece's problem is lack of ecumenic freedom

[Solandri]

Yes, 58.5% is really high, but most of it is for servicing its huge mountain of debt (175% of its GDP).

Japan has more public debt than Greece. But its government only spends about 35% of its GDP.