Today, two powerful forces of development are converging. Rapid technological innovation and globalization put tremendous pressure on Western economies for dramatic structural change. Technology has reduced the need for certain types of work and globalization has moved the work to where the labor is cheaper. In some, the impact of these co-acting forces was somewhat blunted in the past by increased borrowing to offset wage stagnation and the reduction in the standard of living associated with it. Unfortunately, the day of reckoning has arrived, and it is quite possible the jobs and the standard of living that came with them are not coming back.
Greece has tried however valiantly, to stave off these forces. It went on an even bigger borrowing binge than some other Western economies. Now the Grim Reaper has arrived in the form of imperative structural change. As Greece tries to pull back from the precipice, we sit wondering where it will end even as other European Economies are being sucked into the same vortex. Massive government hiring was one of Greece’s ploys but again, the reckoning has come.
How does Greece pry itself loose from its massive debt? What will the other economies, particularly Western ones, learn from this self-inflicted debacle? This is what makes Greece great reading because it is not the triumph but the struggle that is important to follow.