Belief in Excellence leads to stability and optimism

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By Professor Periklis Gogas

Dr. Periklis Gogasis a frequent contributor to The Business Thinker magazine. He is a Professor of Economic Analysis and international Economics, Department of International Economics and Development, Democritus University of Thrace, Greece

The economic crisis of recent years has led many of the Greeks to come closer to economics looking mainly for the causes that led to the prolonged crisis and the structural problems of the Greek economy. Many times, this criticism leads us to exaggerations or even wrong judgments, as it is based on an impression of the potential and dynamics of the Greek economy, which has been cultivated for decades within the Greek society, mainly by the politicians and journalists but it does not correspond to reality.

Is Greece a small and poor country, with an oversized public sector, whose economy is based exclusively on the agricultural and tourism sector? Are the Greeks lazy people that produce nothing? Are wage cuts the only way to make our country more competitive?

These are just some of the questions that concern us (Greeks) and which Dr. Periklis Gogas professor at the Democritus University of Thrace, addressed with his books “Economics for Beginners” and “Modern Greek Myths”. With these books he provided the opportunity to all of us to come closer to economics and seek answers to a series of critical questions that concern us both for the past and for the future of the Greek economy and consequently of our country in general.

Dr. Periklis Gogas is Professor of Economic Analysis and International Economics at the Democritus University of Thrace. Most recently he was a Visiting Professor at the Ross School of Business at the University of Michigan. He also teaches Finance, Banking and Forecasting at postgraduate level at the Aristotle University of Thessaloniki, the International Hellenic University, the Hellenic Open University and at Neapolis University Pafos (Cyprus) .

He received his PhD from the University of Calgary, his Master’s degree from the University of Saskatchewan and his Bachelor’s degree from the University of Macedonia. He has presented research seminars at the European Central Bank, at the Ross School of Business at the University of Michigan , Temple University , at the Mobile Media Association of New York. He is also an evaluator of research and academic programs in Greece, Italy, Cyprus, Croatia, Poland, Kazakhstan, etc.

His research interests include Macroeconomics, Finance, Banking, Machine Learning, Artificial Intelligence, Econometrics and Complex Networks and he is an Associate Editor for the “Journal Economic Asymmetries” (Elsevier ), the Journal of Banking and Financial Technology ( Springer ) and other editorial board. scientific journals.

His research work is published regularly in scientific journals such , the Journal of Money Credit and Banking, Journal of Banking and Finance, International Journal of Forecasting, International Review of Economics and Finance, International Finance, Journal of Forecasting, Physica A, Computational Economics, Economic Modeling, Open Economies Review.

Mr. Gogas, in your book “Modern Greek Myths” you describe twenty myths about our country, which, however, the vast majority of Greek society considers as reality. Why were these myths cultivated? What have they served over time?

I think it is the result of a social and national introversion that came to create a feeling of inferiority for Greece and the Greeks. Of course, some of them are also international, but the vast majority are endogenous. We believe and take it for granted without even considering it any further that we are, for example, a small, underdeveloped country that produces nothing and generally a small “detail” on the world map and economic world.

Perhaps it was an easily accepted excuse that was cleverly spread to cover up the failures of our politicians. If we all believe that we are small, insignificant, underdeveloped, we do not produce anything and we are lazy, it is a very good excuse not to ask for something better and it justifies every failure of our politicians and all of us personally.

The truth is very different. Greece was before the crisis in the 19 most prosperous countries in the world and after the crisis we fell to 29 in a total of 200 countries. Even if we do not take into account the population, in absolute numbers the Greek economy is among the 45 strongest in the world.

I confess that by reading your books, the reader reconsiders a lot. What is the truth, after all? Do you think that the answer to this question may coincide with the causes that led us to the memoranda and all that it has followed since?

That is the main goal of that book. To revisit the idea we have for ourselves because without believing in our strengths we will not be able to do well and achieve the best for ourselves. Our difference with the USA, for example, is that they believe that they are the best in everything. In the economy, wealth, democracy, justice, institutions, etc. Of course, in some of these they are good, but in others they are far behind. But belief in superiority leads to stability and optimism for their future. It leads to a conscious effort to stay on top -real or not- and that serves them good in the long-run.

The big issue is that if you do not identify what the real problem is, how can you find a solution? When you feel that everything is bad, you do not have the courage to fix anything. You are in despair. You do not know where to start and you usually give up. That’s why we have to find exactly where we are lagging behind. What are the structural problems and real impediments in increasing our prosperity. No, everything is not bad, no all is not broken. We have one of the best democracies on the planet. A beautiful country, many dynamic companies that are world leaders and a highly educated human capital.

Recently, the current Government has been heavily criticized for the development model it has been following since the beginning of its term and, in particular, for the way it manages the crisis caused by the effects of the coronavirus. What do you think about how this situation is managed so far by the government? And, at the same time, how do you rate its performance, financially and developmentally?

These are two different issues.

On the subject of the pandemic, I think the government handled it well until last September. Then many mistakes were made unjustifiably, such as the opening of schools, which aggravated the problem, while almost everyone was accustomed to distance education. Many mistakes were made for a narrow political – and I mean micropolitical – interest of specific ministers of the government. They tried to look good and relax the measures in the sphere of their influence in order to gain some electoral benefit. Nonetheless, this was done to the detriment of public health and the economy by extension. We saw many regressions in the measures that as a final result had in the eyes of the public the loss of credibility to all measures.

With respect to the economic policy now, I saw that since 2019 with the election of the new government it was completely anachronistic and “inspired” by the decade of 1950. It may have been good for that era but clearly not anymore.

· Zero VAT was imposed on construction, as if that was our problem. The infrastructure of the country is of high quality with so many billions invested by the EU.

· But VAT and other taxes on universities, which are by definition the center of development and prosperity of any developed nation, have remained constant.

· Why not make all research funds for the universities tax-free? so that our “best minds” do not go to study and research abroad?

· Why Ph.D. students have still to pay taxes on their minimal incomes?

· Of the €100 that we will bring to the country from a European research program, more than half go to fees and various taxes. Money that can finance our research through laboratories and payments to doctoral students.

· No provision for innovation spin-offs from universities or other high-tech companies.

· Why not provide a 5-10 years zero-tax period to every high-tech company that will come to invest in Greece?

· At the same time, provide to any new incoming large investment with a guaranteed stable tax system for the same period. You know, from my business experience as a Financial Director at

a multinational corporation, I can tell you that the main motivation and driver to invest in another country for such a company is not the tax rate, but the stability of the tax environment. That is why countries with much higher corporate taxes have no problem attracting investment from many large companies. We focused on reducing rates that for someone who makes a long-term investment is not an incentive as these tax rates can change overnight.

We still believe that tourism is the most important component of our GDP and it is not. It constitutes only 6% -7% of our GDP. We also believe that we are an agricultural economy which is also not true as the primary sector accounts for only 3% of our GDP. The truth is that similarly to any developed industrial country, 80% of our GDP comes from the services sector and relate to activities such as: banking, insurance, transportation, telecommunications, internet, software , health, education, entertainment, etc.

My example is GrandTheftAuto (GTA). For those of you who do not know, it is a very successful computer game. What you probably do not know is that the total sales of this game reach $6 billion. Yes, 4% of Greek GDP from just one game. This game is, of course, a product of the services sector.

I would like to dwell a little more on the Health sector, as there are many who argue that the pandemic has come to reveal the enormous problems of health systems worldwide. After all, are health systems the biggest “victim” of the coronavirus? Is the way in which our country responded satisfactory?

Many people will be surprised -again- but out health system is according to the World Health Organization (WHO), the 7th best in the world. It responded very well to the pandemic, despite the problems and shortcomings that were created after an almost decade-long cuts because of the debt crisis. That is why we must support it in order for it to remain good and of course to become better. People take for granted some things they have but it is good to recognize them and be appreciate them. Not all countries have free health care. In the US if you call an ambulance you may have to pay from $1,000 to $5,000 for your transfer to the private hospital to which it belongs and there if it is not covered by your insurance (if you are insured) you will have to pay thousands of dollars for simple things like a broken leg.

Therefore, it is very natural for something unprecedented like a pandemic we have never seen before to create many problems to a health system. These are not normal time and needs that we try to meet. But our top and highly skilled doctors and nurses do their best.

Are you optimistic about the future, especially in a period that coincides with the gradual opening of activities? What is considered the most appropriate mix, based on the current data of the Greek economy, in order for the country to achieve a stable development course?

I am optimistic yes. I estimate that this crisis will be followed by a growth of 6% -8% in the next 6 months. This is the case, for example, in the United States,

which is ahead of vaccinations and has returned faster to opening the economy. The big difference in relation to the debt crisis is that we did not have any destruction of the productive potential of the country, both human and natural capital. We just pressed “pause” for about a year. It is like a car that, while travelling, finds an obstacle in its path, like a heard of sheep that we may encounter on a small Greek country road. In that case we will reduce spped and even stall. But once the herd is gone, we can very easily return to the speed we had before. The situation, though, was not the same in the recent debt crisis. In that case the car was severely damaged and lost speed. Thus, it was very difficult to get to where it was before. In short, we have a strong economy, which now, in contrast to the debt crisis, can borrow at very low interest rates, even negative in some cases. Thus, the return to growth rates will be easy

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