Monday Jul 28, 2014 Search
Weather | Athens
31o C
23o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
The placebo effect and the economy

By Nikos Konstandaras

Among the greatest mistakes made in the years of Greece’s hard landing is that citizens did not get the chance to sense that aside from austerity and pain the economic adjustment program also brought some benefits. The many sacrifices and injustices could have been softened to some extent by the targeted improvement of state and social services which became ever more necessary as the economy worsened. Instead of reforms being seen as something good that would offset some of the difficulties that citizens faced, they were presented as further punishment.

The governments of the past four years were incapable of arguing that there was anything positive in the reform package, while the other parties were free to present every change as a catastrophe, thus contributing to a climate of uncertainty and pessimism. Our partners added to this with statements and actions that left open the possibility of Greece finding itself exiled from the common European currency. As was to be expected, this discouraged investments by Greeks and foreigners and caused a drop in consumption, leading to even worse consequences for the economy and society. Austerity on its own caused serious damage, which is measured in terms of lost revenues and high unemployment; pessimism worsened the negative effects of the crisis by reducing the flow of money even further and by encouraging opposition to every reform.

In the past few days we have witnessed an effort to change the climate, to make it appear the crisis has ended and that Greece is making a leap toward normality. The primary surplus and the five-year bond sold to international investors raise the hope that our creditors’ harsh grip will loosen, money will flow into the real economy and the country will recover. These developments, along with words of encouragement from foreign officials and some publications, play a positive role in improving the climate. It is the light at the end of the tunnel for which we have yearned – and sometimes even the illusion of light leads us toward it.

It is acknowledged in medical research that a pharmaceutically inactive substance can have a positive effect when it raises hope in the patient’s heart. Perhaps the single most effective use of this “placebo effect” on the European debt crisis was European Central Bank Governor Mario Draghi’s vague declaration that the bank would do “whatever it takes” to support heavily indebted eurozone members. Without saying anything specific that would overstep his mandate, he calmed the markets and allowed troubled countries, like Italy, to keep borrowing.

Studies into the Greek crisis and the adjustment program will have to look carefully at the consequences of the opposite of the placebo effect – when a nation drinks the poison of punishment, alienation and pessimism. To reach the end of the crisis and to avoid greater pessimism, however, vague hope is not enough. We have to see real economic growth, improvements in our daily lives, good state services and reliable public transportation. And we must feel that justice will prevail.

ekathimerini.com , Thursday April 17, 2014 (18:32)  
Weighing all the factors
Clear rules, for everyone
Concrete measures
Education needs skills
Samaras vows to stand by Cyprus in reunification talks
Prime Minister Antonis Samaras has vowed to stand by the Cypriot government in its reunification talks with Turkish-Cypriots after meeting President Nicos Anastasiades in Athens on Monday. “...
Tree collapses in village square, killing nine-year-old boy
A nine-year-old boy has been killed in a village in central Greece after a plane tree collapsed on top of him. The accident happened on Sunday night in the central square of a village called...
Inside News
Musical chairs at ECB leaves Germany on guard for doves’ attack
When the European Central Bank policy makers first convened in June 1998, Bundesbank President Hans Tietmeyer didn’t like what he saw. The sign in the front of every seat shouldn’t carry the...
Minister mulls fixing food and drink prices at non-private beaches
The government is planning to fix the prices of food and drinks sold at state-owned and municipal beaches, Deputy Development Minister Gerasimos Giakoumatos said on Monday. Speaking to Ant-1...
Inside Business
VOLLEYBALL
Volleyball national team second in European League
Much as the national volleyball team tried to repeat in the finals of the European League the feat it had achieved in the semifinals, it failed to overturn the advantage Montenegro had got f...
SOCCER
Ranieri says he has little to change in Greek national team
The Hellenic Football Federation (EPO) presented Claudio Ranieri as the new Greece coach for the next couple of years, after the Italian manager signed his contract in Athens on Friday. “I l...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Musical chairs at ECB leaves Germany on guard for doves’ attack
2. Samaras vows to stand by Cyprus in reunification talks
3. Minister mulls fixing food and drink prices at non-private beaches
4. Multi-bill containing prior actions ready for Parliament
5. Tree collapses in village square, killing nine-year-old boy
6. Samaras to meet Cypriot President Anastasiades in Athens
more news
Today
This Week
1. Defense Minister Avramopoulos to represent Greece at European Commission
2. Euro inflation seen testing ECB patience as stimulus takes time
3. Tree collapses in village square, killing nine-year-old boy
4. Maziotis moved to Diavata Prison in Thessaloniki
5. Samaras to meet Cypriot President Anastasiades in Athens
6. Multi-bill containing prior actions ready for Parliament
Today
This Week
1. Climber dies in Mount Olympus fall
2. Greek sovereign debt at 174.1 percent of GDP in first quarter
3. Unequal after death
4. Hedge fund Dromeus turns Greek tragedy to triumph with 160 pct gain
5. Quadriplegic woman on life support 'dies due to unpaid power bills'
6. Front-line threats
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.