Testing the Theory: Greece

Predicting the outcomes of the IMF and World Bank measures to be imposed on Greece based on an ecological rather than evolutionary economic model leads to some surprisingly different predictions than what the IMF and World Bank predict publicly.

Good science begins with a question which is then examined by the development of one or more hypotheses, each of which can be falsified by a test that can actually be carried out. For example a question might be: “Are all red things hot?” Is this a testable hypothesis? “All red things are hot.” Suppose we test by asking several thousand people if they agree with the hypothesis. We discover that 98% of the people we asked said yes, all red burners are hot and only 2% said no they are not all hot. Does this mean we have tested the hypothesis? Because the vast majority of people believe that all red burners are hot, does that mean all red burners are hot? Not in science. Opinion is of no value in science. Belief is of no value in science. In science only evidence matters. In the rest of life, opinion and belief can matter, but not in this test. In fact, our test of asking people’s opinion is not even a real test because we still have no idea if all red burners are hot.

Suppose we test by taking the temperature of thousands of red burners and find that they are all hot. Does this “prove” the hypothesis? Nope! If we test another one, it might be cold. Supposing instead we create the hypothesis that states: “Red is what makes a burner hot.” Now we can test it by painting a burner red. If the burner does not get hot, then redness does not cause hotness. OK, so that is a testable hypothesis because we can carry out an actual test to falsify it. The problem with the other test is that we would never know if we had examined every red burner.

There are many possibilities here, but I suggest we start with an example where a test of our theory is actually underway — Greece. We won’t know the answer right away, but the nice thing about Greece as a choice is that we have a competing theoretical model that is being used by the IMF and the World Bank. In this case the IMF and the World Bank have once again chosen the Friedman Chicago School approach as its model. If you read some of my previous blogs, I have argued that this model is incorrectly based on evolution to suggest that a free market with minimal government controls and as few government programs as possible will quickly come to a new balance with a strong economy based on the notion that the “survival of the fittest” corporations will develop providing a diverse system of businesses that will have lots of jobs. The model recognizes that there will be a small percentage of unemployment that is stable, although it does not predict what that number will be. It also will not allow Greece to default on central bank loans. To prevent this, private investors will have the option to invest in the privatization of government operations in proportion to the shortfall agreed to in debt to GDP annually. Thus the model also requires privatization of many previously governmental operations. Severe austerity measures are primarily based on social programs which will help to bring down government costs quickly.

Our test will be to erect a series of predictions based on our ecological, as opposed to their evolutionary model of what the Greece situation will become as the changes are imposed on Greece by the IMF and the World Bank. These will need to be testable hypotheses such as we defined earlier. If our predictions fit the results more closely than the predictions of the IMF and World Bank then we can conclude that ours is a better model.

Will this matter to the IMF and World Bank? Probably not, because they were formed on the basis of the Chicago School ideas. But it might help in some future situation where a troubled economy is being “fixed” or where a government wants to improve its own economy. Then when predictions are made of outcomes by the World Bank or IMF, the government can negotiate on the basis of a different model.

Econome

Greece is in an econome characterized by a temperate zone, moderate forest cover with some agricultural base and a moderate built infrastructure. Thus it is in an econome that in general has a moderate to high productivity and a weak to moderate tertiary consumer base given the relatively low built infrastructure for a country in this enonome. The more productive countries have a lower agricultural emphasis than Greece. The industrial built infrastructure and productivity is quite variable indicating the countries in various stages of transition from industrial to service industries at this time. Greece is similar to Italy at about 66% service industry, but lower than other European countries such as France, Spain, Germany and Austria all of which are above 70%.

Prediction #1:

Under the IMF and World Bank, Greece will increase its industrial infrastructure using scammer foreign investment so that Greece’s industrial sector will trend toward being a sucker economy, losing much of its revenue to distant lucrespecies. Greece will not do much to increase its service industry infrastructure such as communication, banking, or distribution systems that are not directly linked to the scammer investors.

A familiar example is when a large industrial farm is placed in an area that previously had a natural ecosystem. The productivity of the area is increased dramatically for a few domesticated species, but the increased production is not recycled back to the land where the previous ecosystem was located. So the richness of the original area is being siphoned off to support other areas at the expense of the original local ecosystem.

Econosystem

Greece is a parliamentary democracy with a social capitalist econosystem as the main form of its economic structure. Informal subsistence and barter economies also exist in the country. So all three major forms of lucrephyla operate in the econosystem. The degree of endemic parasitism is quite high with criminal gang structures, governmental corruption, lax mechanisms to distribute wealth in the social capitalist fashion. Instead the avoidance of taxes, unlike intentional low tax rates for individuals and corporations cannot be effectively built into a partially planned central budget.

Prediction #2:

Under the IMF and World Bank monitoring system, the econosystem will trend toward a reduced number of small local businesses and toward a smaller number of very large businesses. This will be the result of introducing a suite of exotic lucrespecies based on foreign investment for which there are no extant competitors.

This is similar to what happens in an ecosystem when exotic species are introduced for which there are no natural predators — they become invasive weeds.

Prediction #3:

The IMF and World Bank will annually declare Greece in arrears and use this to privatize previously governmental services to foreign investors resulting in a reduction of deliverables but a net increase in debt repayment to the creditors.

This is similar to what happens when the infrastructure an ecosystem is altered such that its fundamental productivity is transported away from the local region. A familiar example is when a meandering river is subject to flooding and overflows its banks periodically removing nutrients and soil leaving the upstream ecosystem weaker, but the downstream ecosystem becomes stronger.

Prediction #4

The Greek minimum wage laws will be weakened and the actual level of minimum wage will be reduced to enhance the profitability of the lucrespecies.

This is similar to the development of cheap labour in biological species such as ants. In ant colonies, cheap labour is produced by removing ordinary females from the reproductive stream and using them as workers. The workers are expendable in many situations such as making a bridge over water and being the front-line pawns in battles. The workers are used until they cannot work anymore then are left behind or discarded.

Prediction #5

If the minimum wage laws cannot be reduced further — government resistance or popular uprising — the labour will be exported to offshore locations and an emphasis will be placed on developing machine replacements for workers.

This is similar to slavemaking in ants, wherein ants from another species or colony are captured and forced to work under the guard of the slavemakers (see earlier blog).

Prediction #6

The number of unemployed people will rise to high levels.

This is similar to the reproductive strategies of species that have a high natural mortality rate. They overproduce the number of young to offset the high number of losses. In the economic jargon, it is the same — unemployed workers are required in large numbers because of the high turn-over rate of low paid employees.

Prediction #7

A proportion of these people will have pre-adapted behaviour patterns that will lead them to become parasitic lucrespecies on the rest of the ecosystem by cheating and stealing, others will create larger parasitic (illicit) capitalist organizations to operate either in conjunction with existing gang structures or at the margins of their territories.

This is similar to biological systems where a detrimental shift in the conditions leads to an increase in previously rare species, such as fungus, blisters, parasites, and small predators.

Lucrepecies

Individual small corporations and family businesses that make up the lucrespecies (groups of similar styles of businesses) will see less favour with the IMF and World Bank because they are more difficult to control as producers of wealth that can be exported. They are also seen as less efficient producers because they are not similar enough one to each other to benefit by having similar infrastructure.

Prediction #8

Where possible, the introduced lucrespecies (foreign investment) will be encouraged to acquire or merge with these smaller entities. The result will be a significant reduction in local businesses and the introduction of mega-corporations.

This prediction is in part the mechanism for Prediction #2. But it is also in part similar to what happens in some species such as crabs. Some species of crabs will place algae on themselves as camouflage, and in addition will add an anemone to act as a front-line defense (anemones have stinging tentacles). The end result is a cluster of species acting as a coordinated entity — a commensal relationship equivalent to an acquisition. In still others, the species (for example a coral), merges with another species (zooxanthellae) to create a symbiotic relationship wherein once joined each cannot survive nearly as well alone or simply cannot survive alone — a merger.

Medium Term Result

Prediction #9

Greece will be in a rapidly changing set of conditions with increased illness and mortality rates in the general population. The mono-crop lucrespecies planted and the primary consumers (equivalent to cows on a farm) established by the IMF and World Bank will gradually wane or disappear when the resources dry up. Greece will be left with a stronger economy, better debt ratio, a small but prominent group of very rich entrepreneurs and large corporations, but a crumbling infrastructure, a weakened population, and persistent high unemployment.

This picture is similar to what happens to an ecosystem after the invasion of several exotic species use up the more-or-less free resources, destroy the previous form of habitat, and settle into a medium term dominance of the system in which the previous dominant species are weakened, and scrounging for the scraps of the resources left to them in between the weed species.

Summary

So there you have it, my predictions, based on an ecological, rather than evolutionary model of the economy, of what will happen to Greece if the IMF and World Bank are successful in implementing the plans that they are currently imposing and which at least so far the Greek government has accepted. The fundamental picture is transforming Greece into the economic/ecological equivalent of a large industrial farm with most of the emphasis on mono-crop harvest of the primary resources of the country and a second level of primary consumers (economic nomenclature of secondary producers), the biological equivalent of cows that deliver large packages of wealth in easily harvested packages. To do this the new primary production facilities will be closely tied to new factories of processed goods for export.

Needless to say we will not know how accurate or lousy all my predictions are for a few years, but some of the predictions should start to show symptoms within a year.

Leave a Reply

Your email address will not be published. Required fields are marked *