Toms Blog


Thanks to all who came to our Davos meeting, and to all those who wanted to come but were unable to get there.  We heard from the eminent Prof Gigerenzer of the Max Planck Institute how data is abused by medics to demonstrate the benefits of common tests and procedures. We listened to the head of Nestle Science explaining how food, with a judicious sprinkling of lawyers and lobbyists, can be transformed into medicine. We were amazed by breath taking mountain scenery. Not that everything went according to plan. We had inexplicably failed to predict one of the region’s most extreme heatwaves, and therefore to install air conditioning in our hotel. 

Switzerland is not just beautiful: it is remarkable in all sorts of ways.  As we were reminded by Bruno Gehrig, Chairman of Swiss National Airlines, the Swiss have managed to become by some measures, the happiest and most prosperous country in the world. By exercising logic, they have avoided all the big mistakes. They have stayed out of “Europe” and kept their hard won independence. They have not been at war for nearly 200 years. They have preserved their own currency and economic freedom. They have resisted the orthodox “employment protection” laws, with the result that they have an unemployment rate way below most similar economies. They have real vocational education. They have protected their borders. And by leaving their Cantons to set rates locally, they benefit from a competitive spiral – downward – in taxation. A bottle of (German) champagne in Berlin for the best answer to the question “what’s not to like?”  

A tale of two cities: a few hundred miles to the south is Athens. Here we see a country where every mistake has been made, and more besides.  Greece is a fascinating place, full of warm, welcoming people, where quality of life is measured in friendship and family ties. All through history, personalities as diverse as Lord Byron and Shirley Valentine have romanticised over Greece.  But sadly the recent past is one of abuse and exploitation, most notoriously during hundreds of years of Turkish occupation. The last half century has seen civil war and a brutal dictatorship, followed a more recent, economic tyranny. A decade ago officials in Brussels and Athens colluded to allow Greece, who absolutely did not qualify for membership, to join the Euro. This was done not for reasons of economic logic, but pure political aggrandisement.

Now poor Greece, already hobbled by low productivity, a huge and moribund public sector, chronic failure to collect most of the taxes due to government, and rampant corruption among politicians and officials at every level, finds itself in a worse nightmare – locked into a currency at least 30%, maybe 60% above the level it would be if market forces operated and it could adjust against other currencies. Meanwhile it is saddled with all the hundreds of billions of debts fraudulently contracted by past politicians.

This is an economic impasse that can only solved by three actions : 1) orderly exit from the Euro, with the Brussels establishment finding  the decency and humility  to co-operate and a radical devaluation.  2) forgiveness of most of its debt. 3) the removal of a government  led by charismatic but post-adolescent dreamers, and its replacement by one with some connection to reality.

The tragedy is that none of these events are presently on the cards. Only fudge is on offer. The Greeks do not want the (in their eyes) humiliation of joining their immediate neighbours as non-EU states. Brussels can not face the prospect of the Euro, central to their whole state-building project, beginning to unravel. All in all, a stalemate from which nobody gains.