The truth about Greece

Now look, there's no need to get yourself into a twisted-knicker situation, it's all really very simple.

Individuals, families, businesses, clubs, towns, cities, counties, countries or federations of countries only have so much wealth. Wealth is measured in money but money is not, in and of itself, wealth. Money is a system of tokens that we give and receive in place of real stuff. The true value of money is dictated by the stuff it represents. I grow a pound of runner beans and you like to eat runner beans so you are prepared to give me something for those runner beans. What should you give? Well, that's up to you. You decide what my pound of runner beans is worth to you. You might offer two pounds of potatoes, or a small diamond, or twenty minutes with your wife, or you might offer money. You must value my runner beans and offer what you consider to be a fair exchange. What is essential is that you offer something of substance because I have no incentive to give up a pound of delicious green scrumptiousness unless I receive something that I value as highly as I value the finest vegetable god ever created.

Our transaction is not about money, it is about stuff. It is about something substantive. I give you something to enhance your life and you give me something to enhance my life. Were I to accept potatoes, diamond or fleeting fleshy pleasures with a lady who has seen better days, we exchange no money. Except that we do. Money is involved in all trades, even barter, because money is just a language by which we value stuff. Money is involved in a swap of a pound of runner beans for two pounds of potatoes just as it is involved in the swap of a pound of runner beans for a £2 coin. The reason it is involved is that the trade comes first, the stuff comes first, and money is just a way we can assign value to the goods we exchange. That exchange involves £2 for £2. My £2 is runner beans, your £2 is ten minutes access to a scrawny dry crone, although the reality is the other way round - £2 is the token we assign to represent each side of what is actually exchanged. Without stuff behind it, £2 means nothing. It has no value of itself.

That is not to say that the production of a pound of runner beans that gives me a £2 coin is a transaction without consequences. I take that coin to Mr Patel's Minimart and exchange it for a super-sized condom (in preparation for my next visit to Madame Fifi's Sauna and Hanky-Panky Parlour) thereby giving Mr Patel a bit of profit and justifying the profit he has already paid to Mr Choudery's Cash-n-Carry who have already given a bit of profit to the manufacturers of the intimate rubber item of gentleman's apparel. Their profits are the consequence of me producing something new. But that tells the story from only one side. Kingdong Condom Ltd also produced something, something rather big actually, and it is the combined action of turning what I produced and what they produced into economic activity that gave work and profit to Mr Patel and Mr Choudery. The whole thing is sustainable because it is based on stuff that people value sufficiently to be prepared to exchange their own stuff for it.

Economic activity that is not part of the production and exchange of stuff is a drain on the wealth of a national economy. What each country has to do is decide how much of the profit derived from the production of stuff can justifiably be committed to activities that drain wealth. Some government expenditure supports and contibutes to the production and exchange of stuff, sadly the things that buy votes are usually nothing other than a drain.

Greece suffers from one thing and one thing only, its government spends far too much money on things that do not support and contribute to the production and exchange of stuff.

There is only so much wealth in any national economy. It can go up and down from year to year but each year and each decade it is limited by the amount of stuff that is produced and exchanged. Wealth comes from the production and exchange of stuff and from nothing else.

Governments can produce more money but they cannot produce more wealth because they cannot produce more stuff. They can produce money by diluting their currency through either the printing press or devaluation, in each case they reduce the value of each unit of currency in circulation; they do not, however, change the substance of their national economy. The substance is dictated by the production and exchange of stuff. Currently the government of Greece can produce neither money nor stuff. It cannot turn on the printing press and it cannot devalue because it is tied into the ludicrous Euro, yet it is spending far more on non-productive governmental activity than the Greek nation's output of stuff can sustain.

Greece is bust, it's a simple as that. Nonetheless it still has a valuable economy, it's just that it is overvalued because it is tied into the Euro. Released from the straitjacket of the Euro the true value of it's economic activity will be reflected because there will be adverse effects to every part of its economy from its government continuing to overspend. Only then will there be any chance of the Greek economy becoming sustainable.

Lies, spin and goodwill

Whether you work in a trading business or a service business, your profitability is determined by your customers. It is easy to think of the profitability of a shop or a firm of architects being determined by how much money is received compared to how much money goes in costs and that is obviously the case in each individual accounting year. But what about next year? What you do this year and did in past years can have a significant effect on how well you do last year through the invisible power of goodwill.

The goodwill of a business is named aptly. Repeat business comes from keeping your customers happy and hoping they tell their friends about you. You generate goodwill among potential customers and that goodwill translates into custom in the future. When a business is sold it is common to find the price broken down between property, stock, debts owed to the business and goodwill. Ripping people off might turn a few quid now but it dissuades them from patronising your business again. So too if you are in a service business and provide a shabby service. The customer who has already engaged you might keep you on to finish the job because it would be more trouble to hire someone else to take over, but he won't use you again and might warn his friends and neighbours that you are to be avoided. This is all pretty obvious stuff.

The more competitors you have, the more you are likely to suffer in the future by letting down a customer today. That is one of many reasons why we have laws and regulations to limit the number of monopolies and place restrictions on those that do exist - give a monopoly free-rein and you create ideal conditions for a modern equivalent of the wartime spiv. The best explanation of this phenomenon I have ever come across came from the old television comedy Dad's Army. One of the characters is a spiv, a black marketeer, who offers something for sale for five shillings (I think it was knicker elastic, it usually is in English comedies) only to be faced by the comment "but it's only two shillings in the shops", to which he responds "ah, but you can't get it in the shops". Because only he could supply knicker elastic he could charge the highest price he felt his customers would be prepared to pay. Monopolies lead to higher prices, competition leads to lower prices because suppliers have to fight for your custom. Some suppliers will charge more and be busy because some customers value not just price but customer service, that's all part of the same thing - they offer something extra that people enjoy and are prepared to pay for.

My question today is: given all that I have written above, why do so many people lie to their customers when there is a problem rather than telling them the truth? The reason I ask is that I was talking to someone I know who has written and self-published a book, a "how to" guide to a particular craft. She keeps a stock of books in her garage and posts copies to individuals and craft shops as and when orders are placed. Every year or so she has to have a few thousand more printed and lets the printer know how many she needs. She's a well-organised person and arranges a reprint months in advance of the date she is likely to run out of stock. This year she ordered another five thousand and was given a date for their likely delivery. Two weeks before that date she telephoned and was assured everything was in place for that date to be kept. The date arrived but the books did not. Over the next few weeks she was given all sorts of promises of imminent delivery. In the end she received them three months late.

She had received an unusually high number of orders and her existing stock was exhausted a week after the original date set for delivery of the new print run. Being a sensible lady who wears sensible shoes, on receiving a new date from the printer she told her waiting customers of that date, only to have to do so again and again as lie after lie was told to her by the printer. Fortunately no one cancelled their order but the interruption to efficient delivery might have an effect in the future.

The true position was that the manager of the print shop had suffered a family misfortune which required him to spend a lot of time away from work - a fact only divulged once the books were printed and dispatched - causing the printing of everything in their catalogue to be delayed. Had the truth been told, her customers would have been told the same thing and everyone would know it was just one of those hitches that occurs from time to time through nobody's fault.

Customers make all sorts of allowances when they are kept informed of a problem that has arisen, allowances they will not hold against their supplier provided they do not later discover that the information they were given was simply a lie. Had the printing firm said "Mr Snodgrass's son is very ill and Mr Snodgrass can only be here a couple of days a week, we are running on 50% capacity so there will be a delay" the author would not have known when she would receive her books but she would have an explanation she could pass to her customers and the likelihood is that no goodwill would be lost between printer and author nor between author and putative reader.

As it is, she is looking for another printer because she was told numerous inconsistent untruths including: "we've started, it won't be long", followed by "it's next on the list, it won't be long" and then "we're waiting for paper supplies and yours is the first one to be done once they arrived". All of it garbage, all of it lies, all of it has lost goodwill.

That is just one example but I have encountered many examples of the same thing in recent years. Something goes wrong and there is no apology or truthful explanation, instead a load of deflective spin is spewed out to try to buy time. It does buy time but so would telling the truth and the latter would also retain goodwill.

A full tummy and a smile

For those of us currently living off our savings treats have to be rationed these days as the returns from main-stream investments tend to be negative, it makes treats even more of a treat than they used to be and causes us to be more discerning in our choice. Being a plump boy, my treats tend to involve food, and at the moment they alternate between Indian and Thai. Saturday was a Thai evening.

Within walking distance of FatBigot Towers there are three Thai restaurants, all of which have experienced my custom at some time but these days I only go to one of them. One of the others is an extraordinary place. I only went there once although I go past it frequently and it never seems to have any customers. My single visit provided me with the worst meal I have ever had the misfortune to pay for, an overcooked starter and bland but decidedly unpleasant main course. It was reasonably cheap by the general way of these things but grossly overpriced for what it was. Never will I darken their door again.

The second is relatively new and quite nicely appointed, I have been there three times. Their food is good but they have a skeleton staff and delays are not unusual. They are noticeably more expensive than the one on my blacklist and a little cheaper than the third. The third is in a different league. It is the most expensive of the three, although not by much, large and extremely well presented with a magnificently stocked bar and waiters and waitresses constantly buzzing about in the background. To my taste the food at the second is marginally better than at the third, yet the third is my establishment of choice in these straightened times.

If a business wants my money it has to pry it from my grasping hand by providing something I really like. The food doesn't have to be spectacular, the wine doesn't have to be fine but the overall experience has to be enjoyable and for me that means clean premises, unobtrusive yet attentive service, no more than one "how is your food?" per course and an overall air of friendliness. It was interesting walking to the restaurant at around 7.30 on Saturday evening. On the way I passed at least a dozen eateries and only two of them were busy, an independent pizza place and the excellent curry house at which I was assailed some weeks ago by the world's most ignorant person (see here). All the others had fewer than a quarter of their tables occupied, including my second-choice Thai establishment.

Walking in a different direction from FatBigot Towers takes me to my favourite local curry house, on that route I pass five or six restaurants including quite a new one also serving Indian food. I ate there a couple of weeks ago and the food was exceptionally good, however I was treated as an inconvenience by the snotty staff. That is perhaps only to be expected by a scruffy, aged, fat alcoholic who decides to impose his shambling self on high-quality premises; yet others welcome me to their business and smile sweetly as I hand-over cash at the end of the evening.

I know who is going to get my cash, it's the place that makes me feel welcome and gives the impression they have enjoyed having me there at least as much as I have enjoyed being their guest. They might be lying. They might want to get rid of me in case other potential customers are put-off by the rancid old man in the corner who looks as though he smells of stale urine, yet they smile through gritted teeth and realise that one scrofulous customer spending real money is worth more to them than any number who might visit but have not done so.

Next Saturday it will be curry again at my usual haunt and I am sure I will leave with a broad grin and a feeling of deep satisfaction with the product I have paid for.