A System Engineering Professsor’s View on The Greek Economic Crisis

By Larry Ho, Gordon McKay Professor of Systems Engineering, Emeritus, Harvard University

The current problem facing Greece and the Eurozone has been dominating the news lately. The reports people sees in newspaper and broadcasts make the problem overly complex, difficult to understand and resolve. As a citizen of the US, this is my own simplified view:

1. In the 50 United States of America, we have rich states, such as California, New York, and Massachusetts and poor states such as Kentucky and North Dakota. The rich states pay far more in federal taxes to the federal government than the poor states. The government takes the tax money and redistributes it for the good of the whole country. The poor states receive much more of this revenue back than they contribute. Most people are not even aware of such re-distribution and certainly would agree that this all for the greater good even if brought to their attention since we are all part of one country operating under a central government.

2. The Eurozone can be viewed as an incomplete step toward a “United States of Europe”. The rich state is Germany and the poor state is Greece. But because of language, history, and customs, redistribution of benefits are far from automatic. Yes, Greece as part of the Eurozone,certainly deserves of economic help (disguised as loans rather than direct redistribution). At the same time, as part of a union Greece must obey/conformto certain common rules of economic behavior imposed on every member states.Greece cannot irresponsibly spend Euros and expect other member nation to subsidize her endlessly and behave as a totally sovereign country. There in lies the problem. If there were a true United States of Europe and a strong central European government (as in the case of USA), there won’t be a crisis.

3. As the world globalizes, unification is an irresistible trend. United Nations is an organizational attempt after WWII. However, it is often accused to be a weak organization that can do little to resolve conflicts and wars. However, to some extent we have learned from the failed attempt of the League of Nations after WWI. You can say that the United Nation was deliberately designed to be weak because we realized that we are not ready for world unification. On the other hand, we can also say that the economic unification of the Eurozone was an ill-fated attempt without thinking through all the ramifications of rich-poor countries united under one EURO.

4. Someday, our world will come under one government and one language. But I certainly will not live to see it.

(From: http://blog.sciencenet.cn/blog-1565-904182.html )