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Consistency – be gracious in defeat

by on February 14, 2012

When Nadal double faults he does not ask for a third serve. When being caught speeding by police you face the penalty. When defeat comes it is best to bow out graciously.

Consistency and predictability are key ingredients to stable society.  All solutions for Greece’s current economic problems are painful but which solution is consistent? Which solution will show that everybody plays by the same set of predictable rules? 

Greece has borrowed too much money and cannot pay it back. The Eurozone has a no bailout clause and should not be lender of last resort. Greece has to either go the IMF or default. Suppose that the IMF cannot save Greece; all that remains is default. The creditors lose their money and Greece and its people go through hardship accompanied to a lesser extent by many in Europe and a few around the world. Would this be so unjust?  Would this not just set the precedent?  We play by the rules whatever the consequences this creates predictability and stability.

The creditors will lose a lot of money, but that is part of lending money, there is a chance you will not get it back. The fact that the rating agencies did not see this coming and that Greece could initially borrow at similar rates to the rest of the Eurozone is another issue and just another case for not having rating agencies in the first place. This however does not change the situation. Creditors unwisely lent Greece more than it could afford to borrow and they will loose out. 

The Greeks (and potentially their neighbours) will go through a decade, if not more, of hardship and financial isolation. This is not dissimilar to you or me if we go bankrupt. It is simply the effect of having a bad financial reputation. To say the people should not be punished for their politician’s mistakes is further nonsense. Greece is a democracy and its politicians are elected. The people voted in the same people who have let them down decades.

Contagion may resut from the fall of Greece of cause and a few others if not the whole Eurozone may fall, but is this wrong? Should sensible German or Dutch voters, who voted for sensible government budgets be paying Greek welfare? Should our taxes go to bailing out people who made bad decisions? We may all be hit, but those hardest hit should be the ones who placed the highest bets in the wrong place – Consistency and rule of law.  

We should all be free to make our own decisions. At roullete you could bet on red, if black appears you lose. Just because this may have horrible consequences doesn’t mean they tear up the rule book and let you keep your money.  People have placed their bets and a bet can be lost. When a bet goes well you should be rewarded, but in defeat be gracious and do not go crying for help or call foul play. After an epic Autralian Open it may be time for politicians, economists and society to take a leafe out of Rafael Nadal’s book.

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From → Extended Society

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