If you have a car and someone to drive you around, he is
called a chauffeur. Most of the time, if something happens to the car, and it
is not running as well as it should, the chauffeur will know what to do because
he understands this car better than anyone. He knows how to coax it to start in
the morning, for example, and knows when it is time to have a tune-up
regardless of what the odometer says.
But there comes a time when something more serious can
happen to a car, and the chauffeur cannot fix it because his understanding of
it is not based on the principles upon which it operates. In contrast, a
mechanical engineer and his team of technicians would know enough of such
principles that they can design a car from scratch and build it. As well, a
mechanic would know enough to diagnose what is wrong with a car when it breaks
down, and then fix it to run smoothly again.
And you know what, my friend? An economy is like a car.
There are the chauffeurs of the economy who know enough about it to run it
smoothly – but only after it has been put together by the engineers and the
technicians who know how to launch an economy and develop it to full maturity.
The chauffeurs may know how to tweak it here and there when it does not perform
as well as it should, but they cannot fix it when it begins to act up
seriously, let alone refurbish it when it breaks down completely. You will need
a mechanic to fix it for you in such cases, or an engineer and his team of
technicians to overhaul it for you.
The bankers and their employees as well as the officials in
the finance ministries or finance departments are the chauffeurs who will run
an economy when it has already been established and is running normally. They
can even nurse the economy back to good health if and when it catches the
proverbial cold for this one reason or for that one. But when an economy
experiences serious trouble, these people cannot do what is necessary to fix it
because they do not know enough of the principles that make it work. In these
cases, someone else should be called upon to do the work, but regrettably this
is not what happens most of the time.
When a serious breakdown happens to an economy, the
politicians who get involved may or may not know that something different must
be done at this point to save it. What they tend to do in either case, however,
can only be called a big mistake. Confused about who can do what exactly, they
call not on the development engineers and the technicians to fix the economy
but on the financial engineers to try their hands. The politicians make such
decisions not knowing that the financial engineers are the chauffeurs who can
drive an economy when it is healthy, but will drive it into ruin if it is sick.
The reality is that the financial engineers are a breed apart from the
development engineers, the technicians and the mechanics that can fix an
economy, refurbish it or rebuild it from scratch.
A case in point is the Greek situation about which the IMF
has admitted it made a mistake trying to nurse its economy back to health. The
problem with Greece
being a financial one, the financial engineers at the IMF looked into the
toolbox containing financial remedies, and they recommended the use of
austerity measures to fix the problem. The remedy failed because the Greek
economy had deconstructed, and needed to be redeveloped to work again. What it
required were economic development engineers as well as a team of technicians
and mechanics to refurbish it while treating it as if it were an emerging
economy.
In fact, the World Bank instead of the IMF would have been a
more useful institution to team up with the European Union and the European
Central Bank ... and get busy helping Greece get on its feet rather than
bail it out. This troika would have done a much better job than the one
containing the IMF. The World Bank has the economic engineers, the technicians
and the mechanics who can organize for and deliver a program to rebuild the
Greek economy the way that the Marshal Plan helped rebuild Europe
after the Great War.
The troika containing the World bank could have called on
the successful businesses of Europe, Asia and the Americas
to open branches in Greece
against guarantees offered by it. These would not have had to be full guarantees
because partial ones would have satisfied those businesses.
There is still time to implement such a plan, and the people
involved in this matter should consider the idea.