The Athens office of the international management consultants, McKinsey and Company states its purpose in the first

paragraph of the new study, Greece 10Years Ahead. " is a study that aims to define a new growth model and strategy for economic development in Greece for the next 5 to 10 years, founded on the principles of competitiveness, productivity, extroversion, investment stimulation, and employment opportunities." The study is very interesting. It offers numerous insights into the current "crisis," lots and lots of data and critical analysis by, I assume, many highly qualified folk of various appropriate business and academic disciplines. McKinsey sponsored the study in conjunction with the Hellenic Federation of Enterprises and the Hellenic Bank Association. It is, of course, crap. A good friend of mine who spent his career in various high corporate jobs with a variety of "Fortune 500" companies frequently used management consultants. He told me the consultant's only real job is to come into a company, sniff around long enough to figure out who is really in charge, find out what that individual or group wants to have happen and, then, justify and recommend whatever that is. The people who are in charge then take that recommendation, present it to the Board as "proof" that they have been right all along and everybody moves on. I am certain this is not what happened in this case. If the Hellenic Federation of Enterprises and the Hellenic Bank Association are not disinterested, unbiased entities what possibly could be? Further, it is absolutely true that the denizens of the Athens office of McKinsey and Company have little fingers that have forgotten more about Greece than I will ever know. However, I am also certain that they recommendations in the Executive Study of Greece 10 Years Ahead are not sufficient to bring any real relief to that country or the world.

The primary problem in the world economy today is the reduction of all measurements of efficiency down to return on invested capital. When the grand Pooh-Bahs of central banks, private financial institutions, government treasury departments and the deep, deep thinkers and opiners of Davos talk about the benefits to economic systems of free markets they are really saying "free markets" are the best environment for the most efficient return on invested capital. Sometimes they do pay lip service to free trade helping with employment and other "stakeholder" (as opposed to stockholder) interests. This is, unfortunately, also crap. World wide, employment is hurt rather than helped by so called free trade. Tariffs and other barriers to unfettered trade does result in at least temporary economic inefficiencies when it comes to return on invested capital. Therefore, free trade, or the removal of trade barriers, does benefit investors. It not only maximizes return on invested capital, it also reduces risk to investors. It does this second thing by radically eliminating competition from small operators and factories. Competition is reduced when "efficient production" eliminates small competitors by taking away their markets and consolidating these markets into huge single markets dominated by capital intensive corporations that drive down the unit cost of production to the point of bankruptcy for small competitors. The elimination of these competitors puts people out of work. In small nations, like Greece, the elimination of these companies and the jobs that go with them, results in chronic unemployment levels that impoverish the nation. Austerity programs imposed by international bankers on debtor nations, like Greece, just make a bad situation worse, sometimes horrible. The international financial communities slavish devotion to the twin dogma of "free trade" and "austerity" while moving to a unified, single, world economy is the path to anarchy and failure. Free trade does not work for anything other than the concentration of wealth and economic and political power into the hands of an increasingly smaller oligarchy. It is destructive of every nation that buys into it and mitigates against the

existence of a middle class and democratic processes and institutions. What Greece needs is a modified market system that protects native industry that meets three tests. One, protected industries must be labor intensive. That is, industries being protected from foreign competition must require relatively greater units of labor per unit of production than is the average across all industries in the nation. Two, the industries protected should be those that require significant supplies of components of the final product produced be acquired from sources outside the primary company producing the product but not outside the nation. Three, throughout the entire supply chain and production process there must be significant and vibrant competition between native companies offering the same service, component or product. All markets seek monopolistic equilibrium. This is true in a single international market as well as for all markets from the biggest to the smallest. Free markets move faster than regulated markets toward monopoly but all essentially free markets seek monopoly status. Markets do so for the same reason the financial community seeks maximization of free trade, it eliminates competition and reduces risk to invested capital. In all economic history three things are true: to grow an economy some competitive advantage is required. In world trade these advantages can be, but not limited to, superior technical knowledge and skill, easier access to capital, human prejudice and tariffs. Superior technical skill and knowledge in an internet age is an ephemeral advantage not likely to last a year much less a generation or more. Capital, regardless of the hurtles and obstacles, always finds its way to opportunity so this barrier to competition is also relatively short lived. Human prejudice, such as the laws that prevented black consumers from shopping in white stores during the Jim Crow era, can result in a prolonged period of tariff-like protection as was the case in the South prior to the late nineteen sixties and seventies. However, as legions of black small businessmen and women can attest, when society changes its mind and the protection afforded by human prejudice goes away, the resulting economic dislocation is severe and very destructive. The only controlled competitive advantage is the tariff.

The second true thing is that within the walls of protection, in whatever form it takes, vibrant competition must be maintained. In order to overcome the markets' predilection to monopoly, some form of government regulation is required. Without being regulated by non competitive, non market forces, markets will always drift toward a monopoly of a single company or a cartel of companies. Without competition, the constant change required for sustained economic growth will stagnate and die. When competition atrophies, economies also stagnate and die. The third true thing is that in order for any business to flourish, even to exist, it must serve a viable and continuous market. Domestic markets are easier to access and easier to understand and are less fraught with differing local commercial laws and regulations. Greece needs first to fix its unemployment problem. Encouraging the elimination of imports wherever possible and encouraging the spread of competition within the protective walls is the only way to do this. Nothing else will work. Any suggestion to the contrary flies in the face of history and is just plain wrong. The fifty percent "haircut" the great European compromise is set to impose upon Greece's lenders is a good thing and will help. It remains to be seen if this reduction will be sufficient to stabilize Greece's banks and credit. Whether it does or it doesn't Greece needs to take protective steps to insure that a viable middle class is formed by ramping up domestic employment. Failure to do so will mean domestic industry will have no domestic market. Greece needs intelligent tariffs and other industrial protections. Without them there is no way forward.