There are real growth opportunities staring Greeks in the face if they dropped thr Euro for the Drachma, but it would require swallowing some national pride (and before the insults from outraged Greeks come, bear in mind that I’m a first-generation Greek American, born in the Great Commonwealth of Virginia). A great deal of my relatives still live in the country of my family’s birth. Nevertheless, my life here taught me that a huge opportunity is before them if they have the courage to go for it and the humility to pursue it.
First, they would be in a position to out-China China as the primary producer of low-cost goods for the EC. I imagine it would start in textiles and foodstuffs, but they could also take a page from Delaware and make Greece the premier business-friendly place in the EC. Delaware is a tiny state, but through smartly targeted policies they’ve created a niche that’s hard to attack, which is why nearly every U.S corporation of any consequence is incorporated in Delaware—so much so that the state derives a full 25% of its revenue from business fees, and their zero sales tax in no small part has a huge effect on their jobs sector. The Greeks would do well to consider becoming the new Delaware of the EC.
The second thing the Greeks need to do is start thinking like Pacific Rim countries—when surrounded by larger economies, develop a niche of excellence, and use that growth to aggressively pursue other markets in a way that maximizes the use of comparative advantage. This requires discipline, industriousness, and professional pride (pride in *excellence*), and perhaps this might be the hardest mental shift of all.
It *can* be done. They’ve done it before—they’ve just forgotten how.
Someone told me yesterday that the entitlement mentality here is ridiculous. I saw posters on the way from the airport with the hammer and sickle. Seems like there is a war for the soul of Greece.
That, I think, is the problem. They could do what you've suggested from within the Euro by dropping taxes on capital and unshackling private business from the myriad of regulations it must negotiate.
Instead, by returning to the drachma at 50%, they will further impoverish themselves. Exports will be very attractive -- for a while -- but that's an effect of devaluation that is very short-lived.