A Nobel Economist Fears for the Poorest Greeks

Christopher Pissarides won a Nobel Prize in economics in 2010, but he hasn’t forgotten his roots in a modest, Greek-speaking village on the island nation of Cyprus. He was born in 1948. Although his father had a successful business selling materials for making clothes and other items for the home, Pissarides lived among people who scratched out a meager living as farmers. “Work on the fields would begin at dawn with mules and donkeys and end at sunset,” he recalled in his Nobel autobiography.

That sensitivity to the lives of the poor shines through in an interview that Pissarides gave today to Jennifer Ryan of Bloomberg News. He is talking about capital flight—the movement of euros out of Greece into bank accounts abroad. Capital flight increases the chance that Greece will be forced to abandon the euro. People who move their euros abroad are betting that if Greece does return to the drachma, they will be able to buy big piles of them with their euro stash.

“It’s the wealthy who will benefit because that’s who’s able to move their money abroad,” Pissarides tells Ryan. “Wealthy Greeks have already done it, whereas the small saver is not going to do it.”

Even the middle class is at a disadvantage to the rich, says Pissarides, who is a professor at the London School of Economics.

“Foreign banks do not always accept small deposits from non-residents even though they’re part of the euro system,” he says. “If you’re a small shop owner in Athens or one of the smaller towns, how do you find a foreign bank to open a foreign account, do you take your cash in hand and fly off to Italy or Switzerland or wherever? It’s not that easy.”

Read Pissarides’s Nobel autobiography and you sense where his concern for the poor comes from. Here’s an excerpt:

We were a happy family and I had a good upbringing. I have particularly fond memories of our family evenings at home before television, and our summers on the coast of Kyrenia and the mountains and valleys of Agros. I used to spend the time with my cousins, fishing in Kyrenia (mostly unsuccessfully) or playing in the riverbeds and springs of Agros. Cultivation in the village was still at subsistence level, in small plots, and occasionally we would stray into some vegetable patch or tomato bed, to be chased away by hard-working men and women in their traditional village clothes. Work on the fields would begin at dawn with mules and donkeys and end at sunset. On Sunday everything changed, as the whole village gathered at the church to pray, gossip and hold memorial services for their dead, distributing to everyone the traditional home made “kolliva” (boiled wheat with dried fruit, almonds and pomegranate seeds). Service in the Greek Orthodox Church was in the original Byzantine Greek of the bible, so I doubt whether anyone in the village, except perhaps the priest and the teacher, understood much. But it was certainly a great social occasion that I enjoyed very much. Watching how my relations who stayed behind in the village worked and how generous they were with their crops when we visited taught me a lot about family and inner well-being.

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Tyler Cowen, America's Hottest Economist

Andrew Hetherington

By Brendan Greeley

Tyler Cowen sits with a cranberry juice and a pile of books he no longer intends to read. He's at Harry's Tap Room, near the Air France ticket counter in the main terminal of Dulles International Airport, on his way to Sao Paulo. Two days ago he e-mailed me his reading list for the trip—27 books—and I vowed to keep up with it. Already, before he boards, he has assembled a pile of discards. "Unger. I'd say I browsed it. I looked at every page," he says. "There's nothing wrong with the book. It's a good book to stir up leftists." Roberto Mangabeira Unger's The Left Alternative falls with a thud to the table.

Cowen, 49, has round features, a hesitant posture, and an unconcerned haircut. He handles each book as he ticks it off his list. "This I discarded. It appeared to get a good review, but there's no framework, just scattered vignettes. I looked at 20, 30 pages." Sarah Vowell's Unfamiliar Fishes, thud. Cowen's first rule of reading is as follows: You need not finish. He takes up books with great hope and no mercy, and when he is done—sometimes after five minutes—he abandons them in public, an act he calls a "liberation."

In January, Dutton published Cowen's e-book, The Great Stagnation. It has shown up twice on the New York Times' e-book bestseller list. Dutton, a Penguin imprint, will release a hardcover edition on June 9. David Brooks has called it "the most debated nonfiction book so far this year" and leaned on it for a column in the Times. "In terms of framing the dialogue," wrote Kelly Evans for the Wall Street Journal, "Tyler Cowen may well turn out to be this decade's Thomas Friedman." The year is young, but among wonks the book has reached that most coveted of states: It must be responded to.

Cowen thought it was too long for a magazine article and too short for a book, so he suggested that the publisher offer it only as an e-book. The work is priced on Amazon.com (AMZN) at $3.99 for 15,000 words. Cowen gets the sense that Dutton humored him, both on the format and the content. "In a way [neglect] was a bonus," he says. "If this were like the second coming of Harry Potter, everyone would have had an idea about how it should be written." Now most reviews point first to the road it paved as an e-book before moving on to the importance of Cowen's ideas.

The Great Stagnation runs through three centuries' worth of what Cowen calls the "low-hanging fruit" of economic growth: free land, technological breakthroughs, and smart kids waiting to be educated. For developed economies, he argues, none of these remains to be plucked. Yet America, Europe, and Japan have built political and social institutions on the assumption of endless growth. Cowen summarizes the financial crisis in eight words: "We thought we were richer than we were."

It's not that he disagrees with any of the better-known explanations for the crisis—easy credit, flawed ratings—it's that he sees a more fundamental problem, one that can't be fixed with regulation, bailouts, or tax cuts. Cowen thinks that now that America has used up the frontier, educated all of the farm kids, and built a couple of cars for every family, we might be done growing for awhile. The Great Stagnation is a short work, simply written. It avoids any but the most basic discussion of economics, yet also brushes lightly over all of modern history; behind simplicity in style and argument lies a lifetime of intensely productive reading.

Tyler Cowen has read what's listed in Harold Bloom's The Western Canon, though not, he concedes, every single last one of the Icelandic sagas. He rereads what you probably haven't heard of, like Anton Chekhov's Sakhalin Island. For the Brazil trip, in case he runs out of new books, he has also brought Neal Stephenson's 1,100-page Cryptonomicon, which he has already read. Fiction slows him down, he says, which makes packing easier. He carries a Kindle but reads paper when he can; he says he's invested too much time on the rhythm of how the eye tracks the page. Several people have told me the same story about Cowen: They have watched him read, and he scans a page as others might scan a headline.

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