low growth

Am I experiencing low growth? My income is low, my assets decreasing, my future prospects dim. Does it hurt? Do I mind? In short no. I have never been happier. Or, less uncomfortable, anxious, stressed. I like not growing. Am I vegetating? I don't feel / think so. I feel richer, safer, happier. I am uncertain about our future, my future, but happy with that unknowing. See https://soundcloud.com/weeklyeconomicspodcast/the-end-of-growth?&utm_medium=email&utm_source=nefoundation&utm_content=2&utm_campaign=wep_0803&source=wep_0803

Down and out in Naxos and Corfu

Eleven months to the day, date and hour since I had first passed her in the wolf light of early dawn, I got off the ferry in Corfu. I had descended from a mountain in Naxos a few days before, where I had been pleasantly marooned for five months without access to electricity, running water or people, other than my landlord and host, a man called Hodge.

I was met at the bus station in Corfu Town by my new owner, or boss, and hauled off to her hotel, the Villa Magdalena, some twelve kilometres away, in the centre of the island. She kindly allowed me two hours rest before putting me to work with a gang of Greeks, Albanians and Glenn, another English refugee, preparing the hotel for the arrival of a group of forty or so Germans the following day. This explained why she had been so keen for me to come at once, although she did not explain this on the ‘phone. After a blissfully hot shower, my first in several months, I presented myself for work. I cannot remember when we stopped that day, but it was certainly late in the evening. We resumed at seven the following morning. I continued to work eighteen hour days for the next fortnight until the Germans left. A baptism of fire into the life of an unpaid volunteer in the hospitality business. Once the Albanians had left and the Germans arrived four of us remained to cook, feed, clean up and man the bar.

One evening I got rather drunk (I was possibly also exhausted) and compounded my felony by swearing in front of the guests and falling over one of them, who was unfortunately “rolly” (German for wheel chair) bound. For some reason my owner did not sack me.

I had left Naxos in a hurry. I’d spent my last days in Naxos City, a.k.a. Sodom and Gomorrah, and each day I inevitably spent a little more of the pittance left after eleven months. I had just enough cash to buy a ferry ticket and a small bottle of water. I disembarked in Athens with €1.50 in my pocket. I was able to touch an old work mate for a loan - he had a whip round in his office for me.

This is not an unusual situation in Greece. In January I was helping Mikhailis redecorate his house in return for a mattress and a meal, usually lentil soup and bread, and some krasi from his taverna. I asked him to lend me €10 to buy some tobacco. He declined, explaining that he had no cash until the end of the month, when he received his pension. Meanwhile he was surviving on tick from local shops and the remaining stock at his taverna, closed for the winter. I realised I knew no one on Naxos who had any money. I posted a jokey reference to this on FaceBook. A Greek American friend spotted it, and immediately offered to sub me. I subsequently heard he had done the same for Mikhaili and possibly others. He had to return to the US to apply for Greek citizenship, so he could continue to live on Naxos, and promptly had his bank accounts frozen by the IRS over some misunderstanding about his tax. The Naxos cash crisis deepened.

When I arrived on Naxos I had a wodge of money, thanks to a loan from my wife who had precipitated my departure for Greece by throwing me out of her house. For a while I cheerfully extracted cash from ATMs, assuming something Micawber-like would turn up. It didn’t, but I survived anyway. At first I had great difficulty spending the money – every time I offered a bar, taverna or shop a €50, the only notes the ATMs dished out, the retailer would run off frantically looking for change. Things perked up later, when the Germans and Scandinavians arrived and injected their cash into the Naxian economy. Once they leave, Naxians revert to tick from their friends, and the food everyone grows on their plots of land. The rest of the Cyclades disparagingly refers to Naxians as “farmers”, but at least they are not in total hock to the tourist industry for their survival. They grow four crops of potatoes a year.

Shortly after my arrival on Corfu our German guests gave us a €500 note. They wanted to make sure they could keep eating and drinking. My fellow Englander had been doing the washing up all morning and the note had got rather damp in his pocket. He fished it out with a very wet hand and gave it to Magda. Far from being delighted with the rather pretty pale lilac note, she had a total tizzy. Do €500 notes dissolve? Melt? Magda dragged me off to town (one of my jobs is to sit in her illegally parked car while she does errands) and took the note into not one but two banks to have it checked. I began to understand her distress. If the note was fake, or even damaged, she would be unable to spend it. It was the first time in my life I had seen so much money represented by a single note. In England banks refuse to accept euro notes larger than €100 because of fear of fraud. Earlier, I’d had a problem trying to use a €10 note to pay for a sandwich and a beer. It had a tiny tear on one edge, and the shop assistant refused to accept it. Her boss reluctantly agreed she could. I had only just been handed it, as change, like some hot potato.

And the other reason for her unenthusiastic reception of the note was that it was already spent. She got rid of it in the space of a half hour, drip feeding various creditors just enough to keep them happy for a few more days. She is running her business on credit cards and paying 22% interest on what she owes them. She is in a permanent state of near hysteria. I feel for her as, until I left England, I had been playing much the same game.

This is the opposite of a cash economy. I feel very much at home.

Funny Money

Funny Money

I have just moved to Corfu (Kerkira to the Greeks) to help Magda with her hotels. A few days ago, Magda was given a €500 note by one of our German guests. This was kind of them, but probably entirely self interested as they wanted us to continue feeding them. Forty Germans get through an astonishing amount of food every day and Magda and I seem to have spent the best part of half a day, every day, exploring the wealth of supermarkets and cash ’n carries in Kerkira for the best priced deals. Magda is a bogof queen. Which means she sort of assumes bogof applies to everything, and if one of something is a bargain, ten of the same must be an even bigger one. This plays hell with her cashflow.

So I was surprised at her reaction to the €500 note. Instead of being wreathed in smiles, and momentarily delighted with life, she seemed to go into a complete decline. She said in fact she was having a panic attack. Glenn, her best man, had been given the note by Katherina, a well built girl who is responsible for the Germans. This means she has the biggest tab at the bar, and unlike everyone else, has not as yet deigned to settle it. Glenn had been doing the breakfast washing up all morning. His dress code is shell / track suit / trainers and he refuses to wear the extremely smart faux leather apron I persuaded Magda to buy at the Chinese shop, so he was very wet. When he handed Magda the note fished from his pocket with a very wet hand she had conniptions. Do €500 notes melt? We immediately departed to town and her bank, which she rushed into to get the note checked. She then went to another bank and repeated the exercise. They both confirmed the note was OK.

She told me how on another occasion she had gone into her bank to pay some cash in. She couldn’t understand why they put a single €5 note through the note counting machine. Surely, she thought, they could count a single €5 note. The cashier gently explained that the note counter didn’t just count notes, it also checked them. On my way to Kerkyra from Athens, I had tried to pay for a beer and a sausage roll with a €10 note. It had a small nick on one edge. The girl on the till tried to refuse it. I protested, and her boss said grudgingly that it was OK and she then accepted it.

Within half an hour, Magda had got rid of most of the €500. She used it to make part payments on some of her more pressing accounts, and about a third of the minimum payment due on her credit card. This was probably a case of good money after badmoney down the drain. She has already had several of her cards cancelled due to her being late on her payments, and she’s desperate to keep at least one credit card alive. Once cancelled, she cannot reapply for another, and her business is kept afloat on credit cards.

Three months ago I was working for my friend Mikhailis, helping him to refurbish the shutters for his windows and doors. In return he gave me lentil soup and bread, a mattress, and the last of his restaurant’s stock of krasi, each day. I had no money and one day I tried to borrow €10 from him to buy some tobacco. He regretfully explained that he would have no money until the end of the month, then twenty days away, when his pension was paid. He meant, he literally had no money. I suddenly realised I knew no one on Naxos, where I then was, who had any money. I made a joking reference to this fact on Facebook, and a kind Greek American called Lou or Elias, depending on whether he was being American or Greek, said he’d be happy to lend me some. I subsequently found out he’d done the same for Mikhaili, who still owed Lou/Elias €500 when I left Naxos in April. Meanwhile Lou/Elias had returned to Philadelphia to apply for Greek citizenship, and had had his bank account frozen by the IRS over some misunderstanding about his taxes. So the credit crisis deepens.

Kiki, who runs the hotel really, while Magda flies around in an almost permanent panic attack, showed me the €500 note before she entrusted it to Glenn’s damp track suit trouser pocket. It’s a rather beautiful pale lilac colour and I was struck by the fact that this was the first time I had seen so much money represented by a single note. I can understand why Magda felt so nervous.

When I first arrived in Greece, I was quite flush for a time, and constantly interviewed ATMs who happily excreted bundles of €50 notes for me. But I had the greatest difficulty spending them. Invariably I would offer some hapless Greek retailer a €50 note and he or she would rush off down the street searching for someone who could give them change. This was in May, before the season had really started. It became less of a problem later when the tourists started to inject a bit more cash into the Naxian economy.

In January Mikhaili, waiting for his pension, survived on tick from friends – supermarkets, corner shops, hardware stores, petrol stations. He and his family ate and drank what was left of last year’s stock at their taverna (like much of Naxos they close down from October to April). Mike, in turn, kept a number of friends, mostly frail and elderly, supplied with free meals from the taverna when it was open. One of them was a carpenter, and reciprocated by carefully cutting out all the rot from Mike’s shutters, and refilling them with wood inserts and glue, for nothing. His painter and decorator, Giorgiou, did much the same.

Many Naxians, whom other Cycladic islanders refer to disparagingly as “farmers”, live almost entirely and exclusively off what they themselves can grow and produce – potatoes, peppers, tomatoes, several varieties of beans, tomatoes, zuchini, melanzanes, orta (Greek for weeds, wild greens), lettuce, oranges, lemons, kumquats, olives, chickens, cheese from their goats and sheep, krasi and raki from their vines. And mostly, they are extraordinarily generous with what they have.

This is the opposite of a cash economy.

Taxing business

Tax UK sales, not "profits". That way you catch Barclays, Amazon, Starbucks and anyone doing business in the UK. If a UK based business makes all its sales overseas (i.e. it's an exporter) it pays no UK tax at all (although it will be paying sales tax on all the things it buys in the UK).

Loss making (so called zombie businesses) will go to the wall. No more allowances / tax breaks of any kind. If you sell things to UK based customers, you pay tax on those sales - a tax on UK sales of 5% would be the equivalent of paying corporation tax of 20% on profits which are 25% of turnover.

No evasion possible. Similarly tax all land / property in UK