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Sunday, August 14

Athens and Larnaca

by Mike on Sun 14 Aug 2005 08:54 PM EDT

In light of the day’s tragic events in Athens, we extend our heartfelt sympathies and sincere condolences to our family and friends in Greece and Cyprus.

Τα συλληπητήριά μας.

Leave Comment | Permanent Link | Cosmos

Friday, August 12

The land that tech forgot

by Mike on Fri 12 Aug 2005 11:00 PM EDT

If they ever get the Antikythera Machine working again, hopefully it will work just fine with a regular old dial-up connection.

I would like to comment briefly on an interesting “Commentary” piece that I found in the online version of Kathimerini (English version) earlier this week. However, in doing so I must run the risk of exposing my relative shortcomings in the areas of economics and Greek politics. Nevertheless, I am certain that readers who are savvy in one or both of the aforementioned areas will correct me wherever and whenever I am mistaken. Onward...

From Kathimerini (English version):

Narrow minds on broadband use (full article)

Greece has broken yet another record in the technology race, being last among European Union states on the list of fast Internet users. Fewer than one in 100 users owns a broadband connection, compared to the EU average of 10 percent. The huge gap is easy to explain: Greece has the lowest number of fast Internet connections simply because it imposes the highest charges. The fixed charge for a broadband connection in Greece is 64 euros, while the total cost in Poland, that is, fixed costs as well as a monthly subscription, is just 20 euros.

Some notes to provide a bit of perspective: Greece ranked significantly higher than Poland in terms of GDP per capita in 2003. Simultaneously, Greece ranked considerably lower than many other EU, EFTA and “Candidate Countries” in 2003, coming in around 20% to 30% below average. (source) The estimated per capita income for Greece in 2004 was US$21,300 (ranked 43 overall). Compare this to Poland, with a per capita income of US$12,000 (ranked 72 overall). (source)

[continued from Kathimerini article]
Realizing the importance of fast/broadband connections, the conservative government said before the elections that it would provide students with cheap services. However, that government promise has remained a dead letter, as OTE, the Greek telecommunications giant, charges 15 euros per month for broadband services with limited downloading. It should be noted that an interministerial committee had proposed a 10-euro charge and unlimited downloading. The final offer is far from being any incentive to students. Greece’s last place in fast Internet use statistics inevitably has an effect upon its student population. And all this at a time when everyone is talking about the need for the education sector to catch up with technological developments.

The article goes on to declare that “The root cause of the problem is the pervasive role of the state in the economy...” I respectfully submit that this statement should instead read “The root cause of the problem is the state’s pervasive mismanagement of the economy.” Presumably, there would be considerably less criticism of the state’s “pervasive role” if the management of economic affairs was much improved. To say that the Greek government has driven its people to the edge of economic despair is increasingly apparent these days. There are admittedly larger fish to fry than the matter of broadband access in Greece, but the manner in which this issue is being handled is a good example of the institutionalized mismanagement of economic affairs in Greece.

[continued from Kathimerini article]
Turning economic logic on its head, OTE has said that it will lower prices only after the number of subscribers has increased. At the same time, the company wants to be the exclusive provider of subsidized connections for students.

So, when demand increases, then the price will go down? Interesting. My confusion when reading this statement is probably due to the fact that I don’t really have a firm grasp on the conventional economic definition of the term “demand.” Let's look it up:

From the Biz/ed Economics Glossary:

Demand is the want or need or desire for a product that is backed by an ability to pay. Demand is measured over a given time period. It is determined by a number of factors including income, tastes and the price of complementary and substitute goods.

Given the above explanation of “demand” — that is to say the "desire backed by ability to pay” — it appears as though the tech-starved of Greece are out of luck for now. There seems to be a rather myopic perception of the concept of value when it comes to broadband access in Greece. Where increased broadband access would likely improve educational and technological developments and increase and improve commerce thereby bringing some relief to the terribly bleak outlook for the Greek economy, the instant concern for OTE and the Greek government is how to get more money now. It seems more than a bit backwards to say “If a few people continue to pay more now, then more people will eventually pay less later on.” Rather than imposing price controls that favor consumers, the state leaves consumers at the mercy of the "market." Good luck with all that.

The reluctance to institute price controls is in and of itself a "control" of sorts given that the market is incapable of resolving the issue when left to itself. At first glance, it is very accurate to say that logic has been “turned on it’s head” in this instance. It’s unlikely that the Greek people will soon find a way to back their desire for faster Internet access with an ability to pay unnecessarily exorbitant rates, particularly given the myriad of economic problems which Greece faces at present. It’s even less unlikely that Greeks will be able to collectively “pay up” for broadband rates on a scale that is grand enough to drive prices down rather than up.

Cui prodest? Clearly there must be some benefit for a certain small group of individuals and organizations if the powers that be can maintain the status quo. And so long as this is the case, the Greek people are stuck with an economic policy that concentrates all the benefits of cutting edge technology in the hands of a privileged minority.