By Richard Finch

Dimitri Kraniou sees a fascinating dilemma with the economic crisis in his native Greece, referring to a dynamic system in perennial change, as the welfare state in Greece is being systematically dismantled, threatening the lifestyle Greeks are accustomed to.

A Greek default would cause a spillover effect threatening global financial markets, specifically Italy and Spain. Spain is plagued by high unemployment and Italy is debt-ridden. Kraniou said the most important thing to emerge from the crisis is that the global economy will witness a seismic change in the years to come.  

“Everything is in a state of flux. Greeks see their way of life threatened by the crisis, specifically the strict austerity measures.” Kraniou said.

Greece barely avoided bankruptcy last June, after a decade long debt binge resulted in the current crisis that threatens the future of the euro and the recovery of the European economy.The European Union recently approved the sixth installment of ongoing bailout aid, part of the existing $150 billion approved in May 2010 by the EU and the International Monetary Fund. Without the financial aid, Greece would run out of money and not be able to pay salaries and pensions.

A year and a half of draconian cutbacks, including a 3 percent increase in total tax revenue, an across-the-board value added tax on consumer goods and a 15 percent wage cut for all public sector led to the seventh general strike this year in Greece, as workers walked off their jobs last November.

Kraniou said the major indebtedness in the Greek economy has a negative impact on society, specifically the rise in unemployment and an array of social problems that come with it, including a rise in crime and an increase in suicide.

Kraniou, professor of economics and management at Point Park University School of Business and chair of the department of Global Management and Organization teaches his students that capitalism is elusive by nature, and said “I tell my students the concept of capitalism is different depending on the country practicing it. The American system of capitalism is focused on efficiency, and ultimately profit.”

Kraniou is suspicious of newly appointed Greek Prime Minister Lucas Papademos and Italian Prime Minister Mario Monti, because of their strong ties to Goldman Sachs, a global banking empire specializing in mergers and acquisitions.

“Technocrats who push international financial practices will impact our society and must come up with compromise; they must espouse policies to put in place to provide necessary social benefits,” Kraniou said.

Kranious said the primary reason behind European indebtedness is that all European countries use the welfare state to revisit public debate on health insurance, socialism and corporate welfare. Multinational corporations avoid tax obligations using existing loopholes to avoid paying taxes.

“Wall Street penalizes politicians for going along with the welfare state in Europe, the same will happen here in America.” Kraniou said.

As Greece shifts from a socialist government, under former Prime Minister George Papandreou, to a national unity government under Prime Minister Lucas Papademos, it has relied on billions in bailout funds from its more prosperous European neighbors, specifically Germany and France. Former Prime Minister George Papandreou struggled to conform to the demands of the IMF, the EU and the European Central Bank Forces that have worked for decades to erode the welfare state.

Kranious said he is upset over the acronym “PIIGS,” a pejorative used by international bond traders and the economic press to describe the less affluent northern European countries of Portugal, Italy, Ireland, Greece and Spain.  

“Dr. Kraniou is upset when Germany asks Greece to adjust their lifestyle as a result of austerity measures. The Germans believe Greeks are lazy and living beyond their means, but Germany only cares about the euro,” Point Park University business student Ragheed Muhra said.

Muhra credits Krainou with helping students learn to think critically and evoke their analytical skills. Kraniou traces the roots of the international financial crisis to post World War II America, when the political and corporate elites in the victorious United States, decided on and pushed for the premise that for America to grow, their must be free international trade and control of the global financial environment. 

“Capitalism is elusive by nature. In the United States the tendency is to focus on efficiency, so the overriding priority is we have a super dynamic system to maximize the efficiency of the marketplace,” Kraniou said.

Dr. Arch Maharaha, assistant professor of business management in the Master of Business Administration program at Point Park University has known Kraniou since he was an MBA student in the 1980s agrees the situation in Greece is fragile, and added “If the Greek economy fails, Italy may also fall and this will impact the global economy.”

Despite the problems facing the global economic system, Kraniou said he is trying to be optimistic. Kraniou said the Greek way of life is eroding from diminishing incomes and a collapsing welfare state. “The major issue in this new era is how the concept of democracy can survive in the marketplace.”  Kraniou said.