Italy, Spain, and Greece – what can we learn? Are there inevitable lessons for the U.S.?

On a recent trip to Europe, a metaphor became increasingly apparent. It seems clear that the national debates in the Parlamento Italiano, Cortes Generales, and Hellenic Parliament are about how to divide a finite resource and come away with more than one’s fair share. There are finite number of slices in a pizza, paella or souvlaki. They cannot be divided indefinitely… at one point it becomes fruitless.

During the period of expansion, fueled by apparently ever declining interest rates, legislators and lobbyists thought their job was to wrangle resources from a central pool primarily comprised of other people’s money (OPM). Using Washington as an example, it’s as if everyone thought their job was to go to Washington and come back with more slices of the pizza pie than corresponded to their electoral representation. Lobbying, gerrymandering, and appropriations were all refined tools actively used to get others peoples’ money to pay for your own projects.

Meanwhile, legislators seem to have forgotten about baking more pies or preparing the paella or souvlaki. For that matter, figuring out who is going to own the oven. In the interim period, emerging markets, principally led by China, managed to build and own most of the manufacturing base. In Greece, and likewise in Italy and Spain, much of the domestic production capabilities stand dormant while unemployment is rampant. No more pizza, paella or souvlaki to divide… it’s all been eaten. Can there be endless supply of American apple pie? The dream? Yes. The pie? No.

Clearly we know that while the situation is far more complex, how can we progress if the political conversation continually revolves around spending the spoils rather than increasing the productive capacity? Knock knock?

A number of companies have quietly figured this out and are acting aggressively to increase their productive capacity. Many of them are privately held and are able to make the right long-term decisions without fearing short-term negative consequences. A few publicly traded companies, most notably Google, is actively involved in rechanneling spending across the board to bring ever more efficient use of resources. They have tackled advertising and telephony. What about when they address automobiles and flow of traffic? Are you ready for Google health care? There are so many other sectors of the economy that are awaiting that same process and on route… somebody new is going to own the pizzeria, the paella bar and souvlaki taverna. I’m interested in investing with those who are going to be successful. Nominations please?

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