As a consultant, I worked on a fascinating project back in 2012 to prepare a client for a potential Greek exit from the Eurozone. This was July 2012 and things looked bleak.
Fast forward 3 years later and we’re still in the same situation. There have been a couple of false dawns along the way but, largely, the problem hasn’t gone away. Every time I see a headline in the news about the situation (i.e. every day), I am reminded of sunk costs and bitter pills.
The sunk cost fallacy is when we weigh up all our past investment to make an investment in the future. The phrase “throwing good money after bad” sums it up. Billions of Euros have been sunk into this “relationship.” And, it feels like both sides are consistently looking back at all past investment instead of making decisions based on what lies ahead.
When you fall sick, the recovery path is rarely sweet. Yet, leaders on both sides are refusing to swallow bitter pills. Greek President Tsipras won the previous election by declaring he would be anti-austerity. There was no shred of sense in that campaign. He resigned yesterday. Glad that worked out. There’s a nice saying that says something like – “When 50,000 people believe in something wrong, they are still wrong.” The trouble with politics is that it often involves hundreds of thousands of people screaming populist bullsh*t. Someone is going to have to take the bitter pill in this situation.
Time doesn’t make difficult problems go away. The last 3 years in the Eurozone saga have demonstrated that.