Sunday, 28 July 2013


Health Warning: See Manolis’ comment below and my response regarding the figures. By the looks of it, Eurostat didn't mess any figures up.
One of the core narratives employed in an attempt to explain the Eurozone crisis has always been a variant of the 'global imbalances' theme - the Euro peg puts member states on a treadmill, on which the weighted-average speed of the group sets the pace. If you can't keep up, you rack up current account deficits until you are unable to finance these and fall off. If you can keep up easily, you rack up current account surpluses at the expense of everyone else.

Since most of the trade carried out by Eurozone members is intra-Eurozone trade, the argument goes, it is impossible for everyone to achieve surpluses. The Eurozone treadmill is a zero-sum game, and unless you can lead the race, your best option is to exit.

Well the latest data can be found here, and they show that, at a price, current account deficits can come down within the Euro straitjacket. 

The detailed sources of Greece's adjustment can be seen here. It's mostly down to an improved goods balance, while a reduced net income balance is a distant second. 

'That's a recession for you' I hear some readers snort. Since Greece is in a deep downturn, imports must be falling and therefore the goods balance is improving. Except that's not the case. Looking at the goods balance in detail (data here), reveals the following:

And since better economists than me occasionally read this blog, a puzzle for you. Can you explain what happened to Greece's income debits in 2012 (data here)?

To my regret I was originally unable to, but my reader Manolis spotted the difference - Greek government interest payments. These fell by 2.2 percentage points as a share of GDP between 2011 and 2012 (see p 51 here), so they can probably account for most of the 2.7 percentage points loss of income debits during this period (data here).

My original guess, which I will keep up for historical reasons, was that the change had something to do with tax reform, since income debits spiked in mid 2002, following what was then called the 'mother of all tax reforms'. I theorised that the 2002-3 reforms had forced companies to change the way they used offshore companies to avoid tax, sending an increasing amount of money 'abroad.' I also thought that regulatory uncertainty around the tax reforms of 2012 might have momentarily stopped this flow of income. In fact, following Manolis' contribution, I would still offer my conspiracy theory to anyone trying to understand the remaining 0.5% drop.

For details of the 2002 reforms, and the pre-reform environment, see p. 26 onwards here and the image below:

Friday, 26 July 2013


  1. The OECD publishes its Action Plan against Tax Base Erosion and Profit Shifting - depending on where you stand it's either the beginning of the end for tax havens, or the biggest ever diversion dreamt up by tax-dodging elites. It's probably a little bit of both.
  2. Eurostat publishes the latest estimates of government debt among EU members.
  3. The Commission publishes its assessment of the pre-accession economic programmes of Iceland, the FYR of Macedonia, Montenegro, Serbia and Turkey
  4. And the first casualty for Greece's shipping sector as Restis goes to jail.
  5. Interesting paper: "Hidden in plain sight: recognising the centrality of anarchist places of work in 'capitalist' society"
  6. You need half a million dollars to do a documentary on the Greek Crisis? Really dude? Oh, and just to be clear: doing localisation for Apple as a contractor is not the same as working for them.

Tuesday, 23 July 2013


The underbelly of the Greek blogosphere has been in a state of outrage over the last few weeks, as the prospect nears of some stores being allowed (gasp!) to stay open on some Sundays. More specifically, major stores (over 250sqm) will be allowed to operate seven Sundays per year. Smaller stores will be allowed to stay open every Sunday.  Sounds super-duper evil, right?

Actually it sounds suspiciously like the England and Wales Sunday Trading Act of 1994 (Scotland, of course, allowed Sunday trading earlier.) Whatever its original inspiration, the measure, which has met with protest before, has faced opposition all along on three grounds.

  • First and foremost, it is seen as the thin end of a wedge that will in time crack open the regulatory framework that currently allows small Greek retailers across sectors to potter along at sub-optimal scale rather than being swallowed up by larger ones, some presumably foreign.
  • Second, Sunday trading is seen as a measure benefiting employers at the expense of workers, who will be coerced or otherwise tempted into giving up their most valuable leisure time to either work or consumption.
  • Third, Sunday trading is seen as social engineering, either upsetting an ancient tradition of upholding the Sabbath (which has, since Constantine the Great's Days, moved to Sunday), and/or setting aside a day for rest and family life.

I'll consider all three objections but I'd like to start with the religious argument which begs the question of how often people in Greece go to church anyway, and how religious we are. 

A brief introduction to religion in Greece

Loyal readers will know I'm a fan of the European Values Survey of 2008 (see here and here). Based on a large-ish, representative sample, it provides a snapshot of the values and beliefs of pre-austerity Greece combined with detailed personal information on interviewees and their background. In fact, you can check out the full questionnaire hereThe full dataset is available here

When asked how important religion was in their lives, 43% of Greeks said it was ‘very important’ and another 40.4%, said it was ‘important’ – which must surely rank us among the most pious of the European nations. A number close to the total of the above, 85%, claimed to be religious; 11% claimed to be non-religious, and only 3% claimed to be convinced atheists. 

Orthodox Christianity is the dominant faith in Greece, with 93% of the Greek sample claiming to be Orthodox when asked. About 2% claimed to be Muslims, and about 1% were Roman Catholics. Moreover, religions don’t shift easily in Greece. Only a tiny 1.6% of the sample used to belong to a religious denomination other than the one they belonged to in 2008, and 74% of those used to be Orthodox Christians. This suggests that there is more conversion to the majority faith than otherwise, but the base sizes here are too tiny to reveal much on the movement of people between faiths.

Overall, 90% of people in Greece claim to believe in God, and another 3% claim (admit?) that they just don’t know. Yet believing in God doesn't mean you have to take the full package. Only 49% claimed to believe in life after death. When asked what kind of God they believed in, 23% said they believed in a non-personal ‘life force or spirit permeating nature.’ A more modest 69.5% believed in a personal god. 4% didn’t know what to think, even though they believed in some sort of God.

Consistent with the surprisingly high number of believers in a non-personal God, about 20% either never pray or pray less often than ‘several times a year,’ excluding religious services. Still, the majority (55%) pray more than once a week, most of them every day.

Religion is more prosaic than people might think; only 57% of the sample claimed to be ‘very’ or ‘somewhat’ interested in the spiritual. And when it comes to moral issues, even religious people such as the Greeks like a little bit of moral relativism. Only 21% of Greeks believe there are clear, absolute guidelines between good and evil. Another 36% believe that guidelines exist but some deviations can be excused. 42% believe there are no clear guidelines at all. 51% believe in heaven; 47% in hell. Yet 76% believe in the concept of sin.

The Church tends to be seen as an abstract force – it is seen as having useful answers first to spiritual needs (52%), then to moral problems (42.5%), then to family life issues (33%) and finally to social problems (24%). That's partly a function of how people engage with the church. Only 1.6% claim to belong to a religious organisation and 2.2% claim to volunteer for one.

This permissiveness still coincides with a fair amount of intolerance. 41.5% of the Greek sample believe there is only one true religion and other faiths have no truths whatsoever to offer. Another 29% are OK to concede that other faiths share some core truths but there still is only one true religion. This leaves 23% who felt that all faiths share some core truths and there is no true religion, while 4% who felt that no religions offer any truths.

On to that Sunday matter...

50% of the Greek EVS sample claimed that when they were 12, they were going to Church at least every week (71% went at least every month). Only 18.5% claimed to go to Church at least every week now, although 40% go once at least a month. 

Both sets of figures varied dramatically by age cohort, as can be seen on the graph to the right. The blue line may look definitive, but actually it doesn't tell us whether people naturally go to church more as they age or whether people brought up in different times tend to vary in piety. 

However, because the EVS asks people how often they went to church at the age of 12, and because it's easy to assume that churchgoing children are always accompanied by churchgoing parents, it is possible to infer how the churchgoing habits of parents have changed through the years, and compare them to the 2008 figures for parents only. I do this in the figure to the right (mind the jump from the 1990s to 2008 - the X axis would have to be twice as long normally). 

What's also possible is to tease out the effect of parenthood on attendance both in 2008 and extrapolate for previous periods, through a very simple binominal regression analysis involving just parenthood and age cohort. This revealed that, after accounting for age cohort, adults without children were 48% less likely to go to church than parents. This is a bit of an heroic assumption of course, since this ratio of parent vs. non-parent attendance may have changed over time.

Overall, we've got a pretty convincing downward trend in attendance, this it is possible that the recession  

Finally, the usefulness of religious services was questioned widely: 62% agreed partially or completely that they have their ‘own way of getting in touch with God, without Church or religious ceremonies.’

... and on to small retailers

Shielding small businesses from competition is a sure fire way of creating zombies, as the chart below demonstrates for 2008, the last pre-crisis year. You can find the data here, although be warned that these are only extrapolated estimates. If they're right, though, most small retailers in Greece were zombies even in the good days, barely surviving by trading rents with the State and avoiding competition whenever possible.


Friday, 19 July 2013


  1. The IMF's researchers attempt to write a belated history of current account deficits in the European periphery. I would have liked more depth, but the distinct nature of different PIIGS' paths is clear.
  2. Out: now Data on the last 15 years of Greek academic research output
  3. EU Social statistics at a glance
  4. EU and US policymakers strongly favour a free trade deal, says a new survey
  5. The Commission takes Greece to Court for failing to recover illegal state aid to Greek casinos and Aluminum of Greece. I don't get it. Everyone knows casinos create positive externalities / access to casinos is a human right / casinos need to be state-run to ensure quality / whatever dude.
  6. Awesome data on the precise impact of G-20 policy on use of tax havens. One particularly interesting graph needs reproducing:

Thursday, 18 July 2013


Source is this paper from the Paris School of Economics, which is well worth reading in its own right.

Summary: Between 2007 and 2011, Greek deposits in tax havens nearly tripled. Icelandic deposits in tax havens fell to almost zero. And that's really all I need to say here.

UPDATE:  Turns out I do need to add something.

Friday, 12 July 2013


  1. You wouldn't believe it, but the number of Greeks in employment grew by 1.2% in April (2.1% if you don't apply seasonal adjustment). It's the strongest rise since, well, way before 2006. And the number of inactive individuals has fallen to the lowest level in two years. Don't believe me? See for yourselves
  2. Out now: the most detailed possible breakdown of Greek GDP by sector (up to 2011 unfortunately). See here for absolute figures and here for growth rates. 
  3. Bail-ins all round: The Commission's new State Aid rules call for bail-ins before any public funding can be received.
  4. ECB working paper proposes a 'Financial Systemic Stress Index for Greece'
  5. Rethinking austerity: The IMF's researchers consider how changing the composition of public spending can protect growth while reducing deficits, and how different types of austerity affect income inequality. The key lesson: invest in education, cut benefits.
  6. The IMF's researchers also establish some stylised facts on corporate deleveraging in the European periphery.
  7. Latest Troika statement on Greece dated 8 July
  8. The International Economy magazine symposium: Does Debt Matter?
  9. The UK's Royal Statistical Society publishes research showing just how far the UK public's perceptions of key social facts and figures are from reality. I look forward to a Greek version.
  10. Rediscovering Google's N-Gram viewer: here's a heavily smoothed chart of the frequency with which books mentioned 'Greece' or 'Greek' according to the date in which they were published.
  11. The Bank of International Settlements looks at what Central Bank Finances mean for monetary policy.
  12. A (small) survey of Eurocrats shines a light on France's loss of influence in the Union.

Tuesday, 9 July 2013


This post was written by myself but originally appeared as a series on the ACCA Blog. This is a slightly modified version.

Ever heard that your country is the nth best place in the world in which to do business? Have you chuckled or raged at the list of developing countries that rank inexplicably higher? If you have, chances are you have heard of the World Bank’s Doing Business reports. What you may not have heard of is that these rankings very nearly ended up being consigned to history this summer.

On 24 June 2013, the Independent Panel reviewing the Doing Business methodology reported on its findings and recommendations. The most controversial of them all? Scrap those pesky country rankings. To understand how they came to suggest this, and whether this is a good idea, you need a little bit of background.

The study itself

The Doing Business methodology is based on replicating the hoops a small-but-not-too-small (eventual size of ca. 60 employees) formal business has to jump through throughout its lifecycle: Starting up, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. The researchers then assign scores to each category, with countries with low levels of burden scoring higher, and aggregates those into a single ‘Doing Business’  score for the country.

Drawing on published documents and the experience of professional advisers (see here for a full listing), the methodology generally considers three types of burden: time, money, and access to legal instruments or information; all measured in standardised increments. Any distinct ‘process’ is assumed to take at least a day (even if one could, in theory, conduct it in seconds or simultaneously with other processes). Costs are standardised as shares of each country’s per capita GDP. Businesses are assumed in most cases to be located in the country’s capital city. The list goes on, but you get the picture. There are substantial limitations that casual readers will tend to ignore, or dismiss.

Incidentally, some of these topic names are misleading too. ‘Getting credit’, for instance, does not reflect the ease of getting credit in a country. Rather, it reflects how burdensome it is for a lender to provide a business with credit – can they get sufficient credit information on the borrower, for example? Or how easily can they enforce a claim?  

Even worse, measurement errors can make any such composite rankings nearly irrelevant. The Independent Panel cited evidence that measurement errors in alone can change the Doing Business ranking of a mid-ranking country such as Vietnam by about 30 places.

Finally, the way topic scores are aggregated into a single country score assumes that all elements of the Doing Business indicators are equally important (i.e. it applies no weighting). This is clearly not true as the importance of different obstacles shifts within a business’ lifecycle and between different stages of economic development. Burdens, moreover, do not accumulate in an additive way: being unable to access electricity, for instance, would make it irrelevant how well regulated the business is in other respects.

The Magic Circle

Doing Business was, from its inception, part of an elite group of global policy-relevant publications. If you’re interested in such data you will no doubt have your own list, but here’s mine:

  1. the World Economic Forum’s World Competitiveness Reports,
  2. the UN’s Human Development Index,
  3. Transparency International’s Corruption Perceptions Index,
  4. the Heritage Foundation’s Index of Economic Freedom.
  5. The Global Entrepreneurship Monitor
  6. F. Schneider’s regular updates on the size of shadow economies around the world (a recent and very comprehensive one here)
  7. The World Bank’s Enterprise Surveys

To make this Magic Circle, a publication needs to offer regular, scheduled releases and a guarantee of longevity. But it also needs to produce two things that policy wonks crave: first, summary tables that condense a range of very complex issues into standard, quantitative information. Second, country scores and rankings covering a three-digit number of countries – ideally downloadable through a user-friendly interface. 

The first of these features is valuable because the policy industry has, over time, become more standardised and de-skilled, relying on large numbers of bright but relatively inexperienced graduates. Sitting on top of these seven datasets, one can offer sage opinions on Cambodia’s regulatory shortcomings or key medium-term challenges for Burkina Faso without being able to point to either on a map.

The second feature, national scores and rankings, is important for three reasons. First, because rankings ensure a high profile for otherwise dry subjects; they inject an element of urgency and national pride into matters that are otherwise hard for either politicians or Joe Public to care about. Second, because rankings point out best practice. The world is an impossibly big place and most people will never see much of it, so it is hard to know which countries have the best-financed small businesses, much less what one might be able to learn from them. And finally, because scores can be correlated with other variables, such as per capita GDP or unemployment, in order to demonstrate the potential impact of reforms.

The Crisis and the Critics

This is not the first time in its 10-year history that the Doing Business methodology has come under scrutiny. Despite DB’s many methodological flaws, the reason for such attention often has little to do with the quality of the work itself – simply put, Doing Business influences policy and occasionally capital allocations on a global scale. You can’t do that without making enemies.

As DB became more successful in setting the agenda for regulatory reform, especially in the developing world, stakeholders began to take particular issue (see here, here, here and here) with the ‘Employing Workers’ pillar of the DB index, which measured the ease and cost of hiring and (crucially) firing across countries. The charge was that both the DB methodology and the World Bank’s commentary rewarded reforms that served to reduce employment protection, including some in breach of the International Labour Organisation’s (ILO) guidelines.

It was becoming unclear whether the ‘Employing Workers’ score was measuring genuine ease of doing business or whether it was an ideologically-driven measure of the balance of power between employees and employers. Similarly, the ‘Paying Taxes’ score, it was argued, largely reflected countries’ political preference for a big or small state and the ability of some nations to rely on natural resource revenues rather than tax to finance the state.

Eventually, and despite having published an independent evaluation already in 2008, in 2009 the World Bank asked a Consultative Group representing Unions, civil society organisations, businesses and the legal profession to review its methodology once again. This new Group reported on its findings in 2011 and the World Bank has not reported Employing Workers scores ever since.

These debates are typical of a wider debate on Better Regulation – that of accounting for the benefits of regulation to small business (see here for a nuanced discussion).

Cost and benefits are properties of the entire regulatory framework related to business activity and must be seen in context. Providing information to government or a third party is costly but whether or not it is a burden depends on what the entity would have done without coercion and what the market and society get in return. Being pro-market and being pro-business are two different things and it is dangerous to confuse them. This was, in fact, ACCA’s rationale when we lobbied against the European Commission’s proposals to exempt micro-companies from the need to file annual accounts.

ACCA’s brief experience of Doing Business

As a global organisation, ACCA often has good reason to use such datasets too. A good example can be found here. It is taken from our Accountants for Small Business report), where we demonstrate (tentatively) that the financial system is better able to allocate capital to SMEs in countries where more borrower information and legal protection are available to finance providers.

But we’ve also been more intimately involved from time to time. Back in 2009, the UK was in the throes of a regulatory reform fever, which we reviewed in our report, Coming of Age: What next for the UK Regulatory Reform Agenda? as well as a detailed submission to the UK Regulatory Reform Committee. As part of this range of activities, the Better Regulation Executive within the UK’s Department for Business, Innovation and Skills (BIS) was actively considering ways of improving the UK’s already-high Doing Business ranking, so they spoke to ACCA about company registration and taxation, as well as the general governance of regulatory reform. By 2010, the UK had overtaken Denmark to become –quite symbolically- Europe’s ‘best place to start and grow a business.’

The BIS staff even presented their thoughts to ACCA’s UK Small Business Forum, and were extremely honest and clear about the following:

1.    Britain’s high rankings on Ease of Doing Business helped put into context the constant complaints from small business bodies about how over-regulated their members were.
2.    the government of the day had made a political decision not to try to improve Britain’s Employing Workers ranking (Britain’s weakest DB score at the time) as the financial crisis had increased support for regulation in this area
3.    they found Doing Business to be methodologically flawed and were discussing their concerns with the World Bank and IFC.
4.    they were keen for a greater and more varied pool of expert contributors (including accountants) to become involved in informing the Doing Business scores.
5.    they believed there were limits to how high a liberal democracy and EU member could rank on Doing Business, as well as how quickly they could climb in the rankings.
6.    That they nevertheless thought the ranking element of Doing Business was crucial to their efforts to raise the profile of the regulatory reform agenda with ministers.

This last point is crucial. Kai Wegrich of the Hertie School of Governance has demonstrated that, once a critical mass of countries have adopted a particular regulatory reform tool, a race of ‘leaders v. laggards’ tends to develop that spurs more countries to adopt whatever methodologies are seen as best practice for fear of being left behind on a regional or global basis. Tools such as Doing Business create a drive for reform and convergence.

Besides the UK, the Doing Business disciples are not a collection of aid-dependent emerging markets at the mercy of the Washington Consensus – Russia, for instance, had a stated target of getting to the top 20 by 2018 (from 112th place in 2013), and was hoping to attract increased foreign investment in the process.

This time the critics mean business

Why then is this year’s review different? First, because it reflects the growing assertiveness of the BRICSA countries, whose representatives instigated the review in the first place. Forbes hints strongly that the review panel was intentionally balanced between BRICSA and non-BRICSA representatives. Second, because it comes at a time of increased questioning of top-down reforms based on the notion of ‘quality of institutions’.

Essentially, this wonkish debate is part of the much bigger tectonic shift currently underway in what people call the Washington Consensus. Emerging markets are claiming their place in global governance and at the helm of the international institutions that once dictated policy to them. For now, the World Bank’s President has indicated that ‘rankings are part of [Doing Business’] success,’ which I guess must mean they are here to stay. But little by little, the World Bank, and the World, are changing.

Friday, 5 July 2013


  • The OECD announces recovery for Iceland as output returns to trend levels. Note Figure 11 re non-performing loans; Figure 12 outlining the plan for removing capital controls (Cyprus, anyone?); and Figure 14 which shows how Iceland's public finances are still less sustainable than Greece's in the long term.
  • The OECD also have a bumper crop of statistical guidance on wealth and inequality. See their new framework for statistics on wealth, income and consumption distribution and guidance on household wealth statistics.
  • An interesting experiment in syndicating ERT, Greece's public broadcaster, post-closure.
  • The Commission sends a 'Statement of Objection' to 13 investment banks, the ISDA and Markit charging them with infringement of antitrust rules for keeping Deutsche Börse and the Chicago Mercantile Exchange out of the exchange-traded derivatives market.

Thursday, 4 July 2013


After a couple of days of reflection and a little shisha and tea with @dimmu, after which he wrote this, I am returning to the matter of public broadcasters, though not the Greek case in particular. I've been thinking about what the new public broadcaster should look like, while predictably the Government and ERT's supporters are thinking mostly about other things.

A question of quality 

Public proadcasters, the statist argument goes, are the only ones capable of producing ‘quality’ television (whatever that is), because they are not driven by the need to attract advertising revenue or to support the media owners’ business or political ambitions elsewhere. To do either of these things, private broadcasters need a mass audience, and in order to get one quickly and/or on the cheap they must pander to the lowest common denominator and produce crap.

I say ‘whatever that is’ of ‘quality’ television because, while one can easily point to regrettable programming in private television, there is hardly any reliable means of selecting for ‘quality’ apart from accepting the top-down recommendation of a revered expert. Today's ERT defenders did not watch most of the 'high quality' programming they regret losing now, and seem very reluctant to pay even to keep the broadcast live via alternative means.

A great example of this discussion is the viral footage of tearful ERT symphonic orchestra staff, reproduced at nauseam in defence of the ailing broadcaster. Why exactly does ERT have a symphonic orchestra? Because it needs to reproduce (not produce, mind you!) a style of music decreed as ‘high quality’, a style that ERT’s new-fangled advocates would probably have denounced as imposed by elites if their ideology weren't primarily about Government handing out jobs and money. The ERT orchestra was created, after all, (for radio only back then) in 1938, under dictator I. Metaxas. 

From public broadcaster to public audience

The question of why so few people watched ERT to begin with is significant, especially if we're expected to support it as a bastion of ‘quality’ (it is, after all, supposedly the Greek BBC - LOL). I expect that champions of public broadcasting would not interpret low ERT viewership rates as a sign that most TV viewers are incapable of ever enjoying ‘quality’ television. Presumably, audiences in Greece would want good television if only they were given the option, or if only they had been taught to want it.

More to the point, champions of public broadcasting are likely to believe that the role of public broadcasting is precisely to broaden people’s minds so that they can demand better of their own lives, and of those in power. In this sense, the public broadcaster’s job is to produce not news, or TV shows, but the audience itself. This refined audience, they would argue, is the true public good.  As with other public goods, private sector broadcasters and other entrepreneurs can, once it is there, leverage this refined audience for other purposes.

This approach that considers the audience to be the product of broadcasters is not my innovation. It is, in fact, a Marxist concept posited by D.W. Smythe back in 1977 (I can’t find that paper, but see a more recent paper by Smythe here). It is also reviewed most recently in Bermejo (2009) and in Fuchs (2012). While the Marxist critique relates to the manufacture of audiences in capitalism, I think it’s equally successful at explaining the way a public broadcaster is expected to work. But I am taking liberties with the theory, so please keep that in mind.

In the strict definition of the term, access to a public good has to be nonexclusive and its consumption needs to be non-rivalrous. A refined audience is definitely non-exclusive to other economic agents (broadcasters can’t force you to do nothing but watch their content), and only utilisation of its TV viewing time is rivalrous. A refined audience who like to watch informative news and well-producted content but have nothing else in common with each other would not be a public good. If however the ‘refinement’ of the audience is universal (i.e it is a kind of education transmitting values or creating meaning, and elevates the way they interact with everything else in daily life) then that makes it a true public good. In that case, public broadcasting really is either about education or about political propaganda, and yet none of its defenders ever seem to ask for it to be subsumed into either.

Venture Capitalists of the Mind

An alternative (bourgeois?) way of approaching the matter would be to say that the public broadcaster is trying to fulfil the role of the missing venture capitalist of the television world – an economic agent that creates markets for new types of broadcasting (not just new content but also new media) by taking risky bets in areas where demand is unproven - it has what is known as a 'demonstration effect.' Like venture capitalists, such public broadcasters would find that most of their innovations do not break even; but they would tolerate losing small amounts relatively often in order to win big a few times, when they create the Next Big Thing - think BBC's iPlayer, or, come to that, The Office. As with all things Venture Capital, there is likely to be an equity gap in the financing of innovative content and new media, and an argument for the state to step in.

Wildlife documentaries (a classic example of 'quality' television) are a good illustration of this point. No one could know for sure in the early days of television whether the wider population would be interested in watching footage of animals in the wild, even though it's obvious to us now. What they did know for sure was that flying a heavily equipped camera crew to the Okavango Delta for two months is very expensive, and a return on this investment was far from assured. Pioneers of this type of programming had to create an audience above all else. That's evident in the way the Brits revere pioneers of such programming such as Sir David Attenborough. Similar, if less universally accepted, cult personalities spring up whenever an audience has been created from scratch - from cooking to sports, even politics.

iPlayer is a potentially even better, but currently problematic example - the BBC revolutionised catch-up television but has no means within its current charter of monetising it. It's created a loophole that allows me to never pay a TV licence and yet still enjoy some of the best content in the world, delivered in a truly innovative way. But amending the Charter doesn't answer the basic question: how would one fund such a model of public broadcaster-led venture capitalism?
  • A purely state-run broadcaster can use taxpayers' money, confident that the value of an enlightened audience (a public good, remember?) would increase tax revenue over time. 
  • A purely commercial broadcaster would need to be able to attract investors and (crucially) to capture the revenue from a big win after they produce a groundbreaking production - they will need to be able to establish intellectual property rights on innovations (presumably they already do for the actual content), as well as entering into licencing agreements with other commercial organisations that want to use their technologies and content, and even churning out spin-off content where possible (DVDs, books, Making Of documentaries, spin-off series, whatever). 
  • In a civil-society funded model, the broadcaster could seek donations in return for public acknowledgment and great inclusion in its decisions, and hope to produce enough winners (including technologies that people come to rely on) on a regular basis to continue to draw these in.
The BBC is currently engaged in this discussion. ERT never has been - all of the activism is lavished on how many employees it ought to have, and whether the first-degree relatives of employees laid off in 2013 should be hired as well.