Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Please correct me if I'm wrong, but is it not the case that the problems in Greece do not stem from a lack of competitivity due to elevated unit labour costs, but due to a bloated and inefficient public sector and the fact that people just won't pay their fucking taxes?

If that is so, how will the troika efforts to lower wages make anything better, even from their own warped point of view?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Feb 18th, 2011 at 10:09:26 AM EST
None of the proposed policies are solutions to the current problems, nor would they have prevented the crisis had they been in place over the past decade.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Carrie (migeru at eurotrib dot com) on Fri Feb 18th, 2011 at 10:25:17 AM EST
[ Parent ]
There is a huge tax problem in Greece. That being said, it pays to do an analysis where you look at tax revenue per capita related to GDP per capita. It's not an apples to oranges comparison between countries--obviously--since tax rates are different in every country. Whichever way you cut it, tax collection in Greece might seem meager to those in high tax Scandinavian countries, but not very different from other European countries. When you factor in the main industries in Greece (tourism especially) then its official tax evasion rate of 25% (some put it up to 30%) is perhaps a considered result, when compared to the EU tax evasion rate of 19%. Or, heck, 17% in the USA, where it is actually legal for a hedge fund manager to pay half the amount of tax on his income of hundreds of millions as someone in the $200k bracket.

I also question the lack of competitivity. Greece is not a high-tech manufacturing country. They are not competing for high-tech stakes. It does compete in agricultural markets, and in metals. Beyond that, however, tourism, banking and shipping are major industries.

The public sector is a whole other ball of wax which I can't say I understand because of the wide divergence of information about average salaries.

I will say though that if you bring together all the stories of Greek boondoggles with foreign companies, bribes and corruption, especially in the purchase of military weaponry, but also in bridges to nowhere and even security systems, you can easily come up with in excess of $100 billion over the last 10 years which the country did NOT absolutely need to spend.

by Upstate NY on Fri Feb 18th, 2011 at 11:37:37 AM EST
[ Parent ]
Because the offensive is ideological. The IMF is not drafting all of this from scratch, it is implementing one by one, all items from the Greek Board of Industrialists wishlist... Some of them really do believe that if they depress wages the economy will boom, because that is their idea of what a healthy economy looks like: permanently depressed wages, high inequality etc. On the other hand they are trying to gather in some taxes: Apart from making tax evasion laws stricter, Greece now has the highest proportion of indirect taxes as a percentage of total revenues at least in Europe. At the same time they are decreasing the corporate rate....
BTW this study is a look at the distributional aspects of tax evasion in Greece. While far from perfect (and possibly not tracking down money from corruption and crime or the real top of the income ladder) it does show that income underreporting is rife at the lowest (mainly undeclared wage earners, small shopkeepers etc I imagine) scales (where it has a very small taxable footprint) and at the very top (24% among the top 1% - that's beyond whatever they avoid legally) the largest part of middle income wage earners seem to be fairly honest. So contrary to myth, tax evasion in Greece is not ubiquitous but much concentrated at the top of the income ladder.

Note that they are destroying the tax base in more ways than one, yet they state it doesn't matter because they plan to cut expenses even more. Couple that with the planned sellout of everything but the kitchen sink and one begins to realize this isn't about improving the Greek economy but squeezing as much out of it as possible before it its remains are left to fester into a specially prepared second and a half world of former first world countries, with limited sovereignty.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Fri Feb 18th, 2011 at 01:26:49 PM EST
[ Parent ]


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