Liberté Egalite Fraternité and the need for a Guillotine

guillotine

In all this doom and gloom about the Greek situation it is very difficult to think of a message of hope, something that can offer a better, brighter future for Greece beyond the endless austerity of the Bailouts and the chaotic disintegration of Drachmageddon.

Where could a message of hope come from? It is my belief that accepting failure can lead -at long last- to a change of culture. This sounds a bit like Yoda speak, I agree, yet Greeks have not accepted that our culture, our economy, our political system has failed. And failed we have! I have spent a number of posts on this blog explaining the various ways in which Greece has failed. Let me just offer one anecdote that illustrates everything I tried to convey before.

In 1999 I was a student at the Athens Law School (on Erasmus exchange from the University of Essex where I studied for my degree). During the year I met a lot of “knites” Communist Party youth (like Tsipras used to be at some point). While we studied in a university where stray dogs slept in the lecture theatre, people plastered posters on the blackboard while the lecturer was giving a lecture, kids were selling roses and tissues during the class, we could not access the library without a letter from the lecturer AND where we all studied from the same (provided) texts, the knites were lecturing me on how unlucky I was to be studying in Essex, and that Greek Universities were the best in the world. It is this type of imbecility and wilful blindness that characterises the Greek view of themselves and the world.

Once we accept that we are to blame primarily for our troubles, then we can begin the culture shift that will allow us to belong to Europe. The Europeans do not hate us because we are so clever, have such great history and such nice beaches. Capitalism is rough, but resistance is futile (yes I said it, TINA – Thatcher will be smiling in her grave). We have no friends and no allies left to do pretty much anything, nevermind build a socialist utopia. But what do I mean by a change of culture? We need to start displaying solidarity with each other and get down to work. Work may be along capitalist lines, along the path drawn by the Germans etc, but this is the only way. Have no illusions, the drachma fantasies of Lafazanis and Lapavitsas will require even more work. What does this work entail? To stop trying to be ‘magkes’ (wise guys), to stop trying to game the system, to stop treating those who play by the rules as ‘koroida’ (shmucks).

How does a country with such illustrious legacy of cutting corners, faced with such an impossible mountain of adjustment measures even make a start at reforming? We have no choice but to take one day at a time, and at the danger of sounding like Nick Clegg (who?) we need to accept there are no left or right ideas, there are good and bad ideas. A good idea (from the right, but still good) is the idea of a regulatory guillotine (see here, no relation with the ™ version).

A significant part of the structural measures the lenders want to ‘impose’ on the Greek economy have to do with increasing competitiveness and productivity, and with improving employment. Yet every single measure is met with a wall of resistance from vested interests. Now, don’t get me wrong, vested interests may serve a purpose, they may protect hard won rights. My Union protects my vested interests as an academic. However, many ‘rights’ and interests are so rigid that are sinking the country in favour of small sectional interests. Tsipras even had to promise to liberalise gyms. Gyms you say? That’s right, gyms. In an economy so sclerotic as the Greek one we cannot even take advantage of the gifts nature has given us. We sell 60% of our olive oil to the Italians to package and sell to foreign supermarkets. This does not sound like a great idea.

What does sound like a good idea is to subject EVERY rule and regulation that has to do with services, goods and market access to a regulatory guillotine. The idea is to identify what each rule and every aspect of the bureaucracy is there for. Once the purpose is identified (if there is one) then an assessment will be made as to whether this rule is serving the interests of Greece’s progress. I am not taking the neoliberal view that all and every regulation is bad and ought to be done away with. What I am saying is that we should identify the interests behind the rules and make decisions as to whether their continued protection is in the interests of society as a whole. Should hairdressers be protected? If their continued protection (from competition) serves to maintain employment great, if not, protection should go.

You may argue that all these things were proposed before. Indeed Yorgos Papandreou came armed with a series of similar ideas and failed to implement them. Perhaps this was because PASOK is the big mama of sectional interests (they now defend the rights of farmers against the bailout laws). Still, we need some hope for the ‘modernisation’ (a Simitis concept you may say, but whatever) of the country.

Tsipras and Varoufakis gave hope but reaped havoc. Maybe we can give a chance to ideas in a different direction and see what happens.

dinner de con

@iGlinavos

Advertisements

23 thoughts on “Liberté Egalite Fraternité and the need for a Guillotine

  1. Obviously the brainwashing through constant troika propaganda is having some effect, so IGlinavos now thinks we should try to liberalise gyms.

    But only if it has not impact on existing jobs.

    I fully admit I know nothing about the Greek gym market, but I guess here it will have two kinds of regulation. One, you cannot get a license to run a gym, because the mayor’s brother already runs all gyms in town.

    Now here you would want the regulation left in place, as obviously the mayor’s brother might have to make people unemployed in his gym, if someone new comes in. Maybe both the new competitor and the old gym will now be losing money if there is competition. So jobs will be lost.

    So the mayor protects vested interests, but at the same time, protects jobs.

    Secondly, the other regulation will say, that equipment will have to have a certain standard, so the weights do not fall onto you and crush you while you are trying to lift them. And they have to have changing rooms, showers, that kind of thing.

    These kind of regulations you want to stop.

    Do the regulations stop new gyms from opening? Are there thousands of budding gym entrepreneurs in Greece desperate to open a gym?

    So, lots of regulation is actually trying to protect the public as well. Maybe not necessary for gyms, but pharmacies, taxis, etc, you would want licensed.

    The point is, there is arguments for and against regulation and licensing, but it is not going to make a difference either way. How do I know that it is BS what the Troika are saying? About 15 years ago, there was probably just as much regulation, if not more in Greece, I would guess. But 11% of people were unemployed, but now it is 26%.

    Why does the Troika still go on about these supply side measures? Because they have to stick to their script. Also, there is ALWAYS too much regulation, if the policies they are suggesting are not having an effect. So they can always say, you have not done enough.

    Further, have a look at Germany, heavily regulated in all kinds of things, but, certainly in the South of Germany, full employment.

    Have a read of the first few paragraphs of my blog post about bank restructuring, it talks about the regulations in Germany.

    https://radicaleconomicthought.wordpress.com/2015/07/20/bank-rescue-advice-to-greece-follow-the-germans/

    Like

    • greektaxpayer says:

      ” I guess here it will have two kinds of regulation. One, you cannot get a license to run a gym, because the mayor’s brother already runs all gyms in town.

      Now here you would want the regulation left in place, as obviously the mayor’s brother might have to make people unemployed in his gym, if someone new comes in. Maybe both the new competitor and the old gym will now be losing money if there is competition. So jobs will be lost.

      So the mayor protects vested interests, but at the same time, protects jobs.

      Secondly, the other regulation will say, that equipment will have to have a certain standard, so the weights do not fall onto you and crush you while you are trying to lift them. And they have to have changing rooms, showers, that kind of thing.

      These kind of regulations you want to stop.”

      I had to read it three times to make sure I read that right. So you are advocating abolishing regulation that makes sure that health and safety and other standards are met, but want to keep protection for vested interests in place? Are you serious?

      In the example of the corrupt mayor and his brother’s gym empire jobs would not be lost, they would move to the competing gyms, and the public would benefit from competition (yes, this means that the mayor’s brother would lose money, as his rentier income will be passed on to the consumers in general).

      In the example of regulation for proper standards, it’s the only kind of regulation that needs to be kept (albeit simplified), as it protects consumers from shady businesses and ensures a level playing field for all.

      I guess your completely backwards line of thinking is yet another example of what IGlivanos mentions as wrong and backwards culture that needs to change to be aligned with modern European standards.

      Like

      • @greektaxpayer

        Iglinavos said that he wanted to protect jobs when considering cutting regulation. Which I just repeated, as it is a sensible way to look what regulation should be axed if there are 26% unemployed.

        I just picked up his suggestion, and said that if you wanted to protect jobs, it would also mean sometimes to leave vested interest in place. And the rentier income of the vested interests.

        In general competition will result in higher productivity and lower prices. Undoubtedly better for the consumer. But also at the expense of jobs. Unless extra demand makes up for lower prices, total gym sales will fall. Are there millions of Greeks waiting to join a gym, just waiting for prices to fall? Somehow I think they have other problems. So lower sales > lower profits > more chance of job cuts.

        By all means take on vested interest in the economy, and end corruption (difficult to prove in this case, though) but that will always cost jobs. So wait until there is less people unemployed, then do it.

        There is no growth coming from measures like that proposed by the Troika. It helps consumers to spend less. Moving profits from the gym owner to the consumer, that is all. With the collateral damage of further job cuts.

        Like

      • greektaxpayer says:

        @eurogate101

        You probably refer to this part of the original post:
        “Should hairdressers be protected? If their continued protection (from competition) serves to maintain employment great, if not, protection should go.”
        The way I had first read this part is that protection should stay if it serves a purpose for the greater good in terms of employment. If removing the protection would somehow result in a chain reaction that causes a recession and job losses. If the consequence is allowing competition to erode the rentier profits and benefit consumers, the protection should go. It was so obvious to me that I assumed this is what was meant, but maybe I was wrong. Perhaps IGlivanos can clarify which of the two interpretations was meant. If your interpretation (i.e. we should protect the jobs that are sustained thanks to rentier income at the expense of the consumer and potential competition) was right, then I strongly disagree with this statement of the original post too, and I would advocate changing the guillotine criteria.

        More to your point though. You said:
        “In general competition will result in higher productivity and lower prices. Undoubtedly better for the consumer. But also at the expense of jobs. Unless extra demand makes up for lower prices, total gym sales will fall. Are there millions of Greeks waiting to join a gym, just waiting for prices to fall? Somehow I think they have other problems. So lower sales > lower profits > more chance of job cuts.”
        This is wrong. Lower sales and profits from the incumbent rentiers will not decrease the number of jobs in the sector, which will either stay the same or increase slightly if demand for gyms increases slightly (doesn’t have to be millions), or (more likely) if the sharing of the excess profit margins can accommodate more gyms in the market at lower margins (more typical of situations like this when monopolies or oligopolies are broken). More importantly, though, lower prices will mean more disposable income, which will lead to higher sales in other sectors, hence more jobs elsewhere.

        Like

    • Quite honestly I’m not sure what you are trying to proof with your comparison between 11% and 26% unemployment. That the situation would have been better if there had not been any rescue package?

      De Greek appear to me like a bunch of kids that got hold of some matches and then put their house on fire.

      Now they’re blaming their parents for having the matches laying about and the fire brigade for trying to put out the fire and trying to salvage something.

      The consequence of burning your house down is that you have to live in a tent.

      As a fellow European I’m happy to supply you with tents, water and whatever else you may need tot survive, but don’t tell me I have to built you a house that meets your specification.

      You’d better do that yourself and I bet that you’re unemployment rate will drop dramatically the moment you start building, instead of continue arguing about who is responsibly for you living in a tent for quite a while.

      Blaming your parents (the respective Greek governments) for having matches laying about will get you nowhere, blaming the fire brigade (the eurozone) for trying to rescue something that is clearly beyond rescuing will do neither.

      iGlinavos appears to me as a reasonable guy who at least tries to work out a solution. You may ridicule him, but confusing the situation with some semi economic mumbo jumbo will not provide you with a solution.

      The same applies tot the attempts of the fire brigade of course. There is nothing worth rescuing left. The third bail-out will ultimately fail too.

      I’m told the Greek are a proud people. Fine with me. So get prepared for living in a tent for some time and start building a new house. It can be done. Germany proved it after the WW 2 and I dare say, their situation was a lot worse than the situation in Greece to-day.

      If you want Tsipras as your building inspector, fine with me too, but I’m not impressed with their results this far. They should have prepared for a decent exit from the euro-zone. They didn’t and thus we will meddle on for another couple of years.

      It won’t make you happy and it won’t make me happy, but don’t blame me for having burned your house down. You did that yourselves.

      Like

  2. mikenetherlands says:

    Not to forget to mention that the beer in Germany is much cheaper than in Holland and you can’t buy it at a petrol station. But tell me, why is there a pharmacists in Greece on every corner? To sell babymilk? Why do I have to work till I am 66 and 9 months and get an state pension around 550 euro? And the Greeks needs more? And why are people everyday kicked out of there house every day in Holland because they lost their there jobs but in Greece not? And is barber real such a Heavy profession?

    Europe and the banks made mistakes, yes. And we are paining for that. Much money. But love have to come from two sites. So, stop defending that stupid Greek system. Our government is chancing the law to open the market for Airbnb. What is your government doing? The Trojka are our ministers, are we some inoctinated stupid fools to elect Dijsselbloem and Rutte? Is Holland doing so bad? (J.Dijsselbloem, not J.Dissjenbloem as you have wrote Yanis)

    I am not an neoliberalist. But you call us neoliberalists. As a swear word I want to have the Greek people to have an decent live. I don’t care to pay for that. Most people in Holland don’t care. But we don’t want a spoiled wife who is giving one of her child’s only sweets and let the other dying in hunger and misery. Do you want an member of our european family? Fine. Greece is more than welcome. But stop thinking you are something special who can make it’s one rules! Ask your population, what do you want. Staying in the euro and the european family or do you want the drachme. Thát should be a far referendum.

    Like

    • mikenetherlands says:

      You are making a big mistake. I have more than 30 years in traveled Greece in the summer and I even speak your Language. (pick up on the street, I can’s write it because I have Dyslexia.) The last few years not any more because of your crazy prices for ferry boats, one class beter accommodation than tourist class, etc. The Greeks have no idee of prices and money. Buy a 1 liter milk what cost here in Holland between 45 and 65 cents. Or 45 cents for a biologic egg in Greece what cost 15 cent in Holland.

      A pharmacy is not an replacement for an doktor, your country needs family doctors , not people who ear money by selling medicines! And that is the problem of Greece. The Greeks want to give the patient some morfine, so the pain is over. That is not the system my friend.

      The first word I learned in Greece was apergia.(strike) You want petrol? Sorry we have an apergia. The ferry? You need to to go home? sorry, three days apergia. Apergia, apergai till you get crazy!

      Everything is upside-down in Greece. I want a loan? Well, I go to the kokkoglifas (or something like that) I want to marry. Well, I think about a wedding with 2500 people and 25.000 euro loan. And a honeymoon to the Bahamas’ And did you see the presents? Money, gold etc. Are you out of your mind there?

      Do you think like this will happens in Holland or Germany? Do you know the word Figuras? I had the feeling I was an poor man in Greece. When I retuned on my road back in Switzerland I had the feeling to be in a cheap land.

      Don’t try to tell me how the Greek society is working! The systems are crazy, nobody can work in that system, nobody will ever have an decent life in that system. You know that, I know that, Varoufakis knows that, Tsipras knows that, iGlinavos knows that, Dijsselbloem knows that and Schauble knows that. With our without an euro, your systems will never work. They are rotten. Why don’t you want to chance it? Lissen to the wake-up of iGlinavos. I hope Yanis will read this. I am so proud of him for his vote tonight.

      Yanis is in many thinks right. The future of Greece is in Europe. He always is saying that. But we can only lissen to him if he understands the situation. And the situation is that Greece have to reform to an modern state within the euro with normal systems. Than we can invest in Greece. Than we can give Greece hope. Become an good wife for us, and we will be good for you.

      Like

      • Well-wisher says:

        “Buy a 1 liter milk what cost here in Holland between 45 and 65 cents. Or …for a biologic egg 15 cent in Holland.”

        Way too cheap! For a well-off country like Holland that is nothing to brag about! Have you seen how terribly the animals have to be treated to give you this absurdly low price? And even then the producers have a hard time making ends meet. Low prices alone should not the end all and be all!

        Like

      • mikenetherlands says:

        @Well-wisher

        You are missing the point. The farmers in Holland have a good income and we have strikt laws for our farmers. I don’t think this is the right place to discuss this matter, because the situation in Greece for animals is terrible. That is not the point here, the point is that shampoo, toothpaste, toilet paper, tampons, babymilk, in short things you real needs, many times have the double price in Greece! And the income is much lower. And that is the point here. And the prices many times are so high because of your protection. To save jops. And, after a guy wanted for two cocktails 20 euro in the harbor of Chania it was enough for me.

        And can you tell me why an cappuccino is the double price in Greece? And a taxi is more expensive one an island than in Amsterdam? And do you think I ever got an receipt?

        I have a choice, I don’t have the go to Greece. The Greek people don’t have. They have to pay for the same stuff the double price. Why? Why do you wanted to pay so much? To pay the Four-wheel drive from the brother of the mayor? Do you know an other country in Europe were the doctors and the lawyers have villas and hotels? My docter has an simple home and a simpel car. And I can go there for free. And do you know who is paying for this protection in Greece?

        You!

        The pharmacist is selling you antibiotic for the flu, he should sell you an aspirin. The family doctor should comfort you for free when the ear of your child is inflamed. And not led you go to an hospital!

        Greece is default. Financial, emotional, and your systems are default. Your trusted your new government, they made an catastrofe. It was cristal clear from the first moment that they should never, never, get what they wanted. But they went on and on till your country was compete broke.

        iGlinavos is angry, I am angry. He is an academic, I an handicraftsman. But we exactly angry for the same reason. We are angry by the way you are treaded. How you are betrayed. How every government again and again did steal your money. How you believed their egoistic lies. Again and again and again.

        Like

  3. @iglinavos,

    It is an illusion to think that you will have less regulation and a more open market economy by staying with the euro, which means replacing Greek democracy with governance from abroad. In particular, I think if Greece loses control of how it markets its tourism and olive oil, Greece’s economic recovery will be more elusive, to say the least, and important Greek values even beyond democracy wiill also be lost, perhaps forever. Also, you might be interested to read this if you haven’t already.

    http://blogs.lse.ac.uk/europpblog/2015/07/16/could-the-radical-right-replace-the-radical-left-in-greece-why-the-demise-of-syriza-would-pose-a-threat-to-greek-democracy/

    @miknetherlands,

    You make a good case as to why Germany should leave the euro (which happens to be my position) and I hope the Netherlands goes with it, but in the meantime: There are pharmacies on every corner in New York City. Have you ever been there? They are all owned by 1 corporation. However, elsewhere in America, most people who need medicine must travel miles and miles to get it, and they must first go to a doctor to write them a prescription. I don’t know how it is in the Netherlands, but in countries like Greece and Italy, small pharmacies perform both the function of local doctor and take turns being open so that people always have access to health care. It is impossible for them to fulfull that function if they do not have a monopoly on certain remedies.

    This may be very difficult to understand if you have never lived in a country whose terrain means that many people in that country live in isolated areas. Greece is a country of many islands and mountains. The Netherlands is totally flat. The economic model of northern Europe will never work for Greece without destroying the cohesiveness of Greek society. I suspect Greeks will leave the euro before that happens. But if the don’t, millions of them will find it makes more sense simply to move to northern Europe. Sadly, it looks like at present they will be greeted with racism.

    Like

  4. @Greek Taxpayer

    It is entirely possible that the elimination of rentier monopoly profits by introducing competition will in fact be catastrophic for the economy, leading to net job losses.

    Look at the gym example.

    Previously one gym in town:

    10,000 turnover
    2,500 fixed costs
    2,500 variable costs (6 part time employees)
    5,000 rentier monopoly profiit

    A new gym wants to open up, its business plan, capture 50% of market by introducing a 30% discount. the old gym has to lower prices, too. so the turnover in the total market declines to 7,000

    So the new gym’s figures will look like this:

    3,500 turnover
    1,250 fixed costs (cheaper/smaller premises)
    1,250 variable costs (3 part time staff)
    1,000 profit

    What will the other old gym look like
    3,500 turnover (it had to reduce prices to stop customers from leaving to new gym)
    2,500 fixed costs
    1,250 variable costs (now only 3 employees – 3 needed to be made redundant)
    -250 loss

    No business can work at a loss, and has to be closed down. net effect of reducing regulation in the gym market 3 job losses.

    Admittedly, if lower prices mean that more Greeks will become gym users overall, that loss can be made up. But 7% more Greeks must go to the gym, for the old gym to break even.

    And we worked on rather heroic assumptions, that the old gym makes a 50% net profit.

    I would be very surprised to find only one gym in Greece which manages such a net profit figure!

    The point is also this, how come the Troika comes up with the gym market as something where regulation has to be cut down?

    Where is their justification, in terms of analysis, which has led them to that conclusion.

    Maybe, as a Greek taxpayer, you are closer to finding out, where the Troika got its justification from?

    Like

    • greektaxpayer says:

      In the example you gave, the old gym will either have to reduce its fixed costs or go out of business, and a second new one will take its place, making 1000 profit as well. No jobs will be lost (6 employees in the new gyms will replace the 6 employees in the old one), the rentier profit will be passed on to the consumers who enjoy lower prices. Their increased disposable income will increase consumption on other sectors, which will drive investment, job creation and growth.

      Like

      • “Their increased disposable income will increase consumption on other sectors, which will drive investment, job creation and growth.”

        Yep, we have made one business bankrupt (the mayor’s brother – who nobody seems to like, but actually he has a big family to support, and an ill mother-in-law, who now all do not know what to live from. He also loses his big 4X4 which is going back to the car dealer, as he cannot afford the loan anymore. He cannot pay the rent on his other gyms -which he was subsidising with the super profits from the gym in question, and they will have to close, too)

        In the process 6 people lost their job. although six people found new ones.

        Then, the old premises for the old gym, there is no rental income, and the owner of the premises cannot pay back its mortgage, and the bank forecloses on the premises for the old gym

        So, generally chaos and destruction.

        But, you are right consumers can spend more on other things which they could not spend before.

        However, the mayor’s brother cannot spend any more on other things which he could before.

        The net effect on the economy by this Troika induced nonsense is NIL! No increase in GDP anywhere!

        So my plea to reason, leave aeverything as it is, and deal with it, when we have a proper investigation if there are indeed super profits in the gym market, or not.

        Now, my questions to Greeks? Is there actually a general perception in Greece that gym users are being ripped off by nasty rent seeking gym owners – or is this just some idiotic idea thought up by people who swallowed their neo-liberal economic text-book wholesale (I do not mean you Greek taxpayer!) without actually thinking it through?

        Like

  5. Or, while we at it, and which really annoys me in greece wiht unjustified real rentier profits:

    Why doesn’t the troika take on the rentier market of deckchair hire on the Greek beaches.

    a) it spoils the beaches
    b) are not all beaches public in Greece, so who allows deckchair hire, and who profits from that?

    Like

    • greektaxpayer says:

      Totally agree, yet another example of corruption. This is at a local level, it’s usually the municipalities that deal with licenses for businesses on public beaches (umbrellas, canteens, beach bars, etc) and the process is not always transparent or fair (direct assignment instead of auctioning the license, exploiting bigger part of the beach than the license allows, etc.).

      Like

    • Spot on, if only the Troika would have taken on the rentier market of deckchair hire on the Greek beaches, all other problems would solve themselves. 😉

      Like

      • greektaxpayer says:

        I don’t think anyone suggested that this is the only or even the biggest issue with Greece at the moment. It’s just one more example of corruption. Admittedly a small one, nowhere near as significant as others. When you want to build a house though (to use your previous analogy) you do it one brick at a time, and you don’t leave some bricks out thinking that they are insignificant or not as important as others.
        Small issues like this though are not and should not be the concern of the troika. It should be up to the Greek central and local governments to deal with them.

        Like

      • @ greektaxpayer I thought eurogate 101 made that suggestion, which we (both agree) is ridiculous. I like the approach of iGlinavos who seems to say, let’s take a hard look at the habits we seem to have endorsed over the years and let’s chop the ones that are ridiculous.
        Seems to me a sound policy advise which I would also like to apply in my own country.

        Like

  6. Some people have discussed beach umbrellas. This is a good example of the illogical practices of the Greek administration. In Halkidiki up till a couple of years ago no licence was required for the operation of umbrella-lounger rentals. After licences were introduced the licence fee was higher than the penalty for operating without a licence. The local authorities therefore were advising operators to report themselves for operating an illegal business and pay the fine, rather than apply for a licence. Ergo, some rationisation of administration practices is in order.

    Like

  7. @Pim
    “Quite honestly I’m not sure what you are trying to proof with your comparison between 11% and 26% unemployment. That the situation would have been better if there had not been any rescue package?”

    Yes, the situation would undoubtedly have been better in Greece if there had not been rescue package, absolutely!

    There would have been chaos in France and Germany and everywhere else, if the banks who lent the money would have gone bust, though. Because Greece would have defaulted. But for Greece the situation would have been better.

    The 10% government deficit of Greece could have been quickly brought under control by defaulting on all its loans. The interest cost on the loans would have made up about 4% of the government deficit. If Greece had defaulted in 2010, then the instead of paying 4% of its money in interest, it would have saved that money. The deficit would have been 6% of GDP.

    Now to bridge that gap, Greece could have introduced very high import barriers, say 50% import duties. It could also have had to introduce very high export subsidies. (Like, every holiday maker coming to Greece gets 10 Euro a day at the airport for the length of stay on arrival, so Euro 70 in cash for the week of holiday!)

    The current account deficit would have closed almost overnight. The government deficit, which mirrors the current account deficit, would have been equally eliminated quite quickly.

    Greece could in 2010 have taken over its banks, nationalised them, and turned them overnight into Bad Banks. It would have then taken out the good assets of the banks, and started them as good banks and got them to lend to the Greek state to make up the deficit, before the import barriers/export subsidies do their job.

    Greeks who now are all unemployed would, in a situation like that, have worked for import substitution companies. And they would have worked for export growth industries.

    The situation would have been completely different in Greece. And unemployment would by now be much lower than the 11% in the early 2000s.

    Like

  8. @Pim
    “Spot on, if only the Troika would have taken on the rentier market of deckchair hire on the Greek beaches, all other problems would solve themselves. ;)”

    Actually, the Troika should have taken of the deckchair hire market, rather than the gym market. It should have been one of their first priorities.

    Why? Almost all the turnover which is generated by deckchair hire should go to the municipality! I think there could not be a more perfect example for rentier profits.

    If IGlinavos is right, and there was not any licences until a couple of years ago (3 years after the Troika had started its programme) that just shows that the Troika does not have a clue. They should have stayed on a Greek beach more often, rather than looking through the books in the finance ministry. Why?

    Let us say you can buy a deckchair/umbrella for Euro 100 and it will last two years. And you can charge Euro 5/day for deckchair hire. Let us further assume that in the 3 months summer season, the deckchairs are on average 50% full. And you have 30 deckchairs.

    The astonishing profit to be generated by this business model is 5250 in a season. Or 1750 a month.

    Now, that is twice the minimum wage in Greece. The actual job of running a deck-chair business is probably best described as. Stroll over to the beach in the morning, Put cushions on. Sit in the beach bar all day. Flirt with the pretty girls. Stroll over to collect the money. Put cushions away.

    Not exactly taxing. Not really an intellectual challenge. The hardest bit all day will be chatting up the girls. So the actual work during that day, probably just about one hour. that makes the hourly wage about Euro 58/hour. Probably one of the highest paid jobs in Greece.

    I reckon an appropriate licence fee for this deckchair hire business, set from the municipality is about 1,000 Euro per month. Leaving the deckchair entrepreneur with about the minimum wage for his taxing, one hour a day job.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s