Are we repeating the same cycle?

on . Posted in English texts


There are many ways to evaluate a political party’s proposals for extracting their country from an economic crisis such as the one in Greece. The safest is to assess what each proposal will cost, one by one and step by step. The least refined way to do it is to see who will be most affected by the proposals and how, social group by social group. And one rule that must never be forgotten is that there must be something wrong with any proposal that appears to please everybody. Such proposals belong in the past, to a time when there was money to be made in the market and loans were readilly available to keep the state intact and afloat, and the voters happy.

Unfortunately, Greece today is by no means in such a situation. Loans have dried up and the funding policies that we so look forward to in order to boost growth simply do not exist any more.

Moreover, the 1980s showed us that in an open economy without a production base, throwing money you don’t have into the market brings gains to other countries and leaves you looking at mounting debts. And this was the case even though the Greek economy at the time was much more restricted that it is today.

The concept of "rebooting the economy," as opposition New Democracy leader Antonis Samaras promised at his Zappeio 2 presentation last week, not only contains too much of the past, but also has no future at all.

Even if Greece had 100 billion euros to pour into the market immediately, the economy would make a few laps for as long as the money continued to circulate on the domestic market and would then splutter to a halt like a faulty engine.

That money would gradually make its way outside Greece to pay for imports of goods needed for exchanges and for consumption. And then, once the cash flow dried up again, we would find ourselves in an even deeper recession with even bigger debts.

After all, isn’t this what Greece has been doing decade after decade, and the reason why it is where it is?

What neither the government nor the opposition is proposing is a creative shock to the economy. Opening up closed professions, for example, could bring multiple benefits. First of all, the market would see an inflow of money from small investments, which today are prohibited by law. A young pharmacist, for example, would be able to invest in building a store and hiring staff, generating some market movement.

Yet, on the issue of closed professions, the government keeps muddying the waters and Samaras said not a word. He did not make a single mention of the issue anywhere in his 7,000 word speech. And it’s not as though this is an issue that is of no concern to the opposition.

Samaras also failed to elaborate on the biggest matter of government business, which is cutbacks in spending. Sure, everyone talks about how curbing waste and using digital media to better effect are a priority, but, meanwhile there are thousands of organizations that serve no real purpose at all other than sucking up state funding that should be closed down at once.

The fact is that there is no easy way out of the crisis and it will certainly not be achieved by half-baked measures. A restructure of the Greek economy cannot be achieved through bankrolling the existing state model, however warm the applause of the institutional champions of a form of capitalism that’s divorced from reality.

Getting back on the path of growth will take a lot of work and pain, but this is something no one seems prepared to say.

ekathimerini.com , Sunday May 15, 2011