In Greece, the optimists are those who believe the country’s finances cannot get worse. As we saw in the weeks before and after the October 4 election, the unpleasant surprises in our economic indicators seem to have no end. And so the slings and arrows of outraged EU officials just keep on coming. This leaves most of us with two options: to fling up our hands and go into deep despair, or just ignore the bad news and try to get by, as we always have. However, there might be some good news in our steep decline: Things have been so bad for so long that any improvement will have a big impact.

First of all, there is the waste: Everyone agrees that the public sector is grossly overstaffed and, at the same time, criminally unproductive. This is what we could call fraud on a national scale. State payrolls, along with pensions, count for just under half of every euro collected by tax officials. Ministries and thousands of state committees are crammed with people who underperform yet can never be fired. These privileged individuals – estimated at about 880,000 – get paid wages that are most competitive compared to those of people in the private sector, who enjoy no such job security and whose taxes keep the state behemoth alive. Another result is that our education and healthcare systems, though they cost taxpayers huge amounts of money, are so inadequate that they force families to spend even more for private tutoring and medical services. Very simply, getting people to do their jobs and cutting down on waste will have a huge impact on the budget deficit and public debt. One figure that keeps getting quoted but has led to little action is that red tape costs the country the equivalent of 6.5 percent of GDP. This can never be eradicated, but any improvement will make a difference. Finally drawing up a register of who is employed by the public sector and what they do (as opposed to what they were hired for) will also solve staffing problems, without costing the taxpayer another cent.

Simplifying laws and holding people accountable go hand in hand. This, too, will be a giant step toward saving money and encouraging greater efforts by people employed in the public sector. As the civil service plays a primary role in supervising and controlling private business as well (for example, through efficient tax collection), the result will be a more productive and less wasteful nation. Again, we are not promoting grand reforms, just people doing the jobs that they are being paid for. As the public service inspector’s report noted on Thursday, when people are inspected, they work better. (This has been the foundation of bureaucracy since the dawn of civilization, but we still need to reinvent it in Greece.) Related to this issue is the fact that in Greece we have 26 “closed” professions, from notaries public to truck drivers, which means that the price of goods and services depends on the special interests of small groups, whose greatest interest is their own preservation and enrichment. No amount of EU prodding has helped end this situation due to fears of a strong reaction.

The new government is gambling that by pushing 10 billion euros into public investments next year (7 billion from EU funds), it will spur a recovery. It is also playing with EU officials’ patience by insisting on providing 3 billion euros’ worth of handouts that it promised citizens in the elections. It is also budgeting for some minor cost-cutting and one-off revenues. All of this is not likely to placate the EU, credit rating agencies nor other international organizations. True reforms will include radical changes to the social security system, with the objective of making it more efficient and more just, and a national effort to improve our education system. In the meanwhile, making an effort to make people do their jobs could be the biggest structural reform – one that could turn the economy around without notable political turbulence.

16-10-2009	23-10-2009	30-10-2009

06-11-2009	13-11-2009