Forging ahead in the wrong direction
What was the main conclusion drawn by the government from the results of the recent European Parliament election? That it has to focus all of its energy on the everyday problems faced by citizens – so we are assured by all those who, united in one voice and one spirit, just days earlier assured that the government had been busy doing nothing less than toiling day and night to successfully address the people’s needs.
If this was indeed the main conclusion drawn by the conservative administration, then we really need to start worrying. Why? Because it suggests that the government cannot or will not accept that the problem is not just about how much time officials spend in their offices and whether they are being effective. The problem has to do with the actual content of many of its policies. If it cannot understand this simple truth, then nothing will really change.
The primary surplus is often deliberately confused with the actual surplus in order to mask the fact that Greece is running a fiscal deficit
Take the housing crisis, for example. If the government continues fueling demand with billions of euros in loans, it will exacerbate rather than solve the crisis by extending the bubble of real estate prices (much to the joy of the profiteers) instead of bolstering the supply of housing. It is equally obvious that the problem of runaway prices will not be solved, but will be propagated and fanned, if the government does not shift to a stance that is friendlier to healthy competition.
If the institutions of collective bargaining and sectoral agreements in the labor market are not bolstered and if rejecting them arbitrarily carries no cost – which is precisely the direction the Labor Ministry is taking – the dramatic primary redistribution of income from wage labor to profits (in a country with wages at 27% of gross domestic product, the second lowest among the EU27, and profits at 52.2% of GDP, the third highest in the EU27) will not be stemmed.
Moreover, the primary surplus is often deliberately confused with the actual surplus in order to mask the fact that Greece is running a fiscal deficit. But the primary surplus, for its part, arises from the consistent practice of depriving the national health and welfare systems of funds, from exhaustive and primitive indirect taxation, from the enormous burden placed on salaried labor and from having the lowest tax on profits in the Organization for Economic Cooperation and Development (OECD). Therefore, even that surplus is unsustainable – and especially with low rates of growth.
On the question of growth, we like to tout that Greece’s economy is growing at a faster rate than the eurozone average. Sure, it’s only human to applaud such a message, but let’s get real: a) The only way for the Greek economy to go is up; b) this growth is being spurred by the 36 billion euros from the money tree called the European Recovery Fund; and c) this growth is based on consumption, and not on investments and exports.
If the country stays on this course, if the changes in government policy are as profound (or not, as the case may be) as they were in the recent and much-routed cabinet reshuffle, Greece will continue heading in the direction that the vast majority of respondents indicated in the multiple public opinion polls conducted before the June 9 election: for a deterioration – with everything this entails from an economic and political standpoint.
