Winners and losers of the great redistribution
Food and other consumer goods prices were comparatively much higher than in other European countries even before the inflationary wave of the last two years. We secured this lead with subsequent performances: In August, inflation in the eurozone fell to 2.2% from 2.6% in July, but in Greece it rose to 3.2% from 3%, the fourth highest among the 20 countries in the common currency area.
A massive redistribution of income is under way at the expense of wage earners and the have-nots, in favor of the haves and a wasteful, unfriendly state.
One prime example of this concerns developments in the housing market. The measures announced by the government are essentially geared at stimulating demand with subsidized mortgages from the beginning of 2025. Given the shortages in the supply of houses, property brokers expect the measures to cause prices in the capital to rise by 10%-15%, which means that the benefit of the housing subsidy will almost be nullified in many areas and rents will be even more expensive. This signals a big redistribution from those who do not have a home to those who own or rent out urban properties. In fact, as an incentive for those hesitating to rent their properties out on long-term leases, the government will introduce exemptions from the relevant taxes for three years.
The redistribution is evident on even more levels, however.
Primarily, it is favoring profit at the expense of wage labor, bringing Greece in last place among the EU’s 27 member-states in the average hourly wage in terms of purchasing power – even below Bulgaria.
On another level, there’s the weakening of the welfare state. We have, for example, the largest proportion of private expenditure on health of all European countries (around 4.5 billion euros) and this is worsening as the national healthcare system is weakened in favor of the private sector. We have a nominally free education, which in reality is very expensive.
On yet another level, the redistribution is coming to the detriment of depositors, in favor of bank shareholders. There is also direct taxation: in the years 2020-23 nominal earnings increased by 11% and income tax by 41% – four times higher, due to non-indexation of the scale. And so on.
Do the results of the practiced policy justify such a redistribution? If we are to judge by the usual indicators, only a marginal improvement does not justify it: gross domestic product is growing at a rate of around 2% despite a strong injection of European funds, while it is further predicted to fall back to around 1% after 2027. Private investments are at just one-third of the target, though a very large part of them are carried out with state money and those that increase the country’s productive potential are only a small percentage of them.
Greece remains behind in productivity and the current account deficit is a reminder that we have not changed the country’s economic model. Not to mention public debt, which is increasing in absolute terms – followed by private debt. The picture is worse by other, more pedantic criteria, such as the internationally accepted standards measuring the strength of an economy, and the quality and quantity of jobs it produces. Redistribution is not justified. In fact, the opposite can be argued – that it is responsible for the meager economic results.
