The Greek economy is in deep trouble
By now, your country has been in severe recession for about half a decade. The economy has collapsed and unemployment is at an all time high, especially among the young who are emigrating in large numbers. The debt crisis is not resolved, your government is still running a large deficit and there is no sense of unity among the people how to move forward. The plans to cut down government spending have failed consistently last several years and the only things that have been achieved are to raise taxes and cut pensions. Worst of all: There is no end in sight and your government is so dysfunctional that there will be no end in sight for years to come.
Furthermore, even though members of the Eurozone and the IMF have been generous with lending you money at far below market rates and orchestrating a very significant haircut –remember that’s the savings and pensions of our people you’re talking about- the mood in Greece is more and more against anybody who is trying to help the Greek people to resolve this situation and even outright hostile towards ‘the Germans’, as if they are to blame for all this.
Who is to blame?
The most important thing to do for the Greek people is to stop blaming somebody else. To anybody outside Greece it is crystal clear who is to blame: It is your own democratically elected politicians who have spent way too much the last several decades. You have accepted that your politicians promised you money for free and benefits and entitlements for all while at the same time borrowing up to the hilt. Please remember that this is nobody’s fault but your own. The ‘Germans’ did not elect your politicians, you did that yourself. The ‘Germans’ did not borrow money like there was no tomorrow, your politicians –elected by you- of the last decades did that. And you kept them in office.
There is nobody but yourself to blame. But if you must blame somebody else: Please blame your own parents and grandparents for grossly overspending and borrowing. It is your and their mess you are currently struggling with.
What needs to be done?
The way out of this crisis is straightforward and easy to state. You need to cut government spending significantly more –preferably such that you have a budget surplus-, you need to liberalize your labor market and you need to lower taxes on savings and investments. Further you need to slash –not trim or cut- regulations that limit entrepreneurs in trying to set up a business.
To get to a budget surplus you need to fire a significant part of your government employees. Not because you don’t need them –the level of direct civil servants is not unreasonably high- but because you can no longer afford to employ them. You need to cut pensions for all and especially for people who have savings or a second pension. You need to treat public pensions as a type of unemployment benefit: Only those people who absolutely cannot work or pay for this themselves are entitled. Others need to take care of themselves.
You need to reform the labor market such that it is very easy to hire and fire. Expensive and unproductive people –usually the older generation- need to be let go and replaced by much cheaper and more productive people –usually the younger generation. You need to abolish the minimum wage -you simply cannot afford to outlaw any job even if it pays very little. Your economy needs to regain competitiveness on a massive scale and there is no realistic scenario to do so without your younger generation which is currently emigrating in very large numbers. Not doing this will damage your economic competitiveness for generations to come. You don’t really think you can get out of this hole without your most talented and productive people -your younger generation? Please remember the experiences you had in the ’60 and ’70 when your youth was practically chased out of the country.
You need to reduce or completely abolish taxes on savings and investments. The only way out of this dire situation is to make your economy more productive and to do so you need massive investments. Nobody will invest in your country –especially large international corporations- if taxes are high and government regulations are heavy handed and unpredictable. In a globalized world where corporations can choose where to locate their new business: You cannot strong-arm entrepreneurs and investors into obedience. They will leave –as they are already doing in large numbers.
You need to privatize all your government owned companies. You simply cannot afford to keep them: They need to be competing in the market and feel the competitive pressure. Subsidies and favorable anticompetitive regulations in any which form need to be cut and abandoned. You need to do this drastically and quickly: The longer you delay this process, the higher the costs and the lower the benefits. Your government owned companies quickly loose value when they are operating in an economy which is in such deep trouble as yours.
Last but not least you must instill in your people a sense of community. It is no longer acceptable to have corrupt politicians or civil servants. Wasteful government spendings need to be cut, wasteful politicians need to be cut even further. Why not offer a reward to help convict a corrupt public official?
What needs to be done is straightforward and simple. Implementing this needs the support of all in society and everybody needs to contribute. But most of all: You need to do this yourselves. The crisis can be over in a year or two and you can be up and running already within half a year. But it will only happen when you take an honest look at the situation and accept your own responsibilities. It is time to stop blaming others and get to work.