Monday, May 14, 2012

Greek Reforms

The news sources I have access to present Greek politics entirely in relation to austerity: will Greece have a government that continues to adhere to the troika’s austerity mandate (until the money runs out), or will they repudiate it and risk ejection from the EZ?  Momentous stuff, but what about domestic reform?

Looking in from the outside, it seems to me that two reforms are absolutely essential, no matter what happens with the euro.  First, the government needs to have real tax collection capacity, particularly over professionals and businesses.  Without the ability to raise revenues, the essential pubic goods that most Greeks depend on—health, education, social insurance—will be unaffordable.  Periodic cash infusions from outside the country obscure the real problem, that Greece has not been able to call on the resources of Greeks.  At its core, of course, this is a class issue.

Second, Greece needs an autonomous civil service.  All but the very top positions in the public sector should be under civil service protection, and that includes key personnel functions: hiring, promoting and rewarding civil servants.  Contra the claims of the troika, ironclad tenure for civil servants is essential; they should not feel that their jobs are at risk if they displease a political boss.  Enforcement of civil service protection should be lodged, as much as possible, within the system itself.  The goal is to break up the patronage networks that have corrupted Greek politics and economics, to make political payoffs, which cannot be ended entirely in Greece or anywhere else, the exception rather than the system.  It is also difficult to see how the tax collection problem can be addressed without transforming public service.

Perhaps these items are already on the agenda of the left parties.  Again, coverage in my neck of the woods is limited, and nothing I am saying is particularly profound.  I hope reform is seen as just as important as resistance to austerity; if Greece is tossed from the EZ, reform will be that much more vital.

One nice feature of the sort of reform program I’ve sketched is that it puts the rhetoric of the troika to the test.  They say they want reform too.  But are they interested only in smashing the organization, solidarity and living standards of ordinary Greeks?  It would be nice to see how they would respond to the real thing.

1 comment:

paul meli said...

All these suggestions are fine but the elephant in the room is that Greece (and all Eurozone countries) must borrow through private banks to fund growth.

Banks only lend the principal, not the interest , so the funds required to pay the interest do not and never will exist unless the ECB creates them and gives them to the Eurozone countries.

Otherwise, through the miracle of compound interest, the 'zones finances will deteriorate to the point that no amount of borrowing will solve the problem.

Oh, wait…