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Archive for the ‘Greece’ Category

We’re going to touch on two topics today.

I realize that not that many readers care about Greek economic policy, but sometimes other nations can teach us very important lessons. For better or worse.

And in the case of Greece, the lesson is that government intervention and bureaucracy is an enemy of entrepreneurship.

Probably the most amazing – and weird – example is that the Greek government wanted stool samples from entrepreneurs seeking to set up an online company (and, just to be clear, I’m not talking about furniture).

We now have another example, but it’s seems more tragic than bizarre. Here are some really sad passages from a column in the New York Times by a woman who tried set up a business in Greece.

I managed to master the perfect macaron. I was ready to sell them. I invested every penny I earned in high-quality photographs, a superbly designed website and tasteful packaging. “Le macaron grec” was born and the little olive green boxes of treats I was selling were, I thought, my chance to regain control of my life. “Le macaron grec” became a huge success, as I was in demand to cater parties and weddings. …I felt like I was on my way.

Until the visible foot of government interfered with the invisible hand of the market.

…as happens so often in Greece, the bureaucrats had other plans. In a country where you are viewed favorably when you spend money but are considered a criminal when you make it, starting a business is a nightmare. The demands are outrageous, and include a requirement that the business pay taxes in advance equal to 50 percent of estimated profit in the first two years. And the taxes are collected even if the business suffers a loss. I needed only 20 square meters for my baking business, but inspectors told me they could not give me permission for less than 150 square meters. I was obliged to have a separate toilet for customers even though I would not have any customers visit. The fire department wanted a security exit in the same place where the municipality demanded a wall be built.

So what happened? Was she able to satisfy the costly requirements of big government?

Alas, we don’t have a happy ending.

I, like thousands of others trying to start businesses, learned that I would be at the mercy of public employees who interpreted the laws so they could profit themselves. And so in the winter of 2013, my business was finished before it had a chance to take off. The website and a couple of empty boxes in the top of my closet are now the only evidence of the inglorious end of a dream.

Stories like this get me angry. Heck, I’m outraged that taxpayers from around the world have bailed out the Greek government so that bad policy can continue.

Having gotten ourselves all agitated, let’s now enjoy some good news.

It appears that the American people have figured out that our statist president is not doing a very good job. Indeed, they actually have decided he’s the worst president of the past 70 years according to new polling data.

Ironically, even though Obama is probably the most ideologically left-wing president since World War II, I wouldn’t put him in last place. I think Nixon actually did more damage, and Bush II definitely was a bigger spender.

But it’s still good that voters have soured on Obama. As he becomes more and more unpopular, that probably increases support for pro-market policies – such as genuine entitlement reform and real tax reform.

Sort of the way Jimmy Carter paved the way for Reaganomics.

And speaking of Reagan, I’m very happy that he is the runaway winner as America’s best post-WWII president.

P.S. So with Obama now considered the worst and Reagan considered the best, I wonder what the results would be if someone updated this Reagan vs. Obama poll.

P.S.S. Returning to the issue of Greece, that nation’s crazy politicians actually give disability payments to pedophiles.

P.S.S.S. Which is yet another reason why I’m incredulous that so many American politicians want us to mimic Greece’s profligacy (as illustrated by this Henry Payne cartoon).

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As much as I condemn American politicians for bad policy, things could be worse.

We could be Greek citizens, which would be very depressing. Indeed, you’ll understand why I put Obamaland in the title after you read today’s column.

Simply stated, Greece is a cesspool of statism. The people seem to be wonderful (at least outside of polling booths), but government intervention is pervasive and atrocious.

Here’s an example. As I was coming in a taxi from the airport to the city yesterday, we passed some sort of protest. There were a couple of hundred people at the rally and probably about 50 riot cops.

I naturally wondered about the situation, expecting that it was radical statists or some of the crazies from Golden Dawn. But the cab driver explained that it was pharmacists.

So why are pharmacists protesting? I found out from some of the locals at the Free Market Road Show that this is a heavily regulated and protected sector of the Greek economy.

The government has rules, for instance, that products such as aspirin and other painkillers can only be purchased at pharmacies. The bureaucracy also rigs all the prices to preclude competition. And there are even government policies that make it very difficult for new pharmacies to compete against the established firms.

When special interests have that much power, no wonder Greece is in trouble.

Thought there are some sectors of the business community, such as online entrepreneurs, that are treated like crap. Literally.

Here’s another example from a Wall Street Journal report, albeit one where a modest bit of progress has been achieved.

For the first time in more than a hundred years, Greece is sacking public servants. In 1911, Greece introduced jobs for life under Prime Minister Eleftherios Venizelos. Now, a century later, his descendant, Kyriakos Mitsotakis, Greece’s minister for administrative reform, is faced with the delicate task of slimming down the massive public sector this law helped create. …In exchange for…aid, Greece has promised to cut the government workforce by at least 150,000 by 2015 through attrition, and to lay off an additional 15,000 outright by the end of this year. Another 25,000 would be placed in the temporary labor pool. Of those goals, the first has been reached: Greece had 713,000 government workers at the end of 2012, down 122,000 from the end of 2010. …But the labor pool is still a work in progress. Last July, the first 4,000 employees were put in that pool, while another 8,000 or so followed a few months later. Few of them are expected to be rehired. And with Greece’s unemployment rate already close to 30%, few expect to find jobs in the private sector.

I actually feel a bit sorry for some of these people.

They probably took jobs in the bureaucracy without ever thinking about who was paying their salaries and without giving any thought to the featherbedding and waste that accompany most public sector positions.

But I bet they voted for the politicians that dramatically expanded the number of bureaucrats, so it’s hard to feel too much sympathy.

In any event, they’re understandably worried now that the gravy train is being derailed.

Or maybe the gravy is still there, but in different forms.

It appears that there’s still taxpayer money floating around that can be wasted in interesting ways.

Here are some excerpts from the Guardian about EU-funded “anger management” for some of Greece’s senior tax bureaucrats.

Until Greece’s economic meltdown, anger management was an alien concept at the country’s finance ministry. …Today these are the buzzwords flying around the ground-floor training room at 1 Handris Street. For tax inspectors attending mandatory seminars at the government building, anger management, like patience and politesse, are now seen as essential prerequisites of an increasingly stressful job. “Today, in Greece, everyone is either unhappy or angry when they have to go and pay at the tax office,” Fotis Kourmouris, a senior official at the finance ministry’s public revenues department said. “There is a lot of negative emotion … in the framework of better customer service, classes in psychological and emotional intelligence had become necessary.”

I wouldn’t call it “negative emotion.”

This is a long-overdue revolt of the Greek tax slaves.

…inspectors have found themselves at the sharp end of popular rage. In recent months visiting auditors have been chased out of remote villages, hounded out of towns and booted off islands by an increasingly desperate populace. “We’ve had multiple cases of violence at tax offices by angry members of public, including physical assaults; shots were fired in one case, and one attacker came with an axe,” said Trifonas Alexiadis, vice-chairman of the national association of employees at state financial services.

But when you read how the Greek government is trying to rape and pillage taxpayers, you can understand the anger.

A series of new tax laws has further fuelled public anger. Since the outbreak of the crisis, close to 30 new levies have been introduced by governments desperate to augment empty state coffers. “Too much pressure is being put on people who can’t pay,” said Alexiadis, who suggested that in such circumstances the classes were not only ill-conceived but “juvenile and unnecessary”. …accountant Heracles Galanakopoulos agreed. “They produce a law that nobody understands and then produce another three to explain it. By the time people get here they are really very angry,” he lamented… “I spend at least five or six hours a day reading up on all these new laws and still can’t keep up. Anger management is a nice idea but in a system that is so absurd it’s not going to make a jot of difference.”

Amen. As I’ve argued before, Greece’s problem is high tax rates. Evasion is simply a function of a bad tax code.

Let’s close with some Greek-related humor.

I very much recommend this very funny video from a Greek comedian and this politically incorrect map of how the Greeks view the rest of Europe.

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A couple of years ago, I shared a chart that powerfully demonstrated why Greece was in fiscal crisis.

The chart, which showed the explosive growth of the government bureaucracy, also provided some indication of why reform would be so difficult.

Once a majority of a country’s voting-age population is riding in the wagon of government dependency, it is very difficult to build political support for reform.

Now I have another story that perfectly symbolizes Greece’s dysfunctional situation.

It involves the Greek equivalent of a mooching Big Bird-style state-run media. Let’s start with an excerpt from the UK-based Independent.

Greek Prime Minister Antonis Samaras faces a political revolt after pulling the plug on the country’s state broadcaster in the middle of the night. News presenters were cut off mid-sentence when Hellenic Broadcasting Corporation (ERT), the 75-year-old state television station, was dragged off-air just hours after the decision was announced, in what the government described as a temporary measure to stem the flow of wasted taxpayers’ money into a channel plagued by “excesses”. …In announcing the reasons for the move, Mr Kedikoglou listed a catalogue of ERT’s excesses, which include three orchestras paid as civil servants and 19 provincial radio stations which broadcast only four hours of original programmes each day.

What’s remarkable is that the government isn’t even proposing to get rid of handouts. They just want to reduce the amount of money spent on government media, which is financed by money involuntarily extracted from consumers via their electricity bills.

Here’s what a local English-language news source reported.

Government spokesman Simos Kedikoglou argued that ERT had become bloated and needed to be overhauled but PASOK and Democratic Left said they had not given their consent for it to be shut down. Kedikoglou said the new broadcaster would have an annual budget of 100 million euros, rather than the 300 million ERT currently gets from license fees levied via electricity bills.

 

But maybe there is hope for Greece. Some people (perhaps like the long-suffering tax slaves I wrote about two years ago) are fed up with overpaid government officials.

Here’s an excerpt from the BBC about the private sector’s non-response to a strike called by a “communist-backed labour group”.

City streets have been as full as usual with commuters and car traffic. Supermarkets have been open for business and cafes serving customers as usual. “The lowest ERT employee is making in a day what I’m making in a week, so why should I strike for them?” vegetable-seller Yannis Papailias told Reuters news agency in Athens. “Hundreds of thousands of people have lost their jobs. Who protested for them?” asked waitress Maria Skylakou. Unions representing about 2.5 million workers have repeatedly gone on strike in Greece since Europe’s debt crisis erupted in late 2009, although action has been less frequent and more muted lately than last year when marches frequently turned violent. Corruption and mismanagement are widely known to exist within ERT, a public company symptomatic of Greece’s past mistakes.

Wow, the bureaucrats make in a day what someone in the private sector makes in a week. Even if that number is exaggerated by 50 percent, that’s still a remarkable indication of how government in Greece has become a racket for entrenched bureaucrats and interest groups.

And we thought it was bad that federal bureaucrats in the United States got twice as much compensation as people in the economy’s productive sector!

P.S. Don’t let anyone tell you Greece has made “too many” budget cuts. The government in Athens is infamous for being insanely wasteful, even to the point of subsidizing pedophiles and requiring stool samples from folks applying to set up online companies.

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I’m in Europe as part of a six-nation speaking tour, participating in the Free Market Road Show.

My first speech was yesterday in Greece, which is infamous for a government that is insanely wasteful, even to the point of subsidizing pedophiles and requiring stool samples from folks applying to set up online companies.

But I don’t want to share anything about my remarks, which would be rather familiar to regular readers of this blog.

Instead, I want to share a couple of slides from Professor Aristides Hatzis of the University of Athens.

Let’s start with a look at the number of bureaucrats over time in Greece. You don’t need to read Greek to see that featherbedding exploded over the past 35-plus years.

Greece - Number of Bureaucrats

As you can see, it’s an expanded version of this grim chart.

Now let’s look at another slide from Professor Hatzis.

Greece - Anti Business

When you see these numbers (or read this information), it’s a surprise that Greece didn’t collapse earlier.

One reason that I liked the presentation from Professor Hatzis is that he included a couple of amusing cartoons, one of which he borrowed from the United States. Here’s the Gary Varvel cartoon he shared with the Greek audience.

Greece - Varvel Cartoon

Varvel, by the way, was part of my political cartoonist contest. His cartoon on Social Security and Bernie Madoff was my favorite, but the above cartoon would have been a good addition to the list.

Speaking of cartoons, you can see good cartoons about Obama and Greece here and here.

And here’s a cartoon about Greece and the euro.

I’ll close be recommending this very funny video from a Greek comedian and this non-PC map of how the Greeks view the rest of Europe.

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Are there any fact checkers at the New York Times?

Since they’ve allowed some glaring mistakes by Paul Krugman (see here and here), I guess the answer is no.

But some mistakes are worse than others.

Consider a recent column by David Stuckler of Oxford and Sanjay Basu of Stanford. Entitled “How Austerity Kills,” it argues that budget cuts are causing needless deaths.

Here’s an excerpt that caught my eye.

Countries that slashed health and social protection budgets, like Greece, Italy and Spain, have seen starkly worse health outcomes than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted for stimulus over austerity.

The reason this grabbed my attention is that it was only 10 days ago that I posted some data from Professor Gurdgiev in Ireland showing that Sweden and Germany were among the tiny group of European nations that actually had reduced the burden of government spending.

Greece, Italy, and Spain, by contrast, are among those that increased the size of the public sector. So the argument presented in the New York Times is completely wrong. Indeed, it’s 100 percent wrong because Iceland (which Professor Gurdgiev didn’t measure since it’s not in the European Union) also has smaller government today than it did in the pre-crisis period.

But that’s just part of the problem with the Stuckler-Basu column. They want us to believe that “slashed” budgets and inadequate spending have caused “worse health outcomes” in nations such as Greece, Italy, and Spain, particularly when compared to Germany, Iceland, and Spain.

But if government spending is the key to good health, how do they explain away this OECD data, which shows that government is actually bigger in the three supposed “austerity” nations than it is in the three so-called “stimulus” countries.

NYT Austerity-Stimulus

Once again, Stuckler and Basu got caught with their pants down, making an argument that is contrary to easily retrievable facts.

But I guess this is business-as-usual at the New York Times. After all, this is the newspaper that’s been caught over and over again engaging in sloppy and/or inaccurate journalism.

Oh, and if you want to know why the Stuckler-Basu column is wrong about whether smaller government causes higher death rates, just click here.

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It’s not easy to find some humor in the European fiscal crisis, though this Hitler parody video surely is a classic.

We now have a new video to enjoy.

There are some naughty words, so be forewarned.

And speaking of Greek-related humor, this cartoon is quite  good, but this this one is my favorite. And the final cartoon in this post also has a Greek theme.

P.S. If you like Greek-related humor, I have two more posts that have been very popular. The first one features a video about…well, I’m not sure, but we’ll call it a European romantic comedy and the second one has some very un-PC maps of how various peoples – including the Greeks – view different European nations.

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As I explained in my election post-mortem, I don’t think Obama has a mandate.

But that doesn’t mean we can’t enjoy a good cartoon about his interpretation of the results, and this Bob Gorrell cartoon definitely is amusing.

But it’s amusing – albeit in a disturbing way – because it hinges on something that is true.

America is heading into the fiscal toilet. Indeed, both the BIS and OECD predict that our long-run fiscal situation is more perilous than Europe’s welfare states.

To be fair, we were in a mess even before Obama took office. But Obama wants us to move in the wrong direction at an even faster pace. And he definitely opposes the types of entitlement reforms that could save the country.

That’s why the cartoon has some bite.

And speaking of cartoons about Obama and Greece, here’s another one with the same message. And the final cartoon in this post also has a Greek theme.

P.S. If you like Greek-related humor, I have two more posts that have been very popular. The first one features a video about…well, I’m not sure, but we’ll call it a European romantic comedy and the second one has some very un-PC maps of how various peoples – including the Greeks – view different European nations.

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