Sir Ken (Robinson) the famous educationalist, once said the obvious (but it is nice to be able to quote an expert) "... we have to raise the standards of education, we should... I haven't come across an argument that says we should lower them"
Well, A. Baltas, Greece's new minister for education obviously has found an argument in favour of lowering the standards of education. High standards and selection are, "Hitlerian in nature".
He proposes to put an end to pupil selection at certain "higher standard" schools.
Which is an excellent way to supplant and further Greece's mediocre educational performance.
Instead, he could have cogitated helping other schools reach the standards of the "special" schools -- or, better still for the country's educational system, remained at home.
Wednesday 25 February 2015
Tuesday 24 February 2015
What Greece Actually Promised (Greek Finance Minister's Letter to the Eurogroup)
The text of Greek
Finance Minister Yanis Varoufakis's letter to Eurogroup President
Jeroen Dijsselbloem outlining Greece's proposed reforms.
Not much different from what the previous government had in signed.
So, in essence, Greece is re-proposing what had been already agreed upon before.
If at least some of the reforms are implemented Greece, rather than its politicians, stands to gain.
That cannot be a bad thing.
"Dear President of the Eurogroup,
In the Eurogroup of 20 February 2015 the Greek government was invited to present to the institutions, by Monday 23rd February 2015, a first comprehensive list of reform measures it is envisaging, to be further specified and agreed by the end of April 2015.
In addition to codifying its reform agenda, in accordance with PM Tsipras’ programmatic statement to Greece’s Parliament, the Greek government also committed to working in close agreement with European partners and institutions, as well as with the International Monetary Fund, and take actions that strengthen fiscal sustainability, guarantee financial stability and promote economic recovery.
The first comprehensive list of reform measures follows below, as envisaged by the Greek government. It is our intention to implement them while drawing upon available technical assistance and financing from the European Structural and Investment Funds.
Truly
Yanis Varoufakis
Minister of Finance
Hellenic Republic
I. Fiscal structural policies
Tax policies – Greece commits to:
• Reform VAT policy, administration and enforcement. Robust efforts will be made to improve collection and fight evasion making full use of electronic means and other technological innovations. VAT policy will be rationalized in relation to rates that will be streamlined in a manner that maximizes actual revenues without a negative impact on social justice, and with a view to limiting exemptions while eliminating unreasonable discounts.
• Modify the taxation of collective investment and income tax expenditures which will be integrated in the income tax code.
• Broaden definition of tax fraud and evasion while disbanding tax immunity.
• Modernizing the income tax code and eliminating from it tax code exemptions and replacing them, when necessary, with social justice enhancing measures.
• Resolutely enforce and improve legislation on transfer pricing.
• Work toward creating a new culture of tax compliance to ensure that all sections of society, and especially the well-off, contribute fairly to the financing of public policies. In this context, establish with the assistance of European and international partners, a wealth database that assists the tax authorities in gauging the veracity of previous income tax returns.
Public Finance Management – Greece will:
• Adopt amendments to the Organic Budget Law and take steps to improve public finance management. Budget implementation will be improved and clarified as will control and reporting responsibilities. Payment procedures will be modernized and accelerated while providing a higher degree of financial and budgetary flexibility and accountability for independent and/or regulatory entities.
• Devise and implement a strategy on the clearance of arrears, tax refunds and pension claims.
• Turn the already established (though hitherto dormant) Fiscal Council into a fully operational entity.
Revenue administration – Greece will modernize the tax and custom administrations benefiting from available technical assistance. To this end Greece will:
• Enhance the openness, transparency and international reach of the process by which the General Secretary of the General Secretariat of Public Revenues is appointed, monitored in terms of performance, and replaced.
• Strengthen the independence of the General Secretariat of Public Revenues (GSPR), if necessary through further legislation, from all sorts of interference (political or otherwise) while guaranteeing full accountability and transparency of its operations. To this end, the government and the GSPR will make full use of available technical assistance.
• Staff adequately, both quantitatively and qualitatively, the GSPR and in particular the high wealth and large debtors units of the revenue administration and ensure that it has strong investigative/prosecution powers, and resources building on SDOE’s capacities, so as to target effectively tax fraud by, and tax arrears of, high income social groups. Consider the merits of integrating SDOE into GSPR.
• Augment inspections, risk-based audits, and collection capacities while seeking to integrate the functions of revenue and social security collection across the general government.
Public spending – The Greek authorities will:
• Review and control spending in every area of government spending (e.g. education, defense, transport, local government, social benefits)
• Work toward drastically improving the efficiency of central and local government administered departments and units by targeting budgetary processes, management restructuring, and reallocation of poorly deployed resources.
• Identify cost saving measures through a thorough spending review of every Ministry and rationalization of non-salary and non-pension expenditures which, at present, account for an astounding 56% of total public expenditure.
• Implement legislation (currently in draft form at the General Accounts Office - GAO) to review non-wage benefits expenditure across the public sector.
• Validate benefits through cross checks within the relevant authorities and registries (e.g. Tax Number Registry, AMKA registry) that will help identify non-eligible beneficiaries.
• Control health expenditure and improve the provision and quality of medical services, while granting universal access. In this context, the government intends to table specific proposals in collaboration with European and international institutions, including the OECD.
Social security reform – Greece is committed to continue modernizing the pension system. The authorities will:
• Continue to work on administrative measures to unify and streamline pension policies and eliminate loopholes and incentives that give rise to an excessive rate of early retirements throughout the economy and, more specifically, in the banking and public sectors.
• Consolidate pension funds to achieve savings.
• Phase out charges on behalf of ‘third parties’ (nuisance charges) in a fiscally neutral manner.
• Establish a closer link between pension contributions and income, streamline benefits, strengthen incentives to declare paid work, and provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds.
Public administration & corruption – Greece wants a modern public administration. It will:
• Turn the fight against corruption into a national priority and operationalize fully the National Plan Against Corruption.
• Target fuel and tobacco products’ smuggling, monitor prices of imported goods (to prevent revenue losses during the importation process), and tackle money laundering. The government intends immediately to set itself ambitious revenue targets, in these areas, to be pursued under the coordination of the newly established position of Minister of State.
• Reduce (a) the number of Ministries (from 16 to 10), (b) the number of 'special advisors' in general government; and (c) fringe benefits of ministers, Members of Parliament and top officials (e.g. cars, travel expenses, allowances)
• Tighten the legislation concerning the funding of political parties and include maximum levels of borrowing from financial and other institutions.
• Activate immediately the current (though dormant) legislation that regulates the revenues of media (press and electronic), ensuring (through appropriately designed auctions) that they pay the state market prices for frequencies used, and prohibits the continued operation of permanently loss-making media outlets (without a transparent process of recapitalization)
• Establish a transparent, electronic, real time institutional framework for public tenders/procurement – re-establishing DIAVGEIA (a side-lined online public registry of activities relating to public procurement)
• Reform the public sector wage grid with a view to decompressing the wage distribution through productivity gains and appropriate recruitment policies without reducing the current wage floors but safeguarding that the public sector’s wage bill will not increase
• Rationalize non-wage benefits, to reduce overall expenditure, without imperilling the functioning of the public sector and in accordance with EU good practices
• Promote measures to: improve recruitment mechanisms, encourage merit-based managerial appointments, base staff appraisals on genuine evaluation, and establish fair processes for maximizing mobility of human and other resources within the public sector
II. Financial stability
Installment schemes – Greece commits to
• Improve swiftly, in agreement with the institutions, the legislation for repayments of tax and social security arrears
• Calibrate installment schemes in a manner that helps discriminate efficiently between: (a) strategic default/non-payment and (b) inability to pay; targeting case (a) individuals/firms by means of civil and criminal procedures (especially amongst high income groups) while offering case (b) individuals/firms repayment terms in a manner that enables potentially solvent enterprises to survive, averts free-riding, annuls moral hazard, and reinforces social responsibility as well as a proper re-payment culture.
• Decriminalize lower income debtors with small liabilities
• Step up enforcement methods and procedures, including the legal framework for collecting unpaid taxes and effectively implement collection tools
Banking and Non-Performing loans. Greece is committed to:
• Banks that are run on sound commercial/banking principles
• Utilize fully the Hellenic Financial Stability Fund and ensure, in collaboration with the SSM, the ECB and the European Commission, that it plays well its key role of securing the banking sector’s stability and its lending on commercial basis while complying with EU competition rules.
• Dealing with non-performing loans in a manner that considers fully the banks’ capitalization (taking into account the adopted Code of Conduct for Banks), the functioning of the judiciary system, the state of the real estate market, social justice issues, and any adverse impact on the government’s fiscal position.
• Collaborating with the banks’ management and the institutions to avoid, in the forthcoming period, auctions of the main residence of households below a certain income threshold, while punishing strategic defaulters, with a view to: (a) maintaining society’s support for the government’s broad reform program, (b) preventing a further fall in real estate asset prices (that would have an adverse effect on the banks’ own portfolio), (c) minimizing the fiscal impact of greater homelessness, and (d) promoting a strong payment culture. Measures will be taken to support the most vulnerable households who are unable to service their loans
• Align the out-of-court workout law with the installment schemes after their amendment, to limit risks to public finances and the payment culture, while facilitating private debt restructuring.
• Modernize bankruptcy law and address the backlog of cases
III. Policies to promote growth
Privatization and public asset management – To attract investment in key sectors and utilize the state’s assets efficiently, the Greek authorities will:
• Commit not to roll back privatizations that have been completed. Where the tender process has been launched the government will respect the process, according to the law.
• Safeguard the provision of basic public goods and services by privatized firms/industries in line with national policy goals and in compliance with EU legislation.
• Review privatizations that have not yet been launched, with a view to improving the terms so as to maximize the state’s long term benefits, generate revenues, enhance competition in the local economies, promote national economic recovery, and stimulate long term growth prospects.
• Adopt, henceforth, an approach whereby each new case will be examined separately and on its merits, with an emphasis on long leases, joint ventures (private-public collaboration) and contracts that maximize not only government revenues but also prospective levels of private investment.
• Unify (HRDAF) with various public asset management agencies (which are currently scattered across the public sector) with a view to developing state assets and enhancing their value through microeconomic and property rights’ reforms.
Labor market reforms – Greece commits to:
• Achieve EU best practice across the range of labor market legislation through a process of consultation with the social partners while benefiting from the expertise and existing input of the ILO, the OECD and the available technical assistance.
• Expand and develop the existing scheme that provides temporary employment for the unemployed, in agreement with partners and when fiscal space permits and improve the active labor market policy programs with the aim to updating the skills of the long term unemployed.
• Phasing in a new ‘smart’ approach to collective wage bargaining that balances the needs for flexibility with fairness. This includes the ambition to streamline and over time raise minimum wages in a manner that safeguards competiveness and employment prospects. The scope and timing of changes to the minimum wage will be made in consultation with social partners and the European and international institutions, including the ILO, and take full account of advice from a new independent body on whether changes in wages are in line with productivity developments and competitiveness.
Product market reforms and a better business environment – As part of a new reform agenda, Greece remains committed to:
• Removing barriers to competition based on input from the OECD.
• Strengthen the Hellenic Competition Commission.
• Introduce actions to reduce the burdens of administrative burden of bureaucracy in line with the OECD’s input, including legislation that bans public sector units from requesting (from citizens and business) documents certifying information that the state already possesses (within the same or some other unit).
• Better land use management, including policies related to spatial planning, land use, and the finalization of a proper Land Registry
• Pursue efforts to lift disproportionate and unjustified restrictions in regulated professions as part of the overall strategy to tackle vested interests.
• Align gas and electricity market regulation with EU good practices and legislation
Reform of the judicial system – The Greek government will:
• Improve the organization of courts through greater specialization and, in this context, adopt a new
Code of Civil Procedure.
• Promote the digitization of legal codes and the electronic submission system, and governance, of the judicial system.
Statistics – The Greek government reaffirms its readiness to:
• Honor fully the Commitment on Confidence in Statistics, and in particular the institutional independence of ELSTAT, ensuring that ELSTAT has the necessary resources to implement its work program.
• Guarantee the transparency and propriety of the process of appointment of the ELSTAT President in September 2015, in cooperation with EUROSTAT.
IV. Humanitarian Crisis – The Greek government affirms its plan to:
• Address needs arising from the recent rise in absolute poverty (inadequate access to nourishment, shelter, health services and basic energy provision) by means of highly targeted non-pecuniary measures (e.g. food stamps).
• Do so in a manner that is helpful to the reforming of public administration and the fight against bureaucracy/corruption (e.g. the issuance of a Citizen Smart Card that can be used as an ID card, in the Health System, as well as for gaining access to the food stamp program etc.).
• Evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide.
• Ensure that its fight against the humanitarian crisis has no negative fiscal effect."
A lot of stuff to achieve in 4 months.
How cool is that!
Not much different from what the previous government had in signed.
So, in essence, Greece is re-proposing what had been already agreed upon before.
If at least some of the reforms are implemented Greece, rather than its politicians, stands to gain.
That cannot be a bad thing.
"Dear President of the Eurogroup,
In the Eurogroup of 20 February 2015 the Greek government was invited to present to the institutions, by Monday 23rd February 2015, a first comprehensive list of reform measures it is envisaging, to be further specified and agreed by the end of April 2015.
In addition to codifying its reform agenda, in accordance with PM Tsipras’ programmatic statement to Greece’s Parliament, the Greek government also committed to working in close agreement with European partners and institutions, as well as with the International Monetary Fund, and take actions that strengthen fiscal sustainability, guarantee financial stability and promote economic recovery.
The first comprehensive list of reform measures follows below, as envisaged by the Greek government. It is our intention to implement them while drawing upon available technical assistance and financing from the European Structural and Investment Funds.
Truly
Yanis Varoufakis
Minister of Finance
Hellenic Republic
I. Fiscal structural policies
Tax policies – Greece commits to:
• Reform VAT policy, administration and enforcement. Robust efforts will be made to improve collection and fight evasion making full use of electronic means and other technological innovations. VAT policy will be rationalized in relation to rates that will be streamlined in a manner that maximizes actual revenues without a negative impact on social justice, and with a view to limiting exemptions while eliminating unreasonable discounts.
• Modify the taxation of collective investment and income tax expenditures which will be integrated in the income tax code.
• Broaden definition of tax fraud and evasion while disbanding tax immunity.
• Modernizing the income tax code and eliminating from it tax code exemptions and replacing them, when necessary, with social justice enhancing measures.
• Resolutely enforce and improve legislation on transfer pricing.
• Work toward creating a new culture of tax compliance to ensure that all sections of society, and especially the well-off, contribute fairly to the financing of public policies. In this context, establish with the assistance of European and international partners, a wealth database that assists the tax authorities in gauging the veracity of previous income tax returns.
Public Finance Management – Greece will:
• Adopt amendments to the Organic Budget Law and take steps to improve public finance management. Budget implementation will be improved and clarified as will control and reporting responsibilities. Payment procedures will be modernized and accelerated while providing a higher degree of financial and budgetary flexibility and accountability for independent and/or regulatory entities.
• Devise and implement a strategy on the clearance of arrears, tax refunds and pension claims.
• Turn the already established (though hitherto dormant) Fiscal Council into a fully operational entity.
Revenue administration – Greece will modernize the tax and custom administrations benefiting from available technical assistance. To this end Greece will:
• Enhance the openness, transparency and international reach of the process by which the General Secretary of the General Secretariat of Public Revenues is appointed, monitored in terms of performance, and replaced.
• Strengthen the independence of the General Secretariat of Public Revenues (GSPR), if necessary through further legislation, from all sorts of interference (political or otherwise) while guaranteeing full accountability and transparency of its operations. To this end, the government and the GSPR will make full use of available technical assistance.
• Staff adequately, both quantitatively and qualitatively, the GSPR and in particular the high wealth and large debtors units of the revenue administration and ensure that it has strong investigative/prosecution powers, and resources building on SDOE’s capacities, so as to target effectively tax fraud by, and tax arrears of, high income social groups. Consider the merits of integrating SDOE into GSPR.
• Augment inspections, risk-based audits, and collection capacities while seeking to integrate the functions of revenue and social security collection across the general government.
Public spending – The Greek authorities will:
• Review and control spending in every area of government spending (e.g. education, defense, transport, local government, social benefits)
• Work toward drastically improving the efficiency of central and local government administered departments and units by targeting budgetary processes, management restructuring, and reallocation of poorly deployed resources.
• Identify cost saving measures through a thorough spending review of every Ministry and rationalization of non-salary and non-pension expenditures which, at present, account for an astounding 56% of total public expenditure.
• Implement legislation (currently in draft form at the General Accounts Office - GAO) to review non-wage benefits expenditure across the public sector.
• Validate benefits through cross checks within the relevant authorities and registries (e.g. Tax Number Registry, AMKA registry) that will help identify non-eligible beneficiaries.
• Control health expenditure and improve the provision and quality of medical services, while granting universal access. In this context, the government intends to table specific proposals in collaboration with European and international institutions, including the OECD.
Social security reform – Greece is committed to continue modernizing the pension system. The authorities will:
• Continue to work on administrative measures to unify and streamline pension policies and eliminate loopholes and incentives that give rise to an excessive rate of early retirements throughout the economy and, more specifically, in the banking and public sectors.
• Consolidate pension funds to achieve savings.
• Phase out charges on behalf of ‘third parties’ (nuisance charges) in a fiscally neutral manner.
• Establish a closer link between pension contributions and income, streamline benefits, strengthen incentives to declare paid work, and provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds.
Public administration & corruption – Greece wants a modern public administration. It will:
• Turn the fight against corruption into a national priority and operationalize fully the National Plan Against Corruption.
• Target fuel and tobacco products’ smuggling, monitor prices of imported goods (to prevent revenue losses during the importation process), and tackle money laundering. The government intends immediately to set itself ambitious revenue targets, in these areas, to be pursued under the coordination of the newly established position of Minister of State.
• Reduce (a) the number of Ministries (from 16 to 10), (b) the number of 'special advisors' in general government; and (c) fringe benefits of ministers, Members of Parliament and top officials (e.g. cars, travel expenses, allowances)
• Tighten the legislation concerning the funding of political parties and include maximum levels of borrowing from financial and other institutions.
• Activate immediately the current (though dormant) legislation that regulates the revenues of media (press and electronic), ensuring (through appropriately designed auctions) that they pay the state market prices for frequencies used, and prohibits the continued operation of permanently loss-making media outlets (without a transparent process of recapitalization)
• Establish a transparent, electronic, real time institutional framework for public tenders/procurement – re-establishing DIAVGEIA (a side-lined online public registry of activities relating to public procurement)
• Reform the public sector wage grid with a view to decompressing the wage distribution through productivity gains and appropriate recruitment policies without reducing the current wage floors but safeguarding that the public sector’s wage bill will not increase
• Rationalize non-wage benefits, to reduce overall expenditure, without imperilling the functioning of the public sector and in accordance with EU good practices
• Promote measures to: improve recruitment mechanisms, encourage merit-based managerial appointments, base staff appraisals on genuine evaluation, and establish fair processes for maximizing mobility of human and other resources within the public sector
II. Financial stability
Installment schemes – Greece commits to
• Improve swiftly, in agreement with the institutions, the legislation for repayments of tax and social security arrears
• Calibrate installment schemes in a manner that helps discriminate efficiently between: (a) strategic default/non-payment and (b) inability to pay; targeting case (a) individuals/firms by means of civil and criminal procedures (especially amongst high income groups) while offering case (b) individuals/firms repayment terms in a manner that enables potentially solvent enterprises to survive, averts free-riding, annuls moral hazard, and reinforces social responsibility as well as a proper re-payment culture.
• Decriminalize lower income debtors with small liabilities
• Step up enforcement methods and procedures, including the legal framework for collecting unpaid taxes and effectively implement collection tools
Banking and Non-Performing loans. Greece is committed to:
• Banks that are run on sound commercial/banking principles
• Utilize fully the Hellenic Financial Stability Fund and ensure, in collaboration with the SSM, the ECB and the European Commission, that it plays well its key role of securing the banking sector’s stability and its lending on commercial basis while complying with EU competition rules.
• Dealing with non-performing loans in a manner that considers fully the banks’ capitalization (taking into account the adopted Code of Conduct for Banks), the functioning of the judiciary system, the state of the real estate market, social justice issues, and any adverse impact on the government’s fiscal position.
• Collaborating with the banks’ management and the institutions to avoid, in the forthcoming period, auctions of the main residence of households below a certain income threshold, while punishing strategic defaulters, with a view to: (a) maintaining society’s support for the government’s broad reform program, (b) preventing a further fall in real estate asset prices (that would have an adverse effect on the banks’ own portfolio), (c) minimizing the fiscal impact of greater homelessness, and (d) promoting a strong payment culture. Measures will be taken to support the most vulnerable households who are unable to service their loans
• Align the out-of-court workout law with the installment schemes after their amendment, to limit risks to public finances and the payment culture, while facilitating private debt restructuring.
• Modernize bankruptcy law and address the backlog of cases
III. Policies to promote growth
Privatization and public asset management – To attract investment in key sectors and utilize the state’s assets efficiently, the Greek authorities will:
• Commit not to roll back privatizations that have been completed. Where the tender process has been launched the government will respect the process, according to the law.
• Safeguard the provision of basic public goods and services by privatized firms/industries in line with national policy goals and in compliance with EU legislation.
• Review privatizations that have not yet been launched, with a view to improving the terms so as to maximize the state’s long term benefits, generate revenues, enhance competition in the local economies, promote national economic recovery, and stimulate long term growth prospects.
• Adopt, henceforth, an approach whereby each new case will be examined separately and on its merits, with an emphasis on long leases, joint ventures (private-public collaboration) and contracts that maximize not only government revenues but also prospective levels of private investment.
• Unify (HRDAF) with various public asset management agencies (which are currently scattered across the public sector) with a view to developing state assets and enhancing their value through microeconomic and property rights’ reforms.
Labor market reforms – Greece commits to:
• Achieve EU best practice across the range of labor market legislation through a process of consultation with the social partners while benefiting from the expertise and existing input of the ILO, the OECD and the available technical assistance.
• Expand and develop the existing scheme that provides temporary employment for the unemployed, in agreement with partners and when fiscal space permits and improve the active labor market policy programs with the aim to updating the skills of the long term unemployed.
• Phasing in a new ‘smart’ approach to collective wage bargaining that balances the needs for flexibility with fairness. This includes the ambition to streamline and over time raise minimum wages in a manner that safeguards competiveness and employment prospects. The scope and timing of changes to the minimum wage will be made in consultation with social partners and the European and international institutions, including the ILO, and take full account of advice from a new independent body on whether changes in wages are in line with productivity developments and competitiveness.
Product market reforms and a better business environment – As part of a new reform agenda, Greece remains committed to:
• Removing barriers to competition based on input from the OECD.
• Strengthen the Hellenic Competition Commission.
• Introduce actions to reduce the burdens of administrative burden of bureaucracy in line with the OECD’s input, including legislation that bans public sector units from requesting (from citizens and business) documents certifying information that the state already possesses (within the same or some other unit).
• Better land use management, including policies related to spatial planning, land use, and the finalization of a proper Land Registry
• Pursue efforts to lift disproportionate and unjustified restrictions in regulated professions as part of the overall strategy to tackle vested interests.
• Align gas and electricity market regulation with EU good practices and legislation
Reform of the judicial system – The Greek government will:
• Improve the organization of courts through greater specialization and, in this context, adopt a new
Code of Civil Procedure.
• Promote the digitization of legal codes and the electronic submission system, and governance, of the judicial system.
Statistics – The Greek government reaffirms its readiness to:
• Honor fully the Commitment on Confidence in Statistics, and in particular the institutional independence of ELSTAT, ensuring that ELSTAT has the necessary resources to implement its work program.
• Guarantee the transparency and propriety of the process of appointment of the ELSTAT President in September 2015, in cooperation with EUROSTAT.
IV. Humanitarian Crisis – The Greek government affirms its plan to:
• Address needs arising from the recent rise in absolute poverty (inadequate access to nourishment, shelter, health services and basic energy provision) by means of highly targeted non-pecuniary measures (e.g. food stamps).
• Do so in a manner that is helpful to the reforming of public administration and the fight against bureaucracy/corruption (e.g. the issuance of a Citizen Smart Card that can be used as an ID card, in the Health System, as well as for gaining access to the food stamp program etc.).
• Evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide.
• Ensure that its fight against the humanitarian crisis has no negative fiscal effect."
A lot of stuff to achieve in 4 months.
How cool is that!
Memorandum Extension in Extremis, and Truth Evasion In Greece.
To paraphrase Hitler's ad-man, Joseph Goebbels, "what is a lie and what is truth... repeat a lie many times and people are bound to start believing it".
This is what Greece's present ruling party Syriza seems keen to acknowledge by keeping all the media towing the party line of unqualified success in the recent cat & mouse "negotiation" at the Eurogroup.
What the Greek media are telling Greeks is that the Eurogroup bent to the noisy Greek government's pre-electoral promises.
What really happened is the opposite; not a bad thing in and of itself, by the way.
(Much better than the various Syriza pre-election promises and declarations.)
Greece signed a 4month extension of the memorandum promising tostart implementing some reform in this time, and come up with a plan for the next memorandum which will be re-badged as the "contract". Good media trick: as in the social contract (JJ Rousseau's "contrat social").
The agreement was a success from the point of view of Greek banking system that today has liquidity and does not need to impose severe restrictions and curtail savings accounts as in Cyprus.
The agreement was a success for the Eurogroup because the people can go back and deal with other pending matters, without suffering the loss of one of the countries in the European Monetary Union.
What about Greece, the country itself.
Well, the present government promised to start implementing what the previous government had also promised but never implemented for populist reasons and to protect our "cronies": control public spending, check public sector inefficiencies, fight corruption etc; who will argue with that?
So, the second bail-out specified in the 2010 1st bail-out is still a possibility.
So, when all is said and done, two things worked:
1) The Greek government envoys made a lot of noise. A lot of noise brings publicity and there is no such thing as bad publicity.
2) A deal was reached and Greece remains part of the Euro. That is good.
Greeks have the Eurogroup members to thank for the second and their government for the first.
Instead, the Greek government is touting a victory.
Of what?
Of propaganda I guess; if you repeat victory a thousand times, people are bound to start believing it.
This is what Greece's present ruling party Syriza seems keen to acknowledge by keeping all the media towing the party line of unqualified success in the recent cat & mouse "negotiation" at the Eurogroup.
What the Greek media are telling Greeks is that the Eurogroup bent to the noisy Greek government's pre-electoral promises.
What really happened is the opposite; not a bad thing in and of itself, by the way.
(Much better than the various Syriza pre-election promises and declarations.)
Greece signed a 4month extension of the memorandum promising tostart implementing some reform in this time, and come up with a plan for the next memorandum which will be re-badged as the "contract". Good media trick: as in the social contract (JJ Rousseau's "contrat social").
The agreement was a success from the point of view of Greek banking system that today has liquidity and does not need to impose severe restrictions and curtail savings accounts as in Cyprus.
The agreement was a success for the Eurogroup because the people can go back and deal with other pending matters, without suffering the loss of one of the countries in the European Monetary Union.
What about Greece, the country itself.
Well, the present government promised to start implementing what the previous government had also promised but never implemented for populist reasons and to protect our "cronies": control public spending, check public sector inefficiencies, fight corruption etc; who will argue with that?
So, the second bail-out specified in the 2010 1st bail-out is still a possibility.
So, when all is said and done, two things worked:
1) The Greek government envoys made a lot of noise. A lot of noise brings publicity and there is no such thing as bad publicity.
2) A deal was reached and Greece remains part of the Euro. That is good.
Greeks have the Eurogroup members to thank for the second and their government for the first.
Instead, the Greek government is touting a victory.
Of what?
Of propaganda I guess; if you repeat victory a thousand times, people are bound to start believing it.
Wednesday 18 February 2015
Now That The Noise Has Died, Anything To Propose? I'm the Investor What Is Your Plan?
...Other than balderdash in, admittedly, well-structured English.
Greece's ruling party, Syriza, is "anti-capitalist", centrally controlled economy and anti-elitist. This is no secret, the party members have said so in so many words many times in the past. Accordingly, now that the party is in power, its generals have promisedto recruit back civil servants who had been let go to reduce state payroll, to withdraw the distinction from the country's top schools (rather than try to inspire other schools to follow in their footsteps) and stop privatisations and concessions (airports, etc). Among many other things: raise minimum salaries,overturn some flexibility in the labour market introduced in recent years, etc.
All these are consistent with the party's communist publicly declared leanings.
These are also consistent with the slight rise in unemployment in January 2015. Greece has the 5th highest unemployment rate worldwide and the highest in youth unemployment: 54-63% (no-one seems sure of how much it actually is).
After coming to power with the help of right-wing activists, Syriza proceeded to "put its actions where its mouth was" and launched a noise campaign in the EU asking for an "end to austerity" and requested to negotiate a new programme which would lead the country out of its financial straits and make the astronomical debt serviceable.
(The debt is now over 180% of GDP, so it is, to all intents & purposes, unserviceable).
So, the country's premier, A Tsipras and its Finance Minister -- whose command of English is excellent and who can put together a coherent sentence in that language with extended vocabulary -- launched a noise campaign: non aggressive, polite and apologetic but firm in the principles.
Not bad especially for the media part & the public relations. Much of it was for local consumption, but in the beginning it worked and earned them international awareness as well.
Now that the noise has died down, that the Eurogroup has made numerous proposals and time is running out, the point Greece's envoys are making is still the same: we cannot accept an austerity plan that brings misery, etc etc.
OK, what is it you do propose?
(Other than a total debt write off?)
The answer is, nothing.
Greece's Syriza has no plan, no blueprint and no concrete proposal to bring to the table.
In a well written article, Yiannis Varoufakis, Greece's English- savvy Finance minister in a well written article in the NYT :
"...No more loans — not until we have a credible plan for growing the economy in order to repay those loans, help the middle class get back on its feet and address the hideous humanitarian crisis. No more “reform” programs that target poor pensioners and family-owned pharmacies while leaving large-scale corruption untouched..."
Who could put it better???
Except for four things:
a) How will you help the middle class get back on its feet with centralised economy and an inefficient investment and private enterprise averse government. It is against your party's self-proclaimed philosophy. Or by raising taxes even further, as announced...
b) Where will you get the funding to achieve this, and does growing the already bloated public sector go in the above direction?
c) Combating corruption, supporting private enterprise, simplifying bureaucracy, getting ride of "nuisance" 3rd party taxes (small amounts inserted into PPC bills, employers cost, etc), reducing the Public Sector, etc are all part of the initial memorandum Greece signed.
Much of what is deplored, justly, such as the poor pensioners, etc. were not part of any memorandum or EU agenda. They are part of the Greek government's own agenda. These are measures taken by the Greek government in exchange for NOT implementing certain reforms: opening closed professions and reducing the Public Sector payroll are two such reforms, initially agreed upon but never actually tackled.
So where's the drift between Greece and its partners?
Who knows.
Maybe: in the ruling party's communication strategy aimed at internal consumption. Otherwise, there is nothing anyone would want more than to do just what friend Varoufakis wrote.
Maybe: because Greece's leaders have a positioning of opposition to all until the others come up with a good enough plan. That they have no plan is obvious to all but the Greeks themselves (but that is no surprise as Greek media all tow the party line).
OK, but how do you know when the plan is good?
That is an easy one: when the plan proposed allows you to offer kickbacks to your cronies.
...and this all leads us to d):
What exactly are you going to do to "...get the middle class back on its feet", "eradicate corruption", etc.
In other words, "I'm with you: what specific measures are you going to take and how much money do you need to do take them?"
Of course, there is no answer to. Not yet, anyway. Which is why Greece's government is asking for a 6 months' extension: not to implement reform, but to define what it is going to do. (And maybe get its cronies out of the way of reform.)
BUT
When all is said and done, Greece's Syriza has an unique opportunity in its hands to do some good for the country.
While doing good for the country has rarely been the obvious top item in Greek politicians' agenda, Syriza would have little to lose and something to gain; they will go down in posterity as having done something and, while they are sure to lose future elections and power, it's not as if they will starve. MP pensions in Greece are very generous and the current campaign is sure to land Varoufakis a superb job anyway.
HOW?
Syriza controls the vociferous few, professional demonstrators & union cronies, who customarily demonstrate against...
These are people who can and have put aside national considerations and solidarity in the name of being negative: blocking ports in the height of the tourist season thereby killing local tourism economy, locking out factories in protest against the dismissal of a man suspected of theft, who supported civil servants found guilty of misuse and abuse...
Accordingly, they can just as well put aside matters of political solidarity and campaign in favour of reorms that no-one has ever touched:
- fight corruption (in Greece mostly within the Public Sector)
- reduce the Public Sector payroll
- open closed professions
- etc...
They are very few and very noisy, so their support does not cost much. But they, with the help of subservient media can do the trick. And blame it on others, as Greek politicians are always wont to do.
Greece's ruling party, Syriza, is "anti-capitalist", centrally controlled economy and anti-elitist. This is no secret, the party members have said so in so many words many times in the past. Accordingly, now that the party is in power, its generals have promisedto recruit back civil servants who had been let go to reduce state payroll, to withdraw the distinction from the country's top schools (rather than try to inspire other schools to follow in their footsteps) and stop privatisations and concessions (airports, etc). Among many other things: raise minimum salaries,overturn some flexibility in the labour market introduced in recent years, etc.
All these are consistent with the party's communist publicly declared leanings.
These are also consistent with the slight rise in unemployment in January 2015. Greece has the 5th highest unemployment rate worldwide and the highest in youth unemployment: 54-63% (no-one seems sure of how much it actually is).
After coming to power with the help of right-wing activists, Syriza proceeded to "put its actions where its mouth was" and launched a noise campaign in the EU asking for an "end to austerity" and requested to negotiate a new programme which would lead the country out of its financial straits and make the astronomical debt serviceable.
(The debt is now over 180% of GDP, so it is, to all intents & purposes, unserviceable).
So, the country's premier, A Tsipras and its Finance Minister -- whose command of English is excellent and who can put together a coherent sentence in that language with extended vocabulary -- launched a noise campaign: non aggressive, polite and apologetic but firm in the principles.
Not bad especially for the media part & the public relations. Much of it was for local consumption, but in the beginning it worked and earned them international awareness as well.
Now that the noise has died down, that the Eurogroup has made numerous proposals and time is running out, the point Greece's envoys are making is still the same: we cannot accept an austerity plan that brings misery, etc etc.
OK, what is it you do propose?
(Other than a total debt write off?)
The answer is, nothing.
Greece's Syriza has no plan, no blueprint and no concrete proposal to bring to the table.
In a well written article, Yiannis Varoufakis, Greece's English- savvy Finance minister in a well written article in the NYT :
"...No more loans — not until we have a credible plan for growing the economy in order to repay those loans, help the middle class get back on its feet and address the hideous humanitarian crisis. No more “reform” programs that target poor pensioners and family-owned pharmacies while leaving large-scale corruption untouched..."
Who could put it better???
Except for four things:
a) How will you help the middle class get back on its feet with centralised economy and an inefficient investment and private enterprise averse government. It is against your party's self-proclaimed philosophy. Or by raising taxes even further, as announced...
b) Where will you get the funding to achieve this, and does growing the already bloated public sector go in the above direction?
c) Combating corruption, supporting private enterprise, simplifying bureaucracy, getting ride of "nuisance" 3rd party taxes (small amounts inserted into PPC bills, employers cost, etc), reducing the Public Sector, etc are all part of the initial memorandum Greece signed.
Much of what is deplored, justly, such as the poor pensioners, etc. were not part of any memorandum or EU agenda. They are part of the Greek government's own agenda. These are measures taken by the Greek government in exchange for NOT implementing certain reforms: opening closed professions and reducing the Public Sector payroll are two such reforms, initially agreed upon but never actually tackled.
So where's the drift between Greece and its partners?
Who knows.
Maybe: in the ruling party's communication strategy aimed at internal consumption. Otherwise, there is nothing anyone would want more than to do just what friend Varoufakis wrote.
Maybe: because Greece's leaders have a positioning of opposition to all until the others come up with a good enough plan. That they have no plan is obvious to all but the Greeks themselves (but that is no surprise as Greek media all tow the party line).
OK, but how do you know when the plan is good?
That is an easy one: when the plan proposed allows you to offer kickbacks to your cronies.
...and this all leads us to d):
What exactly are you going to do to "...get the middle class back on its feet", "eradicate corruption", etc.
In other words, "I'm with you: what specific measures are you going to take and how much money do you need to do take them?"
Of course, there is no answer to. Not yet, anyway. Which is why Greece's government is asking for a 6 months' extension: not to implement reform, but to define what it is going to do. (And maybe get its cronies out of the way of reform.)
BUT
When all is said and done, Greece's Syriza has an unique opportunity in its hands to do some good for the country.
While doing good for the country has rarely been the obvious top item in Greek politicians' agenda, Syriza would have little to lose and something to gain; they will go down in posterity as having done something and, while they are sure to lose future elections and power, it's not as if they will starve. MP pensions in Greece are very generous and the current campaign is sure to land Varoufakis a superb job anyway.
HOW?
Syriza controls the vociferous few, professional demonstrators & union cronies, who customarily demonstrate against...
These are people who can and have put aside national considerations and solidarity in the name of being negative: blocking ports in the height of the tourist season thereby killing local tourism economy, locking out factories in protest against the dismissal of a man suspected of theft, who supported civil servants found guilty of misuse and abuse...
Accordingly, they can just as well put aside matters of political solidarity and campaign in favour of reorms that no-one has ever touched:
- fight corruption (in Greece mostly within the Public Sector)
- reduce the Public Sector payroll
- open closed professions
- etc...
They are very few and very noisy, so their support does not cost much. But they, with the help of subservient media can do the trick. And blame it on others, as Greek politicians are always wont to do.
 |
| The most unlikely people could make the most needed difference for the country. Will they? |
There is hope yet, but given Greece's political past, and politicians' indifference to their country as a whole, the hope is remote.
Friday 13 February 2015
Sometimes, Making A Lot of Noise May Actually Get You Somewhere: Greece's latest media stars, Tsipras & Varoufakis
Alexis Tsipras, the newly elected prime minister of Greece.
Greece's new government has spent much of its time since it was sworn in, end of January, in creating noise and stirring a lot of media content about Greece's debt renegotiation.
The ploy worked in Greece where many good willing voters, hoodwinked into believing they are being oppressed by the bad guys (who are foreign and probably speak German), see the prime minister & his corollary, the finance minister (Varoufakis) as so many David putting up a fight against Goliath.
Except that here, Goliath is the one who saved David for 4 years in the running...
So, after walking the walk, now is time for the two indigenous Greek heroes to come to some serious talk.
Which they won't of course, because they probably have no idea of what to ask for; The plan stopped at the media show.
Fortunately for them, and especially for the Greeks they (and other Greek politicians as well) duped into voting for into power, Greece's europartners know what to do. And, fortunately for all, they will show the way and everyone will be happy: lower the weight of servicing the debt, maybe reschedule (i.e. erase) parts of it in the future, and rename the troika, and forget about the programme and rename it as growth programme instead... but there is more.
What Greece's two media stars have achieved is no less considerable:
a) Greece is in the news and for some time now, and we all know there is no bad publicity. If Greece where a free business country, this would have been a business growth opportunity of unprecedented potential. But it isn't, so too bad.
b) Also, they have stirred some life -- albeit, by discomforting -- into Europe's somewhat stuffy, conservative governance. And that is never a bad thing: it gets the blood flowing. And it is a kickstart for the future, where Europe will have to wake up, big time!
Not that Greece's currently ruling party are staunch and flexible democrats, themselves -- they aren't. Syriza proponents have publicly declared that whoever is not for their beliefs is against them...
c) In a perverse fashion, they may help Germany get some of its good will back: Germans have been sticklers for austerity and austerity has not worked in Greece mainly because Greece never implemented the reforms (reduce public payrol, open closed professions, simplify business start-up, allow business funding, etc) that could have helped the country improve its situation as a whole. But then, Greece's governments have been more prone to support cronyism and pressure groups rather than the nation.
d) In an even more perverse way, Greece's new government envoys have done a very basic and simple thing: they talked to their partners on normal terms, at arm's length. Which is not a bad thing: it seems that previous Greek government envoys felt unable to put together a coherent sentence that puts forth some request on behalf of their nation.
e) They seem to be enjoying themselves: finally out of mother's crutches, they can let themselves go! It is a positive attitude, and thus being preferable to gravitas.
So, in what must be the most perverse twist, it is Marxists (does "marxist" sell under vintage or antique??) that have made the most successful noise for Greece! This probably says as much about Greece's other politicians as it says about anything else!
However, now is the time for David to stop shooting himself in the foot and wherever else the stone hits him.
If they want to do something useful for their country -- which will not cost them anything after all -- Messrs Tsipras & Baroufakis are well advised to:
* quickly conceive and fine-tune their agenda. Baroufakis will have to do that, the other gentleman being little more than decorative;
* listen to what the others have to say, and judge wisely. Now is the time to negotiate well and in a firm but friendly manner;
* take a deep breath and implement some reform in Greece. The country will never become a real adult unless it sheds its pestilential mismanagement and scapegoat attitude to its own inadequacies.
Again, the result hinges upon Mr Baroufakis' ability to act. All mr Tsipras has to do is smile politely and support his colleague, even if he doesn't quite understand what it is all about.
 |
| Listen to the guy on your left. |
Wednesday 4 February 2015
Greece: one of the most authoritarian countries today -- in market terms
In a recent article at the Washington Post, Matt O'Brien, a reporter for Wonkblog covering economic affairs, discussed whether Greece might actually leave the Euro. This is a nightmare for most Greeks (latest polls show 75% of people asked wish to remain within the EU).
It may be a nightmare for the other EU countries too, although it would seem that the ECB at least, is ready for such eventuality.
As O'Brien notes, the problem is manifold, but mainly the fact that Syriza is missing the vital point.
If Syriza were interested in the country rather than in a media catching first 100 days, they would take note, inter alia, that:
* not only is the Greek ruling party (Syriza) a self-proclaimed centralised economy ideologist, the government also comprises extremist right-wing members.
* not only is the "iconoclastic" duo of the Prime Minister & the (abominably clad) finance minister trying to draw attention by being somewhat undiplomatic, without much to show further - yet.
* Greece is lobbying for a renegotiation of the actual debt -- i.e. they are barking up the wrong tree: Greece should be asking for even lower interest rates - even approaching 0 and a much longer grace period and an even longer payback period...
* the Greek economic model of the past decades has obviously failed miserably if we are to believe the miserable condition the country is in;
this so called "model" consists of a heavily centralised economy, private initiative frowned upon (it can take anything from 8 months to forever to obtain a license to expand a production unit), the unproductive public sector payrol is huge (1.17 million souls), purportedly corruption is high, taxes are amongst the highest in Europe while the offerings are very low; education rates below the global average.
* Syriza has proposed to grow the public sector, to stop or reverse privatisations, to raise minimum wage, to put an end to flexible employment, and to raise taxes even more.
There is more, but these come to mind readily.
Considering that over-regulation, lack of freedom to do business, the bloated and self-serving unions, the bloated and client-based public sector (each ruling party would recruit their own, in addition to the previous party's cronies), etc ad nauseam, brought the country to the present situation, it is hardly encouraging that the new ruling party in Greece is proposing to do more of the same...
As Matt O'Brien notes in beautiful style: "It would need Greece to cut more regulations if it's going to cut less spending. There should be no shortage of things to do, since Greece's markets are the reason the word "sclerotic" exists." Quite so. In the global indicator of taxation benefits to investment, Greece ranks 141/144
Greece's extreme right-wing and outspoken Golden Dawn came third in the recent elections, surpassing the commonsensical "Potami", and this should be something to take seriously into account.
And at some point somewhere, someone has to point out that:
1) austerity in Greece was imposed because of the crisis the country brought upon itself -- not the other way round.
2) some of the measures taken by the Greek government came in exchange for reforms that had been agreed with the lenders but were never implemented: drastic curbing of the public sector is one of these. Not surprisingly, Greece's government efficiency ranks rock bottom (131/144).
In order to save the public sector payroll the Greek government preferred to impose misery with 35% of the population living in poverty according to the national & oecd statistics.
More's the pity: most if not all of the measures and reforms initially agreed are necessary for the good of the country. Arguably, Greece would have been out of the rut, had its government implemented reform instead of raw austerity.
It may be a nightmare for the other EU countries too, although it would seem that the ECB at least, is ready for such eventuality.
As O'Brien notes, the problem is manifold, but mainly the fact that Syriza is missing the vital point.
If Syriza were interested in the country rather than in a media catching first 100 days, they would take note, inter alia, that:
* not only is the Greek ruling party (Syriza) a self-proclaimed centralised economy ideologist, the government also comprises extremist right-wing members.
* not only is the "iconoclastic" duo of the Prime Minister & the (abominably clad) finance minister trying to draw attention by being somewhat undiplomatic, without much to show further - yet.
* Greece is lobbying for a renegotiation of the actual debt -- i.e. they are barking up the wrong tree: Greece should be asking for even lower interest rates - even approaching 0 and a much longer grace period and an even longer payback period...
* the Greek economic model of the past decades has obviously failed miserably if we are to believe the miserable condition the country is in;
this so called "model" consists of a heavily centralised economy, private initiative frowned upon (it can take anything from 8 months to forever to obtain a license to expand a production unit), the unproductive public sector payrol is huge (1.17 million souls), purportedly corruption is high, taxes are amongst the highest in Europe while the offerings are very low; education rates below the global average.
* Syriza has proposed to grow the public sector, to stop or reverse privatisations, to raise minimum wage, to put an end to flexible employment, and to raise taxes even more.
There is more, but these come to mind readily.
Considering that over-regulation, lack of freedom to do business, the bloated and self-serving unions, the bloated and client-based public sector (each ruling party would recruit their own, in addition to the previous party's cronies), etc ad nauseam, brought the country to the present situation, it is hardly encouraging that the new ruling party in Greece is proposing to do more of the same...
As Matt O'Brien notes in beautiful style: "It would need Greece to cut more regulations if it's going to cut less spending. There should be no shortage of things to do, since Greece's markets are the reason the word "sclerotic" exists." Quite so. In the global indicator of taxation benefits to investment, Greece ranks 141/144
Greece's extreme right-wing and outspoken Golden Dawn came third in the recent elections, surpassing the commonsensical "Potami", and this should be something to take seriously into account.
And at some point somewhere, someone has to point out that:
1) austerity in Greece was imposed because of the crisis the country brought upon itself -- not the other way round.
2) some of the measures taken by the Greek government came in exchange for reforms that had been agreed with the lenders but were never implemented: drastic curbing of the public sector is one of these. Not surprisingly, Greece's government efficiency ranks rock bottom (131/144).
In order to save the public sector payroll the Greek government preferred to impose misery with 35% of the population living in poverty according to the national & oecd statistics.
More's the pity: most if not all of the measures and reforms initially agreed are necessary for the good of the country. Arguably, Greece would have been out of the rut, had its government implemented reform instead of raw austerity.
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