What is to be Done?
We don’t have the time to fact-check all the assertions Tsipras makes, but we do know that probably not one of the pension systems in the Western world, such as they are now constituted, is even remotely “sustainable”. This is a pipe dream. Demographic factors alone pose an insurmountable problem to the “pay-as-you-go” systems that are in operation everywhere today. The promises of past governments won’t be kept, because they cannot be kept.
However, Tsipras is no doubt correct when he points to the problems the Greek system has specifically on the revenue side. With unemployment at depression type levels, and pension funds having lost a large part of their assets in the first Greek bankruptcy (the so-called “private sector initiative”, in which once again, the private sector had to bear the burden of decisions made by the political class), it is no wonder the system is tottering.
The problem is though that we have only the vaguest of indications of what the current Greek government intends to do in terms of economic reform to alter the situation – beyond the not unreasonable idea of a debt haircut to liquidate debt which everybody knows it unsound and can never be repaid. Given that Syriza houses an eclectic mixture of leftist groups, ranging from environmentalists to hard-core Marxists, we strongly doubt it plans to liberalize the economy. Greece’s economy continues to be severely hampered by a sclerotic, oversized and reportedly extremely corrupt bureaucracy. If you think this is an exaggeration, here is a reminder – the passage below is from an article in Der Spiegel, which refers to a 2011 OECD report:
“The need for deep structural reforms in Greece is well-known. But a new OECD report indicates that Athens may be incapable of such far-reaching changes. Ministries don’t communicate, officials don’t keep records and oversight is virtually nonexistent. The only thing that might help, it says, is a “big bang.”
Going by the rather bland title “Greece: Review of the Central Administration,” the 127-page report can be quickly summed up: The government apparatus in Athens is virtually unable to implement reform.
Read the rest here...