It's part of 'the system', but the problem isn't the system itself but how Greece has failed to operate sensibly within the system. Running up unsustainable structural deficits during the good times are hardly part of capitalist ideology.

As someone else said, does Greece actually have anything it can use to run an export-siege economy? When Benn and other suggested the Alternative Economic Strategy, there were loads of exporting industries.

Tourism's a race to the bottom industry really, at least the sun and beers end of it is. How can Greece fund decent public services, ensure decent wages from that?

Tubby Isaacs wrote:
ad hoc wrote:
They appear to have one of those much vaunted financial service industries. (At least half the banks and so on in Romania appear to be Greek owned anyway). That and tourism (which Greece obviously also has) seems to be what is keeping the British economy floating. Why won't it work in Greece?

Tourism's a low wage industry.

And if you're going to go big in low wage industry, you should at least do it in a hard currency.

In order for Greece to institute capital controls, they wouldn't only have to leave the Euro; they'd have to leave the EU.

The other significant problem with that strategy is that it is too late. Greece has always had an issue with capital being held outside of the country (see, e.g., the entire shipping industry), and capital flight has increased massively since the beginning of the crisis.

And if you're going to go big in low wage industry, you should at least do it in a hard currency.

Though the extent to which euros are hard currency is questionable.

Pity the Greek protestors haven't heard of Django Django - imagine that blaring in Syntagama Square.

I read today that 75% of total annual Greek government annually goes on public sector wages and pensions. That's an extraordinary figure.

Well even ignoring the possibilities outside the supremely mendacious act of mystification, Greece would be better off defaulting and leaving the Euro.

but if they default and leave the euro, they're still going to have face the underlying problem that their public spending is basically much higher than their tax revenue, and has been for ages. If they default and leave the euro, all that will have changed is that they won't really be able to borrow any more.

The problem with greece, and the problem with ireland is that their political culture has put them in the position where they have any other option. austerity is something the greeks have to do for themselves before they can start to grow back. This is basically what happens when a country inflates a bubble through a financial trick, and then the bubble explodes.

It occurs to me that Berbaslug is rehearsing arguments to use against Chelsea and City fans after FFP fully kicks in....

heh. there's plenty of football threads for that.

I agree they would be better looking outside the supremely mendacious act of mystification. I hope they do. I think they might.

It has been suggested that currently the Greek budget before loan-related payments is more or less in balance. However it is obviously true that the tax system in Greece needs fixing. The $20bn shipping industry pays no tax at all, for example. And the better-off evade tax to the tune of $5bn or so each year.

Levy the tax, collect the tax, repudiate the debt, see where we are. It's not going to be worse than what is being done to the Greek people right now.

Whatever happens, austerity at least is surely instilling some discipline into a country that will need to learn at some stage how to balance their budget. That said, 1974 was the last time the French balanced their budget so it's a pretty common problem.

Austerity is freezing and starving people. Fuck your discipline.

The people who lacked discipline are doing better than ever, that's the only lesson that will be instilled.

I admire the sentiment, but I struggle to see how any Greek government is going to levy and collect any kind of reasonable tax on the shipping magnates.

Their companies are all offshore; the ships are all registered elsewhere; the labour is massively non-Greek; and the individuals at the top are increasingly demonstrating their complete willingness to abandon the country if remaining might cost them money (they've already moved residences and the large majority of their money).

There's a CBC business correspondent named Michael Hlinka who's been saying for years that corporate taxes should be done away with and replaced exclusively with taxes on all forms of income. I assume that's part of the reason (the offshore ownership, etc). I wish I'd paid more attention now.

that is the problem with trying to get the rich to pay their fair share. They will simply fuck off. They don't care.

Austerity is freezing and starving people. Fuck your discipline.

I agree with you completely, but they're out of options.

If you are a country with a balanced efficient tax system, and a substantial degree of discipline when it comes to govt spending, and a relatively small govt debt, you have options. In a recession you can borrow money to cover any deficits in a recession, and pay it back when the economy turns up.

But greece is a country with a huge govt debt incurred in 'good times', an almost non-existent tax collection system, and a system of govt spending even more poisoned by clientelism and vote buying than even ours. They are fucked. They have no options. They have to get things in order at the most painful time. People are prepared to lend them money to help them mend their ways. But not to carry on remotely like before. And quite frankly this is going to wind up fucking everyone in the short term. but there's no way out of it.

As a rather rightwing economist Colm mcCarthy pointed out with reference to the irish budget situation, the government hasn't run out of compassion, they've just run out of money.

Jimmy made the point. Crap about "lack of discipline" being thrown at Greek workers is just ridiculous and does not stand up to any scrutiny at all.

Again, it has been said that the Greek budget is currently more or less in balance, if you ignore any loan-related payments. Does someone want to show that this is a long way adrift?

Greece's problems won't be solved even if you got every rich (whatever that means) person to pay their fare share (whatever that means). Greece needs to get everyone to pay their taxes on everything, from income to services to buying their olive oil at farmers' markets. Stuff that should have been taxed for the past 30 years, but which everyone routinely avoids. And like most places, nobody is going to do that if they think it's just going to line the pockets of corrupt tax collectors and government employees. Or if it's just going to pay foreign governments for loaning them money. Greece is fucked. It's only a matter of time before it defaults and leaves the EU. All this bailout business is just pissing money down a rat hole.

The "bailout" is a cover for attacks on living standards, so in that sense it has value. But you're quite right that it won't stick.

So it's all happened for no reason other than somebody didn't like Greece having good living standards? Nothing to do with the country funding those living standards from money it couldn't pay back?

Well, I'll agree with TT that it provided that kind of necessary impetus (or cover) to right-size government (in line with actual needs, incomes and size) in the same way that GM's bankruptcy allowed it to shed unmanageable debt and wage levels. But I don't think that that's why it happened.