Thursday, 5 February 2015

Rigid Ideology Trumps Welfare Of The People

Nothing better illustrates the ‘profoundly unserious’ nature of Syriza’s plan to revive the Greek economy than its position on the sale of state assets. Syriza’s new ministers have gone out of their way to condemn the practice and say they have absolutely no intention of pursuing any more privatizations. So much for the claim of helping the long-suffering people of Greece. If the party was genuinely interested in easing this suffering it would relax its rigid ideology and use these state assets to generate the necessary funds.

           The Wall Street Journal ran an interesting analysis of the Greek debt situation in the 20 February edition. Stephen Fidler points out clearly that Greece has the resources to tackle its debt, but the government chooses not to. This analysis would seem to be supported by comments from two leading government officials regarding the controversial privatization program.

            Finance Minister Yanis Varoufakis opined in one of his carefully-calculated sound-bites that “it is not very clever to sell off the family jewels in the middle of deflationary crisis. It is wiser to develop state property and increase its value using smart financial resources to strengthen our economy.

            Panayiotis Lafazanis, leader of the hard-left faction of Syriza, added that the Public Power Corporation “will return to the state as a state-run company which will operate as a driver of economic growth.” Are they kidding??!!

           These comments demonstrate clearly that neither of these people has ever been involved in selling or running anything, and has absolutely no idea what they are talking about. First, when is a better time to sell assets than when you need money? The government can set the minimum price it will accept and work to attract bids. Because assets like the Public Power Corporation, the Port of Piraeus, and the railway are potentially valuable for the right buyer the bids could easily exceed the state’s minimum price. The cash received by the state would come in very handy to meet some of the legitimate social needs in the country. This much is elementary, not even Economics 101. 

Fashion statement or finance minister?
            Second, the idea of the Greek state ‘developing’ these assets or having state-run companies becoming “a driver of the economy” is ludicrous. Over the past several decades the Greek state, regardless of the party in power, has demonstrated convincingly that it cannot run a car wash let alone something as sophisticated as a major port or energy company. Just look at the sorry record. Olympic was a decent airline until it was nationalized, starved of investment, over-staffed with political patronage, and ultimately went bust. The airline was well known for people getting paid and never bothering to show up for work. The railroad could be a very valuable asset by connecting with a potentially efficient Port of Piraeus and offering a much quicker way to the heart of Europe than taking a ship all the way through the Straights of Gibraltar and up to Rotterdam or Hamburg. But, under state ownership the railroad never even began to reach its potential. All you have to do now is contrast the part of Piraeus Port owned by the Chinese company Cosco with the state-owned section to see the difference. One bustles with activity and productivity while the other stagnates

Furthermore, all these state assets require millions of Euros of investment to make them productive and efficient. Under state ownership where is that money going to come from? The Treasury is already empty, and there will be intense pressure to spend what little money there is on re-hiring people or boosting pensions rather than buying things like a new crane for the Port of Piraeus.

            One would hope that Syriza would at least be honest with the Greek people. One reality they do not touch upon is that the party is beholden to powerful unions. And these unions have always been opposed to privatization. Such a move away from state-ownership could seriously weaken the unions’ influence. In addition, continuing state ownership guarantees Syriza’s grip on the levers of economic power in Greece. Friends can easily be rewarded while enemies can be left outside the charmed circle. One gets the distinct impression that the last thing Syriza wants is strong economic growth led by a private sector that it cannot control.

            Another way to generate some cash for much needed social programs would be to cut the bloated defence budget which is still one of the highest in NATO as a percent of GDP. Surely, if Syriza were seriously interested in helping the people of Greece it could divert some this money into much needed social spending.

             But what do we get instead of serious proposals? Grandstanding helicopter flights by the new minister of defence over disputed islets close to Turkey where he dramatically drops a wreath for all the cameras to witness. Why? What on earth was he trying to do other than provoke another problem that Greece does not need? Despite deeply entrenched Greeks fears to the contrary, Turkey is not about to lunge across the border and grab some territory

            Greece does indeed have the ability to help itself.  But the government has to get serious about generating sustainable income rather than simply bleating about Europe’s ‘obligation’ to reduce the country’s debt. If Syriza really wants to prove its 'anti-establishment'  tendencies it could actually do something to help the people of Greece rather than rely on trivialities of costume design and grand, theatrical -- but ultimately empty -- gestures

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