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Greece needs to start throwing millionaires in dingy prisons to make any headway with its problems. The Greek crisis, more than anything, is the result of mass

by Steko 14y ago

Greece needs to start throwing millionaires in dingy prisons to make any headway with its problems. The Greek crisis, more than anything, is the result of massive tax evasion.

cantastoria 14y ago
Fair enough. A policy of stricter enforcement of tax laws sounds like a better plan than stimulus to me. Maybe they should start there instead.
lyudmil 14y ago
That's a hypothesis, but it seems unlikely since there are four other European economies facing identical problems - Spain, Italy, Portugal, and Ireland. Spain in particular was a very reasonably managed economy before the crash, running surpluses and growing. So, your hypothesis would require that you attribute the problem in each of these economies to separate causes, which is probably wrong. This is not to say that there wasn't gross economic mismanagement on the part of the Greek government, but focusing on that distracts from the real solution. UPDATE: I'm in complete agreement with everyone pointing out that the problems aren't identical. Perhaps the question is whether, if you were to summarize the causes Euro crisis in broad terms, you ought to mention Greece's economic mismanagement first or the overall crash of the financial markets as the more important factor. My assertion is the latter, mostly echoing Stglitz's analysis here: [1] http://www.youtube.com/watch?v=GdP-Fab8JX8 http://www.youtube.com/watch?v=GdP-Fab8JX8 [2] http://www.youtube.com/watch?v=4Ezn8Sgzxd8 http://www.youtube.com/watch?v=4Ezn8Sgzxd8
- ameister14 14y ago
  The problems aren't identical. They may appear so because some of the symptoms are the same, but the root causes in Ireland, for instance, are far different than in Greece. Spain is closer to Ireland in terms of housing market effects on economic downturn, but ultimately each economy functions on a different system, so it's not entirely wrong to attribute economic problems to separate causes. There is some overlap, of course, but it's definitely not identical.
  - lyudmil 14y ago
    I agree the situations aren't identical, but what theory do you think best explains all the observations? Just to be clear, my answer is: Each country's problems are rooted in the collapse of the US housing market and the resulting financial crunch. The country-to-country variations are there and they're significant, but secondary.
- aptwebapps 14y ago
  I don't think the four are all the same, although there are obviously some common elements. Chief among them the easy money from the center during the boom years. But I think Greece's inefficiencies and mismanagement made a bad problem worse.
_dps 14y ago
> The Greek crisis, more than anything, is the result of massive tax evasion. [Greek/US dual citizen here] Having lived in Greece for upwards of a decade, during the particularly transitional time from ~1988-2004, this is not in line with my experience. Hear me out before writing me off as an apologist :) Greece has a large problem with collecting the taxes they claim citizens owe but not a large problem with collecting a large fraction of GDP. According to the World Bank, they are right in line with Sweden and France (http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS). These numbers are corroborated by the OECD (PDF warning http://www.oecd.org/newsroom/41498733.pdf http://www.oecd.org/newsroom/41498733.pdf). [Edit: I wrote Sweden and France when I meant to write Spain and France; I apologize for the error but I have left it lest someone think I am trying to whitewash :-)] Greece has collected plenty of money; we overspent, and we spent stupidly i.e. in ways that obtained either votes or kickbacks, and not in ways that improved the economy or the life of the common person. As just one example, look at the paltry investment of the Greek government in its only competitive advantage, the tourism business. The cast and crew of "Mamma Mia" did a better job promoting tourism in Greece than any Ministry of Tourism effort. Spain, Italy, and Turkey are eating our lunch. We also got used to almost five decades of "free" foreign money through the Marshall plan, post-communist hysteria leading to US military aid and military bases, EEC/EU growth funds, and having our debt priced as if it were of German quality. In my opinion, the tax evasion is a serious social justice problem, but it is not a serious budgetary problem. The bulk of Greece's public budget is supplied by ordinary people making ordinary incomes, and it is a travesty that the wealthiest manage to dodge contributing proportionately. But that does not mean the government does not have enough money to do a good job. I would love to believe that the government has failed due to being starved of resources; at least then a solution like taking on more debt would be plausible. With the situation as it stands, I can only respond with our poet laureate Seferis' exasperated lament, "Everywhere I go, Greece wounds me".
- Steko 14y ago
  "but not a large problem with collecting a large fraction of GDP. <links>" Part of my problem with the statistics you link is that the measure is limited because it's known that US revenues are in the 16-19% range but they are listed here at 9%. Loathe as I am to cite the Heritage Foundation they are the most complete figures on wikipedia and show Greece heavily lagging France and Spain. http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... Next, the black market in Greece is estimated at 25% of GDP which inflates official collection percentages even more. http://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_Greece http://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_G... Finally, it really doesn't matter that they collect some nebulous "large share of gdp". What matters is that the scale of evasion is far greater than Greece's immediate problems. But Nikos Lekkas, the head of the Greek tax inspectorate, the SDOE ... insisted that Greece could easily pay off its debts if taxes due for payment were paid into the Greek state's coffers. ”Tax evasion in Greece has reached 12 to 15 per cent of the gross national product... That is €40 to €45bn per year. If we could recover even half of that, Greece would have solved the problem. http://www.telegraph.co.uk/finance/financialcrisis/9319799/Greek-chief-tax-inspector-says-Christine-Lagarde-right-to-criticise-evasion.html http://www.telegraph.co.uk/finance/financialcrisis/9319799/G...

by Steko 14y ago

Greece needs to start throwing millionaires in dingy prisons to make any headway with its problems. The Greek crisis, more than anything, is the result of massive tax evasion.

cantastoria 14y ago

Fair enough. A policy of stricter enforcement of tax laws sounds like a better plan than stimulus to me. Maybe they should start there instead.

lyudmil 14y ago

That's a hypothesis, but it seems unlikely since there are four other European economies facing identical problems - Spain, Italy, Portugal, and Ireland. Spain in particular was a very reasonably managed economy before the crash, running surpluses and growing. So, your hypothesis would require that you attribute the problem in each of these economies to separate causes, which is probably wrong. This is not to say that there wasn't gross economic mismanagement on the part of the Greek government, but focusing on that distracts from the real solution. UPDATE: I'm in complete agreement with everyone pointing out that the problems aren't identical. Perhaps the question is whether, if you were to summarize the causes Euro crisis in broad terms, you ought to mention Greece's economic mismanagement first or the overall crash of the financial markets as the more important factor. My assertion is the latter, mostly echoing Stglitz's analysis here: [1] http://www.youtube.com/watch?v=GdP-Fab8JX8 http://www.youtube.com/watch?v=GdP-Fab8JX8 [2] http://www.youtube.com/watch?v=4Ezn8Sgzxd8 http://www.youtube.com/watch?v=4Ezn8Sgzxd8

ameister14 14y ago
The problems aren't identical. They may appear so because some of the symptoms are the same, but the root causes in Ireland, for instance, are far different than in Greece. Spain is closer to Ireland in terms of housing market effects on economic downturn, but ultimately each economy functions on a different system, so it's not entirely wrong to attribute economic problems to separate causes. There is some overlap, of course, but it's definitely not identical.
- lyudmil 14y ago
  I agree the situations aren't identical, but what theory do you think best explains all the observations? Just to be clear, my answer is: Each country's problems are rooted in the collapse of the US housing market and the resulting financial crunch. The country-to-country variations are there and they're significant, but secondary.
aptwebapps 14y ago
I don't think the four are all the same, although there are obviously some common elements. Chief among them the easy money from the center during the boom years. But I think Greece's inefficiencies and mismanagement made a bad problem worse.

_dps 14y ago

> The Greek crisis, more than anything, is the result of massive tax evasion. [Greek/US dual citizen here] Having lived in Greece for upwards of a decade, during the particularly transitional time from ~1988-2004, this is not in line with my experience. Hear me out before writing me off as an apologist :) Greece has a large problem with collecting the taxes they claim citizens owe but not a large problem with collecting a large fraction of GDP. According to the World Bank, they are right in line with Sweden and France (http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS). These numbers are corroborated by the OECD (PDF warning http://www.oecd.org/newsroom/41498733.pdf http://www.oecd.org/newsroom/41498733.pdf). [Edit: I wrote Sweden and France when I meant to write Spain and France; I apologize for the error but I have left it lest someone think I am trying to whitewash :-)] Greece has collected plenty of money; we overspent, and we spent stupidly i.e. in ways that obtained either votes or kickbacks, and not in ways that improved the economy or the life of the common person. As just one example, look at the paltry investment of the Greek government in its only competitive advantage, the tourism business. The cast and crew of "Mamma Mia" did a better job promoting tourism in Greece than any Ministry of Tourism effort. Spain, Italy, and Turkey are eating our lunch. We also got used to almost five decades of "free" foreign money through the Marshall plan, post-communist hysteria leading to US military aid and military bases, EEC/EU growth funds, and having our debt priced as if it were of German quality. In my opinion, the tax evasion is a serious social justice problem, but it is not a serious budgetary problem. The bulk of Greece's public budget is supplied by ordinary people making ordinary incomes, and it is a travesty that the wealthiest manage to dodge contributing proportionately. But that does not mean the government does not have enough money to do a good job. I would love to believe that the government has failed due to being starved of resources; at least then a solution like taking on more debt would be plausible. With the situation as it stands, I can only respond with our poet laureate Seferis' exasperated lament, "Everywhere I go, Greece wounds me".

Steko 14y ago
"but not a large problem with collecting a large fraction of GDP. <links>" Part of my problem with the statistics you link is that the measure is limited because it's known that US revenues are in the 16-19% range but they are listed here at 9%. Loathe as I am to cite the Heritage Foundation they are the most complete figures on wikipedia and show Greece heavily lagging France and Spain. http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... Next, the black market in Greece is estimated at 25% of GDP which inflates official collection percentages even more. http://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_Greece http://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_G... Finally, it really doesn't matter that they collect some nebulous "large share of gdp". What matters is that the scale of evasion is far greater than Greece's immediate problems. But Nikos Lekkas, the head of the Greek tax inspectorate, the SDOE ... insisted that Greece could easily pay off its debts if taxes due for payment were paid into the Greek state's coffers. ”Tax evasion in Greece has reached 12 to 15 per cent of the gross national product... That is €40 to €45bn per year. If we could recover even half of that, Greece would have solved the problem. http://www.telegraph.co.uk/finance/financialcrisis/9319799/Greek-chief-tax-inspector-says-Christine-Lagarde-right-to-criticise-evasion.html http://www.telegraph.co.uk/finance/financialcrisis/9319799/G...