1 / 66

Greece at a crossroads What is at stake, and what to expect

Aristides N. Hatzis Associate Professor Philosophy of Law & Theory of Institutions Ph.D. (Law & Econ, U of Chicago). Greece at a crossroads What is at stake, and what to expect. Atlas Network Webinar July 1, 2015. 1929-1936: Anomalous political situation 1936-1940: Dictatorship

mackay
Download Presentation

Greece at a crossroads What is at stake, and what to expect

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Aristides N. Hatzis Associate Professor Philosophy of Law & Theory of Institutions Ph.D. (Law & Econ, U of Chicago) Greece at a crossroads What is at stake, and what to expect Atlas Network Webinar July 1, 2015

  2. 1929-1936: Anomalous political situation 1936-1940: Dictatorship 1940-1944: Word War II 1944-1949: Civil War 1949-1967: Illiberal Democracy 1967-1974: Dictatorship 1974- : Constitutional Democracy

  3. 1980: The 10th Member of the European Communities Greece circa 1980 public debt: 28% of GDP deficit: < 3% of GDP unemployment: 2-3% average growth rate 1975-1980: 4.6% inflation: 25% (due to the second oil crisis)

  4. 1981: PASOK

  5. A modern Greek Tragedy

  6. 1981-2011: From Miracle to Nightmare 30 years of getting subsidies from the EU, borrowing and spending Minimal structural reforms Anti-market bias The state controlled about 75% of all business assets Bloated welfare state

  7. Borrowed Happiness • average per capita income: $31,700 (2008) • 25th in the world (95% to the EU average) • private spending: 12% more than the EU average (2009) • human development and quality of life indices: 22nd in the world (2010)

  8. 1980-2010: the road to default • 1980 public debt: 28% of GDP • 1990 public debt: 89% of GDP • 2009 public debt: 142.8% of GDP • almost 165% in late 2012 • 1980 public deficit: <3% of GDP • 2009 public deficit: 15.4% of GDP • 1980 government spending: 29% of GDP • 2009 government spending: 53.1% of GDP

  9. Greek Public Servants

  10. Greek public debt (percentage of GDP)

  11. GREECE 2010 • Public Debt: 142,8% of GDP • €350 billion ($ 500 billion) • Public Deficit: 15.4% of GDP • “Growth”: -4.5% of GDP

  12. Like there is no tomorrow!

  13. A bloated Welfare State… • Social benefits to households (percentage of GDP) • from 22.0% (2004) to 26%.4 (2008) to 29.0% (2009) • (from 2004 to 2009 “conservatives” ruled Greece) • half of it went to pensions • “social transfers” (subsidies to the pension funds of powerful professional groups) equals 52% of this half – 6.34% of GDP in 2008. • EC pension projections (2009) • EU-27: 12.3% (2040) – 12.5 (2060) • Ireland: 6.4% (2040) – 8.6% (2060) • Portugal: 12.5% (2040) – 13.4% (2060) • Spain: 13.2% (2040) – 15.1% (2060) • Greece: 21.4% (2040) – 24.1% (2060)

  14. An inefficient welfare state The indicator of the efficiency of social benefits in alleviating property is the worst in the E.U. (13%, where the EU average is 35% and some Scandinavian countries were as efficient as 70%!). In 2002 the indicator was a poor 4% with a EU average of 31%.

  15. A helping hand to the rich

  16. Extractive economic institutions: Designed by the politicallypowerful elites to extract resources from the rest of society. • Inclusive economic institutions: Secure property rights, law andorder, markets and state support (public services and regulation) formarkets; open to relatively free entry of new businesses; upholdcontracts; access to education and opportunity for the great majorityof citizens,i.e., create incentives for investment and innovation and a level playing field.

  17. The Greek trap A bloated inefficient “welfare state” but also Tax evasion (as a social right) A huge inefficient public sector Corruption – essentially tolerated if not decriminalized Public sector union power Closed professions Overregulation to ensure rent-seeking “A state made for the welfare of politically powerful pressure groups”

  18. Greek Extractive Institutions Index of Economic Freedom Long-term score change (since1995)

  19. Low levels of trust • Government: 14,6% (51,7%) • Courts: 40,2% (52,6%) • Education system: 51,8% (66,1%) • Other people 16,5% (24,2%) • Philanthropy: 9% (28,9%) • Volunteerism 10% (20,9%) Global average in parentheses

  20. A political culture of Statism Protectionism Corruption Cronyism Nepotism Rent-seeking Irresponsible spending

  21. Greece is not a free-market economy!

  22. Mostly Unfree... • Index of Economic Freedom-2015: 130/178 • Last in the EU • Economic Freedom of the World-2014: 84/152 • Last in the EU • Global Competitiveness Report-2014/5: 81/144 • Last in the EU • ICC Open Markets Index: 48/75 • Last in the EU

  23. Greece’s neighborhood

  24. The Greek Vikings* Cost: €17-25 bn * Pelagidis & Mitsopoulos 2011

More Related