Tuesday, July 26, 2011

Stiglitz - Still not good enough to work in Greece

Right now, Greece is going through some tumultuous events and the decisions being made now will have important ramifications for generations to come.

For now however I would like to talk about Stiglitz and his presentation. Actually I want to write on the irony of his talk. Over 200 people attended his poorly publicised talk. Only a couple of politicians turned up, one of whom Stefanos Manos is a former politician. So the front rows of around 50 seats were empty as the invited politicians didn’t show up, obviously scared to show their face in public or be seen listening to - what the communists and far left call - “That Jewish Economist”, in a tone that makes one fear for public safety. In the audience there were those who challenged him on a couple of his economic points – and rightly so, but on the whole everyone enjoyed his talk and it was not raided by a Student Union demonstration happening down the road.

The irony lay in the fact that it occurred in a country where he is technically not allowed to work as an economist or university lecturer or is even recognised as an English speaker.

Stiglitz cannot work as an economist because he never completed his 'guild' like training at a Greek University. Only those who graduated economics from a Greek University are recognised. To have his degree recognised as good enough, he has to prove his university exists which may include translating a university handbook into Greek at a price of 1.5 euros a page. Once proven - he can then proceed to get his Degree recognised. If he is lucky he can have it recognised in 2-5 years, and involve ancillary costs of up to 18 000 euros. Then he has to wait from the Economists guild to invite him as a member, once a member he can set up his shingle and head off to work.

However it is now slightly easier. One of the new ‘Austerity Measures’ passed by parliament recently – which was one of the reasons we saw the terrific riots happening down in the centre - was the 'Opening up of professions.' The Greek work landscape is littered with closed professions. Reading the list of 136 professions that were opened it - it is no surprise that unemployment is where it is - or the number of luxury cars that still roam the streets. A list can be found here in Greek. These professions include dentistry technicians, tour guides, hairdresser and of course - economists. Not included in the list are truck drivers, lawyers and pharmacies - three of the most powerful lobby groups that still remain closed to competition.

Closed professions in Greece are a result of a 'guild' like recognition system and a restriction of licenses to operate. Licenses to operate trucks were given out during the Military Dictatorship in the early 70s and when PASOK came to power in early 80s - and never again. These can be sold or inherited - hence the signs outside pharmacies saying Inherited Pharmacy (Pharmacies are also guaranteed 33% profit margins by the government and lack of competition means they can charge higher prices on certain goods compared to the rest of Europe).

Ostensibly the new legislation will make it easier to become a taxi driver, run a currency exchange business, or a beauty shop. However as a student of Economic Development and History i am not praising the legislation just yet. Some of you may have heard of a Japanese expression "Turning it in the belly". During Allied Occupation the Allies - read USA - encouraged opening up of trade and changes to the legal system. The Japanese bureaucrats followed these changes to the letter of the law, but implemented other changes to make the law meaningless. One famous example was allowing American baseball bats to be sold. This they allowed no problem - they just implemented an administrative decision to check that all bats imported were made of wood, and so all bats imported had a hole drilled right through to ensure that they were wooden. Similar stories occurred with tyres (Japanese snow was different to American snow) and other goods.

Which is why I - and most of my friends are cheering the 'opening up of professions' just yet. We wait to see what administrative barriers exist to see if Greek bureaucracy will 'turn it in the belly'.

So until then, Mr Stiglitz - come and talk to Greece and (if rumours are true) advise Greece, but know that you're not good enough to work here.