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.

Initiatives for development from Mr Azariadis and Mr Ioannides

Lets turn our attention to yesterdays enthralling discussion organised by AXIOTIS - which is a scientific, non-profit organisation dedicated to dialogue and promoting the principles of meritocracy, transparency and the modernisation of public administration, the business sector and civil society.

Speaking at the event was Costas Azariadis, from Washington University, St Louis, and John Ioannides, Tufts University, Boston, both of whom spoke on the much talked about subject of development. Mr Azariades’ talk was titled “A country seeking work.” He reminded those gathered that Greece has 3.2 million souls working in the private sector, 1.1 million in the public sector and 1.8 million pensioners. In other words One in two is waiting on the state. However, Greece has 1/3 of the Mediterranean coastline which is underdeveloped when it comes to private capital. What this means post Memorandum is that we may see a boom and a shift towards extensive infrastructure development with private financing. Along with opening up of the education system to private initiative, this could jump-start the economy.

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Greek economy: Diagnosis schizoid

According to economists it takes 5 years for a country, any country to get out of a recession. What about Greece though. It never follows any sort of economic trend. Last year during the height of the GFC - Global Financial Crisis, Greece imported more luxury Mercedes-Benz automobiles than any other European country.

This is because there is more than one 'economy' operating in Greece.
There is the black economy which according to some estimates is as large as 40% of the total economy.
This economy not only includes those catchy sounding professions as Pimps, human desperation traders and drug dealers, but it also includes lawyers, doctors, taxi drivers, petrol station and car park owners. These professions are notorious in Greece for not paying taxes and working 'off the books'. Here in Greece its just common knowledge.

The second economy is the Public Sector. 40% of the national budget gets sucked into this black abyss. These people do pay taxes. However they are not taxed on their fringe benefits, benefits that is more than their initial wage. They get higher pensions and their pension funds have never been looted by any government. They have access to free child care the envy of any first world country. Some civil servants can get a fixed home loan at 3%. In the last nine months of the previous administration many civil servants booked 90 hours overtime a month - on days they didn't even turn up to work. Try that anywhere else.
More tragic however is that bright minds get attracted to work here. Sure its dull and boring in the civil service, but 6 hour work days plus the benefits - where else can you get that.
This has left the third economy weak and anemic.

The third economy is the economy that those abroad understand and live in. People selling their goods and services on the dirty market. It is not a free market in Greece. There are restrictions as to who can be employed as what and if so how many hours they can work at what compensation rate. For example, though previously employed as a writer at a large company, i was never officially one, instead i was hired as a mere office employee. If i was a writer the government demands that i be paid extra money and that i work for no longer than 40 minutes in front of a screen etc... While well intended - these do more to hinder the 'free market' than support it. And looking at all the building sites with workers with no safety helmets, more has to be done enforcing laws than merely writing them.

Many professions are closed shop, such as movers and journalists. Red tape can kill small businesses. If you are self employed in Greece - factor in at least 35 days a year that will be lost to red tape.

Despite this there are some companies that are doing well. These include the Mastiha cooperative that is investing in their niche product Mastiha. Korres which is selling worldwide. Intralot which is one of three companies that competes in the world that provide lottery systems. Coca-Cola 3E, a local franchise, that through local hard work and entrepreneurial spirit is now the second largest bottler in the world after Atlanta and operations across the Middle East and Eastern Europe. These are just a few companies - that despite the roadblocks that the other two economies place in their way have managed to do well.

If Greece is to get out of this recession - it is to this third economy that Greece must look towards as being the engine of growth. No more must it coddle the public sector, a sector which sucks the fire out of the real economy. No more can it turn a blind eye to the black economy, which tears down any progress made in the real economy.

The more we wait however, the more anxious we become.