Tom Ellis TOM ELLIS

Tsakalotos on Wall Street

COMMENT

Finance Minister Euclid Tsakalotos rings the closing bell at the New York Stock Exchange, celebrating the 13th Annual Greek-American Issuer Day at the NYSE, earlier this month.

TAGS: Politics

Greek Finance Minister Euclid Tsakalotos recently rang the closing bell at the New York Stock Exchange. Earlier, he met with businesspeople, fund managers and representatives of the financial markets, and spoke at the Invest in Greece Capital Link Forum.

Meanwhile back home, Tsakalotos came under fire from officials of the two biggest opposition parties, New Democracy and the Movement for Change (the new center-left party led by PASOK’s Fofi Gennimata), for having visited the mecca of capitalism and for cozying up to the representatives of big money.

Criticism from the left was anticipated and justified. The Greek Communist Party (KKE), Sailing for Freedom, Popular Unity and Antarsya have every reason to emphasize the inconsistencies and transformation of SYRIZA and to lash at the betrayal, as it were, of leftist ideals by the party of Prime Minister Alexis Tsipras.

On the other hand, centrist and center-right parties should welcome SYRIZA’s final acceptance of the system – notwithstanding its weaknesses and distortions. They should condemn the “delusions,” the incompetence and other shortcomings (and SYRIZA certainly has plenty of them) and they should provide arguments about why they would do a better job at managing this system.

The narrative of New Democracy, which is the main champion of the liberal credo in Greece, should be that it would be better in government at managing the private economy, which is the driving force of economic growth, because it has better knowledge of and more faith in it.

ND should stress, even to the country’s foreign creditors, that high tax rates and contributions encourage tax avoidance and prompt firms to shift their tax domicile overseas. Furthermore, they drive scores of salaried workers (usually the most talented) out of the country because they cannot stand to see 70 percent of their gross salary go to social security contributions, taxes and solidarity tax.

Investors want policy and tax stability and less bureaucracy. Growth will come from private and healthy entrepreneurship, not from state-dependent businesses. But in order to have healthy entrepreneurship and job creation, you need incentives (which is a far better, more sustainable and productive solution than benefits). Increasing taxes beyond a certain level fails to increase revenue. It also creates counterincentives against work, productivity and innovation.

The gradual moving away from populist behavior and unattainable promises should not be criticized. There is ample room for New Democracy to put forward thorough and convincing arguments from a liberal free market standpoint.

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