ECONOMY

False promises won’t work

The pre-election period is fertile ground for hyperbole, sophistry, lies, inaccuracies and, above all, promises – especially when the terms of the political debate are dictated by TV channels eager to see their ratings go up. The tyranny of the TV image, which all candidates, irrespective of party, embrace, offers the opportunity to «focus on the problems of everyday life» and a chance to hypocritically proclaim one’s solidarity with the suffering masses. What it doesn’t offer is the opportunity to conduct an essential debate about the real needs and, especially, the limits of the national economy. Economic growth Greece got back onto the path of high economic growth fairly recently, when it began cutting its budget deficit and public debt and investor confidence began improving. Deficit reduction ensured the country’s entry into the European Monetary Union with its positive consequences, such as lower interest rates that benefited the consumers and the end of currency exchange risk. Even though our politicians are usually loath to tackle the essential issues, these do not change. For a government to provide for the disadvantaged, it needs resources. An economy needs to grow to provide these resources. Growth is only compatible with fiscal discipline. Everyone knows, and government officials know best, that the resources are lacking. The only ways to save some money for social policy are to reduce defense spending and the cost of servicing public debt. If we reduce defense spending from 4.5 percent of the country’s gross domestic product (GDP) to 3 percent over the next four years and, simultaneously, reduce the cost of servicing the public debt from between 5 and 5.5 percent of GDP to 4 percent, we will save some 500 million euros to spend on social policies. As an internationally acclaimed expert says, if we need continued growth we must focus our effort on continued fiscal discipline, deficit reduction and a faster reduction of the public debt. Servicing the enormous public debt, still over 100 percent of GDP, is still the single largest expenditure item in the state budget. During the next few years, however, there will be a pressing need for enormous outlays on health and pensions. If the effort to shore up public finances does not continue, the economy is going to sink. This is the reality. Attempts to sweeten it, promises and visions are merely self-serving notions of politicians anxious for some prime TV time. The recent outpouring of sympathy for the weakest segments of the population, the low-wage and low-pension earners and the unemployed is pure demagoguery. Everyone knows that there are precious few resources available to help these people. Curb spending Curbing excess spending could provide a solution, but a lot of things will have to change. For example, how can the state demand from all companies, including the smallest ones, to publish their financial data quarterly and not demand the same thing from large public corporations, hospitals or local authorities? Some people suggest linking outlays to ministries, and determining whether a minister keeps his or her job, on measurable targets, such as reducing waiting lists to hospitals by X percent or cutting accidents by Y percent. Real problems No doubt, a lot of progress has been made over the years. It is no coincidence, for example, that Greece can borrow at a rate only 0.2 percentage points higher than Germany. Greece’s image in the European Union has vastly improved as a result: It is no coincidence that Vassilis Skouris is president of the European Court of Justice, Nikiforos Diamandouros is the EU’s ombudsman and Lucas Papademos is the vice president of the European Central Bank. This should not make us forget that the country’s debt is equal to its GDP; this, in itself shows the limits of the economy. It is clear that no deviation from fiscal prudence can be allowed. Alekos Papadopoulos, the ruling PASOK party’s former minister of finance, says that «Aiding the neediest cannot be done at the expense of economic stability. We cannot compromise the state’s ability to aid these people simply to further a few political careers.» This is merely common sense, but, apparently, common sense minds are not so common. Our politicians should wonder, for example, why Greece is not an attractive place for foreign investors. They should realize that there is nothing we can do to compete with Balkan states’ low wages, for example, but that we can, and should, offer a more open economy, less dominated by the state. It is hypocritical to be proud of the 4,000 Greek businesses active in the Balkans and to shriek with horror at the prospect of a single foreign takeover.