Trying to ignore ‘impertinent’ data at our own peril
This is a serious misunderstanding. Public opinion is trapped in a fallacy that could prove destructive in the future. Most people have the impression that numbers do not matter. All that has happened in the last few months with the revelation of the real deficit, larger than the one previously stated, does not mean anything. Nor is there any consequence coming from the fact that the public debt as a percentage of the gross domestic product rose by 9 points, standing at 112.2 percent, the highest in the EU. Fiscal data is not just mere figures; it also shows the situation in the real economy. For example, the (hourly) productivity of work in Greece has dwindled in the last couple of years and is the second-lowest among the EU’s old 15 members. These and other unpleasant conclusions are included in the European Commission report on the application of economic policy guidelines, released earlier this week. In nearly all measures monitored by the Commission, Greek progress is marked as limited or ineffective. Greece’s best «score» is in measures under way, but without tangible results yet. This, then, is the situation as recorded by the Commission and other international institutions. So now that we are aware of it, what will happen? Probably nothing. Almost everyone will carry on as before, thinking that none of this is their concern. Yet, the rise in public debt is not a negligible fact. It means greater public spending is needed to service it, when state funds could have been used for other purposes. Nor is the rise of the public deficit a neutral development. It means that the public debt will increase further. The government is obliged to proceed to the next step. Just as it has revealed the fiscal reality, it must now move from the diagnosis to the remedy. Otherwise, the diagnosis will be dismissed lightly by the public as misleading. Just as the government rightly sets high growth targets, it must also proceed with measures to render it possible. If it thinks priority should be given to reducing the public debt, big moves ought to be made in privatizations. If the target is to reduce the deficit, then taxes must rise where this can be done relatively easily, e.g. a special fuel tax. If it wants inflation to go down, then indirect taxes must be reduced. If it believes growth must accelerate, immediate measures must be taken to support large investments or to deregulate the labor market. If it thinks it can proceed at a slow pace simultaneously on all fronts, the government is wrong. Time is not on its side on this occasion. On the contrary, further delay aggravates the situation and the measures to be taken later will be harsher and more painful. Of course, postponing the handling of the problems does have a positive effect: It allows us to enjoy everyday life…
