ECONOMY

Resources alone are not enough

Economy and Finance Minister Giorgos Alogoskoufis, two former PASOK party senior ministers, Yiannos Papantoniou and Evangelos Venizelos, Federation of Greek Industries Chairman Dimitris Daskalopoulos and the new chairman of the General Confederation of Greek Labor (GSEE), Yiannis Panagopoulos, on Thursday took part in a broad discussion on the issue of «Resources for Development and Social Cohesion.» Despite the broad experience and the abilities of the speakers, most attendants at the discussion left disappointed, as it lacked substance and contributors on the whole repeated what they say in Parliament or in the organizations they represent. Daskalopoulos expressed the view that expectations for large amounts of foreign investment were an illusion and the result of Greek conceit; himself a prominent industrialist, he evidently dislikes foreign competitors. Panagopoulos repeated labor union rhetoric about government bias in favor of employers and Papantoniou remembered with pride the miracles achieved during the seven years he held Alogoskoufis’s post. We emerged from the discussion no wiser, although when Alogoskoufis found a little time for matters other than praising his own policy, he proved that the dilemma usually posed between development policy and social cohesion is false. «In all cases, neither development nor social cohesion is a matter of resources only. It is chiefly a matter of economic and social institutions… Efficient economic and social organization leads to efficient and fair distribution of resources and to the efficient accumulation of physical and human capital, which is linked to economic development… Social cohesion, in turn, is an essential requisite for development,» Alogoskoufis said. He noted that, at any rate, the only thing that the country did not lack if it wished to promote development and social cohesion was resources. The PASOK governments had huge resources at their disposal, including taxation and EU investment subsidies, but somehow we ended up with chaotic deficits and a huge public debt. Three EU-subsidized Community Support Framework investment programs and agricultural supports brought more than 60 billion euros to Greece. PASOK borrowed a further 80 billion from abroad. Indeed, public debt shot up from 29 percent of GDP in 1981 to 110 percent in 2004. From 327,000 in 1981, PASOK increased the number of public servants to 596,000 in 2004. Public utilities were bloated and their losses multiplied. Bureaucracy and corruption continued to reign while public contractors became even richer through illegal practices. In contrast, the percentage of poverty, as measured by Eurostat, bogged down nearly a quarter of the population and our living standards did not impove in relation to the EU average: From 77.7 percent of the average in 1981, it fell to 65.5 percent in 1990 before rising again to 75.5 percent in 2004.