On Lagarde, tax evasion, SYRIZA, German newspapers
Mr. Tsipras vs. Reality
There are some merits to Mr. Tsipras’s post-election plan, based on the summary in Ekathimerini. However, he is not accepting reality, unless he thinks he can stare down the countries and investors that are supporting Greece and force them to buy in. If he cancels the memorandum, it is pretty clear that the outside funds will be cut off. With what money does he propose to restore wage and pension cuts? With other funds, retracting the emergency taxes would simply cripple Greece even more. Tax evaders, even if caught, won’t immediately cough up all monies owed. I saw no mention that he would reform and reduce the government bureacracy aside from a few token high-earning managers. In fact, he proposes to hire new «consultants», which expands the state machinery and has a new set of costs associated with that. As ambitious and positive as some of his ideas are, the immediate cutoff of international funding means there will be no time to implement them. A quickly accelerating and violent economic crash will occur and linger long before any revival. Greece could easily become the first failed state in modern Europe. Voters should take a very good look at Mr. Tsipras’s plan before deciding how much more disaster they desire to court or, at least, demand he come up with a more realistic plan. Unfortunately, Mr. Tsipras has demonstrated he is like most politicians. He wants to talk and tell, not listen, compromise, and revise.
Some taxing questions for Ms Lagarde
Given current false attitudes and the fact that I am originally from the Middle East, I know well what it means and feels like to be at the receiving end of stereotypical comments. Thus, I felt I had to write this in defence of the Greek people, as well as the Italian, Spanish, Portuguese, and others who currently are collectively under attack for being corrupt and tax dodgers and for bringing Europe to its knees.
There are always good people and bad people in all nations, and thus, for me, stereotypical comments are deplorable.
(My details and credentials below)
Dear Ms. Lagarde,
Recently you registered your utmost anger and frustration with the tax-dodgers in Greece. I say good for you. Everybody should pay their taxes. Those who dodge are the scum of the earth.
Please allow me to remind you of the gist of your remarks from the interview you gave to the Guardian on Friday, 25 May, 2012.
You blamed the Greeks collectively for causing their financial peril by dodging their tax bills. You stated that, «As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax».
You then remarked that you had more sympathy for poor African children with little education than for jobless people complaining about austerity measures in Greece.
Before I put my questions to you, I wish to note that, while no one would deny that tax-dodging in Greece is a very serious problem, nonetheless you failed to make a distinction between those who pay their dues, the less well-off wage earners; the working class, who stand in contradistinction to the super-rich who find legal and illegal means to avoid paying their taxes. Therefore, I am sure you will agree with me that any attempt — perceived or otherwise — to stereotype any people, civilisation, or culture, is deplorable and should be avoided at all costs.
There are also those who are angered by your failure to mention the catastrophic shortcomings of those economic fools in Europe as a whole who kept silent whilst the going was good and said nothing about the prevailing neo-liberalism, crony capitalism, debt-financed expansionism and more. They turned Greece into an ideal laboratory for the most brutal neo-liberal experiment, for which they, too, must be held accountable. To pretend otherwise and blame it all on the tax-dodgers alone is nothing but an affront to humanity and justice.
Now my taxing questions to you are:
Are you also equally angered and frustrated with those who do not pay their taxes in Northern Europe and North America and elsewhere? Moreover, what do you think about some senior diplomats, mostly former government ministers, with unbelievable pensions and perks already under their belts, paying no income tax and more, when finding new jobs with UN agencies? Would you call them tax-dodgers too? Will you blame them too? Will you name and shame them too?
I was shocked and horrified to learn that the director of the IMF pays no tax whatsoever on his or her salary and expenses. Is this true? If so, is this fair? For not paying their taxes they may hide themselves behind Article 34 of the Vienna Convention on diplomatic relations of 1961, which declares: «A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal.»
The said article may make them a legal tax-dodger, but will this make the dodging morally, ethically and spiritually right or acceptable?
It is said that the current director of the IMF is paid a salary of US$467,940, with automatic increases every year according to inflation. On top of that the director receives an allowance of US$83,760, payable without justification plus additional expenses for entertainment.
Now, Ms. Lagarde, would you volunteer to set an example and ask the director of the IMF to make her salary and expenses taxable? Then she may wish to send the generated tax to the children in Africa that she is so worried about.
The world desperately needs value-led, moral and spiritual leadership. You can set an example for that kind of leadership. How wonderful that might be: putting your example where your mouth is.
Kamran Mofid PhD (ECON)
Founder, Globalisation for the Common Good Initiative(GCGI)
SYRIZA’s economic manifesto
“It is for you that we all embark on this struggle! To put shoes on your feet, food in your children’s mouths! We are fighting to change your life, to raise you up from poverty and humiliation, to make you men!» (Greek patriot in early 1940s)
I had to think of the above when I read through SYRIZA’s new economic manifesto (NB: I used Google translation, so I may have misunderstood details of the manifesto, but I think I got the overall message pretty well).
In general, I found Alexis Tsipras’ presentation an arousing document. It included all the right soundbites which a domestic audience suffering pain and humiliation likes to hear. The presentation could have aimed at arousing people against some new enemy, for example, foreign powers. It didn’t do that and this deserves a compliment.
Mr. Tsipras begins by explaining in detail what SYRIZA means by an economic manifesto, by a program. They mean values, principles, clear guidelines, fixed lines, etc. He contrasts that beautifully with, say, Mr. Samaras’ habit of shouting out 18 action steps or the like. And he even used the famous Churchill phrase «Who, if not us? When, if not now?»
If Thomas Jefferson had held in impromptu speech early on during the formation of the American Union, he would probably have used some of the same soundbites which Alexis Tsipras used.
The problem with soundbites is that they are never tangible. By defininition, soundbites consist of sounds and not of specifics. The economic manifesto is extremely short on specifics. Actually, specific measures are not even included in the presentation but, instead, only in the short Annex 1.
Soundbite 1 — a public register of all properties. SYRIZA deserves 100% agreement and support as regards the absolute necessity of a complete, nationwide electronic real estate cataster. That is the minimum standard required if one wants to assess property taxes. A society which has administrative problems with the assessment of income taxes must also use the instrument of property taxes.
Where SYRIZA is wrong is when they call for a registry of all properties. To declare all personal properties beyond real estate is a confidential matter between the individual and the tax authorities. A property tax form requires the individual to list all his properties and the tax authorities are charged with verifying that.
Soundbite 2 — «internal devaluation». The Google translator suggests that Mr. Tsipras considers internal devaluation as wrong. If this is a correct translation, then it is Mr. Tsipras who is wrong. A country which still has a significant current account deficit after 3-4 years of recession has a massive problem with its real exchange rate. There are only two ways to solve that problem: either internal devaluation (the long and drawn-out adjustment) or external devaluation (return to the Drachma). There is nothing in between. And SYRIZA has ruled out a return to the Drachma.
Soundbite 3 — government
revenues/expenditures. SYRIZA proposes to rein in expenditures at a maximums of 45% of GDP (presently around 50%) and to increase revenues to about 45% of GDP (presently slightly under 40%). Should SYRIZA accomplish that within the four years they say they need, they would deserve a Nobel Prize for public administration (NB: I suspect that the 45% of GDP expenditures do not include interest. If so, that 45% figure would be far too high and much higher than it is today)! SYRIZA does not explain how they plan to reduce expenditures by another 5% of GDP but they are specific as regards the revenue increase.
Soundbite 4 — tax reform. SYRIZA quotes the Greek constitution as saying that Greek citizens have equal rights and equal obligations to «contribute without distinction to public charges and in proportion to their means». Quite sensationally, SYRIZA seems to include even the Church among those who have obligations. A tax reform following this constitutional mandate could only be good. Details, however, are missing in the manifesto.
Soundbite 5 — reform public administration. If all the mentioned soundbites were to become reality, Greece would have one of the most modern and efficient public administrations in the world. However, I hasten to add the following sentence which I found somewhere in the manifesto: «The administration should organize an ‘invasion’ of democracy, meritocracy and democratic planning in daily operations». That has a very bad sound to it (but perhaps it is poor translation).
Soundbite 6 — nationalizations, etc. Here, SYRIZA gets very ideological about how an economy works. There is a clear mindset that «the state» (or society at large, whatever that means) must play the role of the «visible hand» in the economy. Otherwise, more or less evil forces would begin to take over society. Thus, there can be no thought of privatizing companies which are still state-owned. Instead, the impression is left that one might even look at new nationalizations and in the banking sector they would certainly be planned.
Nationalizations as a tactical measure of necessity can become necessary (examples: the nationalization of AIG; or the partial nationalization of US banks in 2008/09). Nationalization as a strategic goal generally leads to disaster. And Greece is a country which has the advantage of being able to see already what disaster some of its nationalized companies have created.
If the Hellenic Financial Stability Fund has to recapitalize Greek banks, it should certainly get shares for it. However, it would have to pledge these shares to the ECB/ESFS which are refinancing these recapitalizations.
What reactions can be expected to SYRIZA’s economic manifesto?
Some will undoubtedly throw it out the window without reading it simply because it comes from the Left. If Mssrs. Samaras and Venizelos did that, it would be a shame because they could adapt some of the soundbites for their own purposes.
Those who are still doing rather well despite the crisis will definitely object to it because the manifesto would require a greater future contribution from them. And those who have a vision of Greece as a an attractive place to do business; as as well-functioning economy which is not dependent on subsidies from abroad; as a mature partner in the European Union — well, I regret to say, those should object to it.
And, finally, those who are in the lower half of today’s totem pole of Greek society will fall for the soundbites. They will read into the soundbites all those wonderful things which Greeks back in the early 1940s read into soundbites like the one I cited at the beginning of this post. Without wanting to demotivate those Greeks, I would only alert them to the following Greek wisdom:
“Any fool can throw a stone into the sea, but once he does, a hundred wise men can’t pull it out!»
Germany — crisis
With a headline like «German daily says time for Greece to leave the Euro» and then the article actually says that it’s the German newspaper Das Bild that says so, give the impression that all Germans have that same view. This attitude (and burning the German flag) is a reason why German tourists are annulling their holidays.
Wouldn’t it be better to say German newspaper Das Bild, the German government, or whatever, and be a bit more specific? Germans have flocked to Greece for many years and helped boost the economy and they’re (like any other tourists) still needed.
Coming from a concerned Dane married to a New Zealander living and considering buying/setting up a B now Greek nationals will need to obtain visas to travel to the EU. Public order breaks down with a run on the banks. Borders are closed to prevent currency flight. World governments issue cautionary notices on travel to Greece, tourism collapses during August with people canceling pre-booked holidays.
With an inexperienced PM and escalating violence in the streets, President Karolos Papoulias dissolves the government and empowers General Michail Kostarakos to restore public order and institute an interim government while introducing the New Drachma.»
The scenario above is a nightmare, but what if the turnout for the elections on June 17 was as low as in May? I am sure that Greece is about to sleepwalk out of the Euro and the European Union in 2012, Alexis Tsipras will then be immortalised in Greece’s history books for all the wrong reasons.
We (EU) love Greece but we don’t love it enough to sink the Euro and the European Union. Tsipras maybe in touch with the Greek voter but he is out of touch with EU citizens.
At the very least, please make sure you vote on 17 June so you have a voice in which way Greece will go: in or out. It is that simple.