Vote grabbing

We will keep coming back to the question of election campaign handouts to various social groups which the state budget cannot afford and which will bind the economy’s future no matter who wins the next elections. We are referring to today’s main news story, that the government has decided to increase the lowest farmers’ pensions from the current 161 euros (55,000 drachmas) per month to 205 euros (70,000 drachmas) by the end of the year and 249 euros (85,000 drachmas) in 2004. Prime Minister Costas Simitis is to announce the move at the Thessaloniki Trade Fair next month. The total extra burden on the budget will be around 200 million euros (about 68 billion drachmas). The second most important news item today is not unrelated. The 2003 budget deficit increased by 80 percent in the first half of the year, despite a forecast of 12 percent. According to official data, this is due to a considerable reduction in revenue and a rapid rise in expenses, mostly on social security fund deficits, including that of the farmers’ pension fund. In short, with a budget deficit and deficits in the social security funds, the government is deciding to increase the lowest pensions. And it seems that these are not the only handouts Simitis will be announcing in Thessaloniki. It is also rumored that their total value will be around 1 billion euros (over 300 billion drachmas), spread around a million families. Simitis’s purpose is obvious: to give some satisfaction where dissatisfaction with the government is most evident, in the hope of reversing the rising tide against it. We hope that in making further promises, he will be good enough to tell us where he is going to find the money; and he had better be convincing. There have been other occasions when we have had the opportunity to emphasize that vote-gathering promises not only lead to long-term, painful economic problems, but end up being paid for by those whom they are supposed to benefit. We have seen this often enough. It turns politics from being an organization of collective action into an opportunistic transaction with voters, who become accustomed to trading their votes, even by blackmail. Let us not be misunderstood: Boosting the lowest pensions is one of the main responsibilities of any government, But that responsibility is part of the overall economic program. It is not decided upon for arbitrary reasons just a few months before elections take place.