On Sunday 07 July, the national elections will be held in Greece for the emergence of a new government, hoping that Greeks will be able to move away from the misery and sadness of the consequences that the near bankruptcy of the country has left behind nine years ago. The promises of the previous government of Alexis Tsipras during the election period of 2015 for a better future that would defeat the unpleasant situations that experienced until then the Greek citizens were denied at significant percentage.
The fact that the Greek Prime Minister Alexis Tsipras (2015-2019) failed to make his promises to lift the country and for a better future, landed Greek voters in the grim reality they are experiencing, knowing that it is very difficult to change situations in Greece from the existing structure of the Greek state and from the structure of the current Greek political system.
by Thanos S. Chonthrogiannis-https://liberglobe.com
The history of the Greek fiscal tragedy (2010-2019)
At the end of 2009 and early 2010, the Greek Government of George Papandreou (2009-2011) announced that his government received from the Greek government of Constantine Karamanlis (2004-2009) an annual budget deficit in the Greek state General government budget of 15.1% of GDP or €35.8 billion (Source: Eurostat, http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=gov_10dd _edpt1&lang=en, 18/08/2018) and public debt 126.7% of GDP or €301062ms (Source: Eurostat http://ec.europa.eu/eurostat/tgm/refresh/TableAction.do?tab=table&plugin=1&pcode=sdg_17_40&language=en, 18/08/2018) with GDP (GDP 2009, €237534,2ms) (Source of Data: Eurostat, http://appsso.eurostat. ec.europa.eu/nui/show.do?dataset=nam_10_gdp&lang=en, 18/08/2018).
The general government budget deficit figures in combination with the size of the public debt and the size of the current account deficit, -€29.2billions or-12.3% of the GDP. (Source: Eurostat, http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init =1&language=en&pcode=tipsbp20&plugin=1, 18/08/2018) & (GDP, €237534,2ms 2009) were the most negative elements for the economy of a country and excluded the Greek state and thus the Greek economy from the international capital markets for any form of borrowing from them (10/01/2010).
The total financial assistance from the EU-IMF to Greece for the years of implementation of the fiscal adjustment from the support programs and by the end of 2018 has reached the total of €284.8billions with the €198.8billions coming from the support programs I (2010-2012) & II (2012-2014) respectively and €86billions from the support Program III (2015-2018), without this size to include the guarantees granted (Source: Memorandum I & Memorandum II & respectively Commission, Euro session 12 July 2015).
All Greek governments (2010-2019) with the outbreak of the financial crisis in Greece (January 2010) and the entry of Greece into the first financial support program (May, 2010) followed by three other support programs I (2010-2012), II (2012-2014) & III (2015-2018) respectively chose not to follow the advice of the Troika (EU, IMF, ECB) on the fiscal adjustment of the Greek State budget by firing directly 150000 full-time civil servants, but chose to impose gigantic taxation on income and on immovable property and while cutting employees’ nominal incomes and in particular nominal pensions.
The imposition of gigantic taxes on the Greek economy was imposed by the Greek governments (2009-2019) in order not to dismiss redundant staff of permanent civil servants, which the troika demanded from the outset, but also to avoid waste in the public sector.
The reader should understand that with the current heavy taxation, Greece with any annual tax revenues does not pay off the repayments of loans received during the financial support programs I (2010-2012) & II(2012-2014) totaling €194.8billions (€80 billion and €114.8 billion respectively) rather than only paying off €300million interest on an annual basis for the €80billions support program I (2010-2012) and from 2020 onwards Greece will pay off interest and capital on all these loans.
One of the aftermaths of the reductions in nominal wages and nominal pensions was the increase in recession and unemployment which in turn increase the debts to the pension funds geometrically and reduce their revenues accordingly.
In addition unemployment and recession (accumulated recession 29.7% for the period 2008-2013, Source׃ Eurostat, http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=tec00115& plugin=1, 01/08/2018) resulted in the ever-growing uninsured work that removes resources from the social security system.
The great recession leads businesses towards the preference of tax evasion and the choice of businesses to operate under the status of ever-increasing part-time labour. The elastic (part-time) work is chosen because of the increasing turnover of businesses caused by the reduction of consumption, the increase of taxation and the increase of uncertainty for the future to consumers.
Continuously reduced nominal pensions increase the size of indirect and direct taxation for pensioners, even if taxation remains as a percentage unchanged, because their actual income is reduced.
The consequences of the Greek fiscal tragedy today
1. The outstanding debts of the Greek State to third parties remain more than €2 billion.
2. Household and business debts to the Greek State and to third parties exceed 3/4 of the Greek general government’s debt.
3. Arrears owed to the Tax office exceeds €100billion.
4. The overdue debts of households and businesses to banks exceed the €107 billion (total loans €200 billion).
5. The total private debt exceeds 1/2 in the size of the public debt (debt of Greek general government) reaching 115% of GDP.
6. The shrinking of the deficit and the presentation of an artificial but unsustainable primary surplus in the state budget of the general Government is not due to the actual reduction of the primary expenditure of the central government budget which remains to this day at very high levels, but to the fact that:
a) The obligations of the Greek state to its suppliers and to the taxpayers have not been fully repaid;
b) At the same time, there have been no pensions in hundreds of thousands of new pensioners in recent years, showing even more limited the general government budget deficit.
c) In addition to all these outstanding obligations of the Greek state are added annually and new unpaid obligations of the Greek state to third parties.
For each unit increasing the primary surplus of the state budget of the general government, which primary surplus is achieved due to the non-payment of the obligations of the Greek state to third parties and due to the continuous reduction of actual incomes from nominal wages and pensions, causes unemployment to rise annually by 25000-27000 unemployed people.
If any primary surplus in the general government’s state budget was achieved by increasing the productivity and competitiveness of the Greek economy, while drastically reducing the primary expenditure of the state budget of the central and general government to take part in the immediate and drastic reduction of the human resources of the Greek state through mass redundancies of hundreds of thousands of permanent civil servants and not by reductions of nominal wages and pensions, then the achievable primary surplus in the state budget would have a strong basis and for each growth unit of this primary surplus would be created respectively 25000-27000 new jobs annually in the private sector.
7. Unemployment in the Greek economy remains at gigantic levels of 18%, (2019), with any reductions which have hitherto been shown in the official percentages are due to the ever-increasing elastic (part-time) work at the expense of permanent (full-time) work, the migration of thousands of unemployed people to other EU member countries and not only, and/or diffusing the efforts of the unemployed to find a job while deleting themselves from the unemployment office and fund equally.
8. The development of the Greek economy and after nine years of hard fiscal adjustment remains low to 1.3% of GDP for the first quarter of 2019 and is totally disastrous for a country whose GDP fell by 29.7% of GDP.
It is not a growth but a recession if are counted the Greek government’s overdue debts towards third parties, the non-issuance of pensions to hundreds of thousands of pensioners and the non-payment of the debts of the Greek state to the taxpayers.
9. Investors from abroad are asking for SEZ (Special Economic Zones) to invest in Greece because they want to avoid the variability of taxes and the corrupt Greek state mechanism.
10. More than 500000 Greeks from the outbreak of the crisis and to this day left in abroad abandoning the country to find a better future.
11. The middle class was destroyed in Greece and remains deeply disappointed without being able to hope for a better future. Knowing very well the Greek governments (2009-2019) that the contraction of the middle class paves the carpet to modern opponents of liberal democracy, right-wing, far-left and nationalist-populists.
The reader can now understand how Greek governments (2009-2019) respectively “executed” and continue to “execute” literally, both the companies that push them to bankruptcy and the private sector employees who direct them to unemployment and under-employment and to the middle class, with the sole aim of maintaining them with political parties criteria and illegally appointed civil servants in the Greek state payroll.
The preferred solution for the restoration of the Greek economy
Three hundred thousand (300000) direct redundancies of permanent civil servants should be approved. In addition, the mass privatization of public and broader public services should be promoted without the new individuals-employers committing themselves to maintaining jobs in these public sector organizations-services.
The immediate dismissal of 300000 permanent civil servants achieved annual savings totaling €6.9 billion, solely from the annual wage expenditure of the central and general government budget.
This amount does not include the sum of the direct and indirect costs of operational and organizational expenditures saved on an annual basis by the corresponding allocation to the specific state budget (central government) which exceeds €1 billion.
Next, it should be enshrined in the Constitution of Greece that the annual primary expenditure of the central government’s state budget should be a maximum of 15% of the GDP, with 4% of the annual GDP from this 15% of the annual GDP being the maximum annual level of public expenditure on salaries and pensions of the Greek state.
The funds freed from this drastic reduction in public spending will be used through the implementation of equivalent fiscal measures in the Greek economy to drastically reduce the sizes of the corresponding indirect and direct rates prevailing in the whole spectrum of the Greek economy.
Drastically reducing the tax rates of indirect and direct taxation will continually attract new investments from the EU and abroad (a growth cycle) by increasing their annual self-growth rates in an ancillary capacity of the Greek economy.
In other words, the primary expenditure of the Greek state budget of the central government should be approached and never exceed 15% of the GDP annually with 4% of the GDP to be the maximum public expenditure on salaries and pensions of the Greek state in central government budget.
Revenues from any privatization of state-owned organizations qualify cannot make public debt viable and at the same time reset the budget deficit in the general Government’s budgets, while triggering a viable development. Privatization of state organizations/enterprises should take part in a positive fiscal and macroeconomic environment to enlarge the sales value of.
The massive redundancies of these hundreds of thousands of permanent civil servants should be carried out simultaneously for all and not partially and in the long term.
If these redundancies take place simultaneously at the same time for all these civil servants, the chances of finding work faster for all these employees and not only for them, just because of the direct application of the equivalent fiscal value measures in the Greek economy, will be maximized.
Why Greeks do not hope to improve existing situation in the Greek economy
The specific political system and the administration of the Greek state are profoundly vicious and corrupt. The current Greek political system bases its existence on customer relationships with its voters which in turn are based on the massive and illegal recruitment of voters of the political system in the Greek public sector and at the expense of the rest of society with the active expansion of public expenditure financed by excessive private sector taxation.
The fact that Greece has escaped bankruptcy does not mean anything because the steps that have been taken so far to improve economic and social conditions are insignificant, while the middle class is frustrated.
Alexis Tsipras (2015-2019) and his political party-SYRIZA despite the hopes he had cultivated did the same with the other executive power political parties before him based on vicious and customer relations, despite having implemented some policies that relieved the poorest and unprotected citizens category.
Kyriakos Mitsotakis (main opposition leader) may have fostered hopes but his party is a state-secularist party as well as all other executive power political parties in Greece. This means that they are based on vicious and customer relations and as the President of the New Democracy political party promised that no civil servant would be fired.
Thanos S. Chonthrogiannis
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