As the political system debates the Greek economy’s “day after,” everyone needs to understand that the only way to help the country rebound, to attract foreign investment and to boost domestic enterprise is to improve the operation of the private sector by removing obstacles in the form of red tape and graft and easing the burdens of excessive taxes and social security contributions.
Many – still hostage to ideological fixations – refuse to accept the need to streamline the civil service even though the latter is dragging down the private sector, which is the economy’s growth engine.
The state’s role is to ensure that the market operates properly and according to the rules, while also providing support to vulnerable social groups. It is important that such subsidies are well targeted because the more the criteria are loosened, the more the state machine will miss its real targets and end up taking away much-needed resources from public investments and other sectors. Ultimately, it is the regular wage earners and professionals who end up paying the price through higher taxes and contributions.
From its opposition to private universities to its intention to have 10,000 more people hired by the state if clerics are taken off the public payroll, the government has shown its instinctive support for the public over the private sector. By the way, the state is still Greece’s “best” employer, according to Labor Ministry data. Even at the peak of the crisis during the 2014-2017 period, the average public sector salary rose by some 17 percent, against a reduction of 3 percent in the private sector.
For Greece to reach high growth rates, it needs to reduce the size of the public sector and the burden it puts on the economy. In most cases this means cutting down on waste, not compromising on social welfare. Hard as it may be for some to grasp, the state does not create wealth. This is not its function. It is not innovative, flexible or quick-acting. Only the private sector can gear the economy and help it grow. New, sustainable jobs and better salaries can only come from a long-term national policy framework – which in a perfect world would have the support of the opposition – that improves the business environment by slashing taxes and social security contributions and also puts an emphasis on specific sectors of the Greek economy that have a comparative advantage.
There needs to be a high degree of social justice, but the private sector is the economy’s engine. Healthy businesses which follow rules and regulations and are not embroiled in clientelist practices. The road to economic normality passes through innovative private enterprise and a competitive liberal economy, not public entitlements and statism.