Letter to the Troika

by Capricorner

If your “dictates” are not aimed at creating a Social reaction, it seems that when you arrive in Greece you leave common sense behind. You “impose” all what is detrimental to Greece in an effort to contain expenditures, but ignore the nature of the problem. Think about the factors of the Greek “failure”.

Farmers were accustomed to spending their time in cafes and other social venues, with illegal immigrants working in their fields, for a small compensation. The result was BAD Quality farm products receiving low prices. No Problem. The blessed subsidies from Brussels covered the gap and the Farmers were happy and financially well.

A New Government can provide incentives and guidance to encourage the Farmers to organize in Cooperatives which will operate like Private Companies, staffed (not with relatives and friends as is the case with Greek Farmers Coops) with people from the private business sector. These people will know how to maximize not only Output but also Value, as is the case with Dutch and German Agri-Products. Now they sell at low prices, they have no bargaining power with the Merchants who sell at high market prices what they buy at low prices from the Farmers. By marketing and also exporting their production for themselves the Farmers will earn what the Merchants, now, earn and by processing for themselves their production they will earn extra, like the Farmers of Germany and other countries do. The country’s wealth will increase and from it the taxes which will strengthen the Greek finances. No need for measures which are disincentives to investments in Agri-Projects. All Greece needs is a good Government which will direct the Farmers to substantial improvements of their incomes.

Push, at the highest level, for this problem to be addressed and you will thus reduce the risk of Greece becoming a problem once again.

Greece is the last “Soviet” type Economy of Europe. The Economy is regulated and a large part of it “Public”, operating not with Market but with Political considerations and therefore not Profits Oriented. In public Corporations managers give raises to their people even if the Corporation is loosing money and is getting deeper in the Red. The Public Purse covers the loss thus moving the loss to the Tax Payers. Ingenious? The Private Sector is subject to the tyranny of the Trade Unions, in Greece known as Labor Syndicates. They control everything because they control the votes which politicians crave for. Unionization is the heart and the lifeline of the Public Sector. According to the press even the Greek Intelligence and other supposedly Secret Services are Unionized! The Unions have shaped the Greek Economy in a way that made them the Government within the Government.

The Chinese wanted to buy the Piraeus Port Organization, one of the thousand or so Organizations of the Greek Public Sector. The Unions and the Socialists and, of course, the extreme left parties, were up in arms to stop the sale, which, none the less proceeded. Now they are all numb about the sale because the Chinese with their practical thinking have turned the Organization to a more productive successful enterprise with the workers very happy at the same time.

In the eighties PASOK used the Nationalized Banks to finance the Private Enterprises which had fallen to difficulties as a result of the crisis of the late seventies and thus made them Public “liabilities”, at the same time imposing on them the exact same rules regarding their function, not with Market criteria. All were subject to the same compensation regulations, employment guarantees and prevention of administrative adjustments. No concern for the particularities of each enterprise. The result was irrational increases of cost exacerbated by the Automatic compensation increases that were attached to the Cost of Living Index. Greece, thus, begun its ascend in the cost of production and its descent in the “competitive” index. Greek Manufacturing moved North, to Albania and Bulgaria mainly. The ever increasing Production cost was passed on to the Greek cost of living which kept on rising thus making imports ever more competitive. Socialist ingenuity!

It was the era of the Union bosses who could do anything, with their political potency. Greece is now a highly regulated Economy, where the need is one of change of mentality, not simply deregulation of everything, but this is a very hard thing to accomplish. Witness the recent effort to liberalize the work hours of the Pharmacies. It was rejected by the Parliament (voters interests first).

If you, gentlemen, insist on abolishing every, repeat, every rule and regulation of the Professions and the Trades you will throw the country to disarray. There will be a lot of whining and you will be cursed by all those affected, but the shock therapy will let loose the potential of the Greek Youth. It will be one determining factor for the re-birth of Greece, so go ahead and do it all at once. For once do something of constructive value.

The Greek problem becomes more complicated given the Corruption and the Waste that are an integral part of the Public Sector. Corruption impeded the Development of the Economy. Waste impeded the financing of the “healthy” sectors of the Economy. Funds that could have gone to productive investments which could have produced wealth and indeed jobs were looted, ending up in the pockets of those in the game, or in consumption of every kind which greatly benefited, not Greek Manufacturing but Imports. A great deal of Money was wasted instead of “planted” in the Greek Economy. Examples abound. To compound the problem the Greek indifference to concerted, methodical, conspicuously focused production per specific standards, gradually lost markets to competition, decreased the significance of industry, gradually turning the Greek Economy to one of Commerce, based on high profit margins, given the false Greek, borrowed, opulence.

For such a problem there is but one solution. Do not hesitate to insist that the law be changed so that Government Ministers, Officials of every kind, Members of Parliament and generally every person in a Public Office be held accountable and subject to the laws of the country, like all citizens should be. Do away with the immunity they currently enjoy. Make them answerable for their actions, make them responsible. Couple this with a New way for the Public sector to operate, exclusively through the Web. No personal contact of any kind for any reason between citizens and Public employees. Everything under the light. This will eliminate graft by half. Additionally impose on the Public sector New Ways. Demand that it operates like the Private sector, no two sets of standards and that it is subject to the exact same laws, rules, regulations, which apply to the Private sector, no discrimination. To ensure the contribution of the Public sector to Greece, bring in German and French Civil Servants who will train and assess their Greek counterparts, show them how to assess their subordinates, how to determine the qualifications required for each position and how to get the best out of them, as well as how to set objectives and strategies and monitor progress. Objectives is, to the Greek Public sector, a strange, incomprehensible concept.

If you do all that Greece will make a giant step forward and become a worthy Eurozone partner. Until then keep pushing and be patient, but take no chances. The Greek “system” will try to undermine you.

Greece needs to sell assets to scale down its debt but this is no time to sell because as long as German, Dutch and other “voices” suggest that Greece leaves the Eurozone no one will want to invest in Greece. Furthermore the value of the Greek assets is currently depressed. Let the situation turn around and then let these sales take place to, thus, make possible fair market prices. Do not push for fire sale prices, unless you want to serve specific foreign interests, which will give credence to the rumors that others want to grab Greek assets at distressed prices.

Why should Greeks be precluded from buying Greek Public assets? Greek Banks, as you well know, have no money, having been compelled to buy the Greek Bonds which are now two thirds down in value and having lost their customers’ deposits which people withdrew in panic and keep home, in safe deposit boxes, or in foreign (primarily Swiss) Banks. Mrs. Merkel and cohorts put the Greeks in panic mode with their initial rhetoric. Unless they do something to relax their fears Greek Euros will keep their distance from Greek Banks. Let, the change happen and Greek Banks be able to finance the purchase of Greek assets and then push for their sale, to Greeks, not the lurking Distress Assets Buying Funds from abroad. The Greek buyers of Greek Public Assets will add value to them and make them contributors to the Greek Economy and Greek Tax Revenues. Let, therefore a degree of normality return, with foreign buyers not afraid to invest in Greece because its future is in doubt. When the fear that it exits the Eurozone and returns to the Drachma vanishes the Greek Public assets will begin ascending to a fair market value and then you can push for their sale. Now is not the time for this. Do not err on this issue as well.

Encourage Greek Manufacturing to joint projects with European partners to thus be exposed to good practices, technical expertise and quality development, because Greek Manufacturing can not have the scale of its competitors and should, therefore, be enabled to compete with “Quality”.

You do well to demand sacrifices from the Greeks, but if you ignore the pain you will only create resentment and the Greeks may react in foolish ways, whose repercussions may affect not only Greece. Use common sense. Pain is inevitable, but not all in one big “dose” and do not restrict your selves to pain. Give the country hope and an objective. Come out with the truth. What Greece has is not, by European standards, what is known as “Government”, so you are obliged to explain to the people what this so called Government does not. Explain to the people, you know how, that the Greek Public sector is what it is and should therefore become what it should, with a Greek Government doing … well all the above. Show them a friendly face and tell them that their politicians should have already explained to them the situation and should have already prepared plans which could have brought the results which you now are obliged to pursue in painful ways. Tell them why the Greek politicians are ridiculous and a menace to Greece, also, why they are not to be trusted, which is a compelling reason for the financing of the Greek debt to be made through an escrow account, to ensure they do not misuse, or, squander these funds. Tell the Greeks that, in effect, they have no Government and to get one they should hold elections, but that they should be very, very, careful not to be fooled again, by the same con artists. The challenge should be to have a Government which can collect the taxes due, not tax indiscriminately, reduce the Public sector in an orderly fashion and inject justice and rationale to the Greek state. Your technical expertise will be available and should be put to use.

If you do this, gentlemen, push for a reorientation of the country, instead of merely conducting painful experiments with the Greeks, you will take a place of honor in European History and a place in the hearts of the Greeks. You got off to a bad start, but you can change course and address the problem of Greece creatively.

Sincerely yours

A fed up citizen