Monday, February 21, 2011

Papandreou's credibility gap widens at home.

Today the Greek government started its plan to boost the local car market by encouraging motorists to take their old cars off the road in return for subsidies of up 6000 euros on the purchase of new vehicles. The plan is according to government designed to revive the country's ailing car market which has been hard hit by the current economic crisis.

Yet the idea of paying millions at a time of major financial readjustment seems odd, especially considering the Greece has virtually no automobile industry and the vast majority of the money will go abroad. Also the fact that subsidies are designed so that the larger the car the greater the money returned (in effect, a tax break for the better off) is particularly galling when poorer Greeks are being faced with public transport price rises of between 40% and 180%

Although prime minister Giorgos Papandreou likes to give the appearance of being more ecologically minded than his predecessors the policy of promoting more car sales whilst making bus and tram use much more expensive is hardly the greenest way forward. However, such contradictions are emblematic of the ruling PASOK party's often schizophrenic policies.

Last week junior minister for education Fofi Genimata announced that introduction of a new 2.2 billion euro package designed to promote life long learning yet at the same time lecturers in Greek polytechnics (TEI) were occupying campuses nationwide in protest over the fact that they have not been paid since November. Likewise angry parents demonstrated the decision by school bus drivers in Greece's second largest city, Thessaloniki  to suspend work until they have been paid money owed .

Time and time again the government announces new programmes or introduces legislation without checking whether the funds are available in the vain hope that such policies will, at least in the short term divert voters attention from the fact that the economy is in free fall and no one, least of all politicians have the slightest idea how to fix the problem .

Whilst everyone agrees the answer to Greek woes is "development" the policies being promoted to encourage it are not working. Cuts in the public sector have reduced government spending but at the same time disrupted  the national economy and lead to spiralling unemployment and the closure of hundreds of thousands of small businesses. Likewise falling wages are crippling Greek families who are also facing huge rises in costs of utility bills, transport and food. Even consumption of bread has been hit with bakers reporting drop in turn over of 30%.

Much has been made of the fact the Greek wages have outstripped rises in productivity over the last two decades but what foreign economist fail to realise is that the cost of living has steadily risen as well, especially after the introduction of the Euro which saw the price of  goods and services double or triple. As a result higher salaries have not been translated into higher standard of living but rather greater profits for the cartels and monopolies that control much of the Greek economy. (In the case of bread the cost of loaf has risen from 50 drachmas (15 cents) to 80 cents, an increase far in excess of even the most generous pay rises)

The most blatant contradiction between Papandreou's stated aims and the government's day to day running concerns political corruption. Although the country has been rocked by revelation after revelation over the bribes paid to government ministers and other high level officials belonging to both PASOK and its main rival New Democracy not one MP has been charged nor spent a day in jail. On the other hand when faced with a campaign of civil disobedience over increases in bus fares and road tolls legislation was quickly passed that make such actions criminal offences.

It's hardly surprising given this background that the government faces an ever growing credibility gap with fewer and fewer people believing that those in charge have either the will or the ability to drag Greece out of its present slump.


Chudex's said...

A fascinating paper.
I love reading your writing
I got a lot of input
thanks and encouragement to keep writing.

artemis said...

yet another flawless report, thank's teacherdude!!!!