Congrats Greece! You are Slightly More Free Than Bangladesh, Burundi, And Yemen
The Heritage Foundation ranks Greece #130 on its economic freedom list, which puts it in the "mostly unfree" category. Of course, these rankings depend a lot on the categories and the weighting, but the story here is still telling. The next worst European country I can find is Slovenia at #88 and the first EU country I see is Italy at #80, not great but a good fifty spots higher.
Which begs the question, asked by Megan McArdle today, of why Europe wants Greece anyway. In terms of political-economy, it had little in common with the rest of the continent. Everyone assumes the EU is trying to prevent a domino effect, with the other PIGS nations defecting from the Euro, but I think the Greek capitulation this weekend shows how unlikely this is -- it is clear Greece will do absolutely anything to stay in the Euro, and so it is reasonable to assume Portugal, Spain, and Italy face the same incentives and are thus not ready to leave the Euro on a whim just because Greece does.
Not Sure:
"Which begs the question ... why Europe wants Greece anyway."
How often do politicians/bureaucrats willingly give up control of others?
July 13, 2015, 12:30 pmMatthew Slyfield:
Has the EU managed to demonstrate any control over Greece?
July 13, 2015, 2:00 pmMJ:
To be fair, they did get some modest concessions in exchange for this latest round of bailouts. Speaking of which, I wonder what increasing Greece's VAT from 13% to 23% will do for their economic freedom ranking.
July 13, 2015, 5:55 pmMatthew Slyfield:
Did they get actual concessions, or the promise of future concessions that the Greek government can re-neg on after they already have the latest bailout money?
The Greeks have done that before, promise future reforms in return for a financial bailout and then after the bailout happened, the promised reforms didn't.
July 13, 2015, 7:52 pmmemelo2:
Slovenia is a member of the EU (and even of the Euro zone). But your point still stands.
July 14, 2015, 3:00 amMJ:
To be honest, I'm not sure. It sounded like they agreed to some pension reforms, privatization of some moribund, state-owned enterprises, and the VAT increase. But I'm not sure how this will be enforced, especially if the EU gives them the entire $95 billion now or over a short period of time. It seems as though Greece could easily backtrack at some point, especially with Syriza now being protested from both the left and right. Riots, anyone?
July 14, 2015, 1:54 pmMatthew Slyfield:
My point exactly. The EU may think it has control over Greece, but that control will not be demonstrated until the promised reforms have actually been implemented. Given the state of Greek politics, I am doubtful any promised reforms will actually materialize.
Right now, I don't think there is any path for Greece that doesn't end in blood in the streets.
July 14, 2015, 4:27 pmSamWah:
Scroll up to "The Greece Problem Is Not New".
July 15, 2015, 12:41 pmMJ:
As an update, I just read that the bailout deal calls for 85 billion euro to be dispensed over the course of 3 years. In principle, if the Greek government held back on its obligations during the first couple of years, the ECB could withhold the rest of the bailout funds. Of course, by then most of the damage would already have been done.
Also, as predicted there are thousands of protesters outside the parliament and things are starting to get violent, with several of the protesters throwing 'petrol bombs' (Molotov cocktails?) at the police.
July 15, 2015, 6:06 pmMatthew Slyfield:
"Also, as predicted there are thousands of protesters outside the
parliament and things are starting to get violent, with several of the
protesters throwing 'petrol bombs' (Molotov cocktails?) at the police."
That's just a warm up. When it hits the point that the current government runs out of money and can't get a new bailout, when pension payments just stop because there is no money to pay them with, then it will really get ugly.
July 15, 2015, 9:03 pm