Once again, Greek’s political elite is talking about making the spending cuts needed to stay in the eurozone.
I put it that way because if they were really concerned about putting their fiscal house in order, they would have done it by now in a reasonable manner that did not involve massive tax hikes and keeping government big while cutting government salaries to make it look small, in accordance with the wishes of their fellow elites in Brussels.
Once again, they are refusing to consider even the idea of reducing government’s size and scope, opting instead for a Rube-Goldberg, big-government-on-the-cheap scheme that only a Eurocrat would love (Ekathemerini, Greece):
Government officials were on Wednesday to continue talks aimed at identifying 11.5 billion euros in budget cuts for 2013 and 2014 but the proposed resurrection of a so-called labor reserve scheme aimed at putting thousands of civil service on reduced wages ahead of a status review appeared to pose a serious stumbling block to progress.
The leader of the third party in the coalition government, Fotis Kouvelis of Democratic Left, appeared to be particularly opposed to the measure which authorities have attempted to implement several times without success . . . The head of socialist PASOK, Evangelos Venizelos, was also skeptical about the measures but less vehemently so. He has insisted that it should not lead toward layoffs in the civil service.
For the uninitiated, the “labor reserve scheme” is a plan to put government workers on 60% pay for a year – with full pay restored if they can fill an opening by retirement – and only then, maybe, if they haven’t opted for retirement, they would they be let go. This is the third time this “reform” has been put forward, but even this is considered so traumatic that it has been sidelined repeatedly.
That this “labor reserve” would even be considered tells you how badly out of touch the Greek elite is. Greek politics have devolved into a shouting match between the big-government-on-the-cheap right (the New Democrats, the largest and unnamed party in the coalition government) and the big-government-at-all-costs left (which includes both the parties quoted in the article and the lead opposition SYRIZA).
Reducing government’s size and scope so the private sector can pick up the slack and recover? Look somewhere else.
Cross-posted to Virginia Virtucon