See, this is what happens when a think tank technocrat comes into government. With politicians, you get career pragmatists interested in enriching themselves and their friends, and with academics you get people who know theory but never had to balance a checkbook in the real world.
Yannis Stournaras left Greece’s perhaps most prestigious thought palace, the Foundation for Economic and Industrial Research (IOBE) to take the most thankless job in the country as Finance Minister. It was like leaving the New York Stock Exchange as Chairman to become Captain of the Titanic.
A very capable hand and a good man in a storm, (not good enough as it turned out despite such a promising start) he came on board with the blessing of a beleaguered Prime Minister Antonis Samaras, the New Democracy Uber-Capitalist leader, but also with his back to the wall against a would-be saboteur, PASOK Anti-Socialist chief Evangelos Venizelos, who is serving as Deputy Premier/Foreign Minister in a coalition government because he tossed aside his principles.
Venizelos, who could slide off sandpaper, had Stournaras’ job two years earlier when then-Premier and the man he replaced as PASOK head, George Papandreou, was creating a train wreck for Greece, driving the country off a cliff into an economic crisis.
PASOK and New Democracy had taken turns for 40 years using Greece as a patronage dumping ground for people who were hired for do-nothing public service jobs because otherwise many of them didn’t have the qualifications to run a hot dog stand outside Yankee Stadium.
That Ponzi Scheme style of government made Greece top-heavy with debt trying to pay hundreds of thousands of needless workers given jobs in return for votes in a country which didn’t’ have the means to pay them so just kept borrowing to keep it going as long as it could.
When it came crashing down in 2010, Papandreou – who said, “The money is there,” while campaigning – found out it wasn’t and went hat-in-hand to the International Monetary Fund begging for help.
The IMF, joining with the European Union and European Central Bank to form the so-called Troika, which has become a dirty word to Greeks, ponied up $325 billion in two bailouts but those came with harsh austerity measures.
Cut to the end of 2013, with a seventh year of a deep recession on the horizon, Greeks buried under an unrelenting avalanche of pay cuts, tax hikes and slashed pensions are suffering record unemployment and one in five of them are living in poverty.
What’s the solution? Stournaras says it’s simple: it’s not death and taxes but tax them to death. You can’t make this stuff up. With their disposable income cut some 46.8 percent, Stournaras (he has to get out of the office more and see some human beings) says the answer is more taxes because Greeks aren’t paying enough compared to other European countries.
That theory of admonishing non-returns didn’t sit well with people who actually pay taxes in Greece, if you can find one, and it made him a pariah among the lawmakers of the ruling parties coalition of Samaras’ Capitalists and Venizelos’ anti-capitalists.
That’s quite a feat, sharks wanting to avoid having a piranha swimming among them and it gave The Great Opportunist Venizelos a chance to snipe away again at him, apparently jealous that Stournaras, for all his naivete, has brought Greece to the edge of a primary surplus for the first time in a decade.
But Mr. Taxman Stournaras’ tax-them-to-death school of economics clashes with the cut-their-salaries-100-percent-and-make-them-slaves philosophy espoused by Samaras, Venizelos and the Troika’s banker buddies.
Statistically speaking, Stournaras is correct about the Greek tax rates, although he doesn’t take into account that few people pay them. The country’s corporate tax rate of 25 percent is exceeded in Europe by Malta at 35 percent; Belgium (33.99); France (33.33 for big business); Italy, which is controlled by the Mafia, at 31.4); Germany – the biggest contributor to Greek bailouts and led by the Mistress of Austerity, Chancellor Angela Merkel – at 30.175); Spain (30 percent) and Luxembourg (28.59.) Switzerland, the tax haven of choice for rich Greeks who don’t have to worry what Stournaras says, is tied with Greece at 25 percent.
For income taxes, considering maximum rates, Greece – at 42 percent in the highest bracket – is only 16th, far behind front-running cradle-to-grave care countries Sweden at 56.6 percent, Denmark, 55.56, and Finland, 53. Also ahead of Greece are The Netherlands, Serbia, Austria, Belgium, Norway, Portugal, Iceland, France, Germany, Italy, Romania and the United Kingdom.
Fair taxes are a necessary part of a government that uses the money to provide services, but where Greece claims the ignominious dishonor is in not doing that.
Wage-earners who have money taken out of their checks for health insurance find neighborhood clinics and hospitals closing and merging and have to pay more out of pocket for medicine as well as the ubiquitous bribes to doctors to get good service. You need an operation at a state hospital? If you don’t want that scalpel to accidentally slip you’d better cough up an envelope stuffed with enough 100-or-500 euro notes.
The great U.S. Supreme Court Justice Oliver Wendell Holmes said, “I like taxes. With them I buy civilization.” But one of his predecessors, Supreme Court Chief Justice John Marshall put it better: “The power to tax is the power to destroy.” Especially in Greek hands.