The people of Greece are fantastic. Amazing. Hard working and entrepenurial whilst still valuing the quality of life. Their business skills mean they own a big chunk of all the world’s ships, and people like Stelios Haji-Ioannou (serial entrepreneur and founder of Easyjet) are just the tip of an iceberg of strivers.
They have been let down by a succession of venal governments who have trashed the country with gross ineptitude. The bankrupt economic theories of Keynes and Krugman have been applied and the lessons of Hong Kong and Singapore ignored. It is difficult to imagine how Greece could have been more badly governed.
In life I am an optimist, so if you have a lemon you make lemonade. Apply this and Greece is in a position of amazing opportunity. Being at rock bottom they can do literally anything. With the right policies they could very rapidly have a booming economy. There is nothing to stop them from becoming the richest nation in Europe. Concentrate on generating wealth instead of on stopping the economy from working. Here is how:
- Leave the Euro currency immediately. It is a structural millstone that stops the Greek economy working properly. All values are false and markets cannot work. Being in the Euro has been one of Greece’s biggest problems. Money became far to cheap and the currency far too stable. Markets just didn’t work as they should.
- Remain in the EU. But work with Cameron to make it a more useful trading organisation and a far less powerful political organisation. Seek the maximum help from the EU contingent upon the reforms listed here. Debt write down is inevitable, as is a further bailout and ongoing grant aid. If the EU won’t play ball then just leave.
- Replace the Euro with a crypto currency, the Bitdrachma. Have no paper or coins. All transaction would take place using phones, smart watches, computers and other such devices. Bitdrachma debit and credit cards would also work. Pay all government salaries, pensions and all other internal bills with this currency starting immediately.
- Get rid of all existing taxes (except for health taxes on tobacco and sugar, which need to be far higher than they are now). Greek taxes are currently largely uncollected or uncollectable, over 60% of the population is in tax arrears. Replace these taxes with a transaction tax on the Bitdrachma. This would be impossible to avoid, except by barter. It would only have to be at a very low rate, just 3 or 4% as an absolute maximum. The collection would be totally automatic and would be on EVERY transaction. Ensure all large transactions (house sales) and all internal business transactions use Bitdrachma.
- Contract an international firm of accountants to forensically audit the personal accumulation of black money over the last few decades. On a commission only basis. Say 25% of everything collected. Looking at all the London homes owned by Greeks would be a very good start. Nobody to be exempt.
- Privatise everything that can be sold off. Every state asset except for the absolute minimum. This has to be done ruthlessly. It doesn’t matter if things go for fire sale prices, they will become so much more productive in the private sector.
- Minimise the number of state employees, once again ruthlessly. Only provide the minimum services required to keep the state working. Using a cryptocurrency vastly reduces the number of state employees needed. No finance ministry, no tax collectors, no central bank.
- Set up an organisation to eliminate the evils of cronyism, corporatism, socialism and corruption. There is a lot of these in Greece and they cripple the country. These are the four utterly immoral economic forces that punish working people and entrench unfairness in society. Lots of vested interests will need to be trod on. Good. Margaret Thatcher did it and it worked for Great Britain.
- Pensions. Move the state pension age to 67. Allow no more new pensions effective from today’s date, then roll it till the 67 age is reached. Progressively remove pensions from the state system. Let people buy their own.
- Maximise free trade with other countries. This is where Greece, strategically placed between East and West, has the potential to become an economic powerhouse.
It would be necessary to implement all the measures fully to get synergy. Treating this as a menu to pick from would help a bit, but wouldn’t deliver the startling results that are possible.
With these measures in place Greece would instantly have no budget deficit before interest payments. A surplus would be guaranteed. Then the foreign currency brought in by tourism and trade would be used to steadily pay down the government’s external debt. As this happened the economy would just motor away. Using the economic lessons we have learned from Thatcher and Cowperthwaite we know that this would happen. And Greece would very rapidly be rich again.