07 August 2011

Lessons from Greece

The Guardian | Aditya Chakrabortty | Greece in panic as it faces change of Homeric proportions

Jason Manolopolous, who is author of a new book called Greece's 'Odious' Debt, says that for years Greece was buying more from the rest of the world than it was selling. "We were buying BMWs from the Germans and selling them tomatoes."
That sounds remarkably like the wonderful "Iowa Car Crop." If such trade is available – sans subsidies, of course – then embrace it and enjoy it.
By European standards, Greece has an average-sized public sector, but a very leaky tax collection system. What the public sector is, however, is under-resourced and inefficient. On my last day in the country, I wangle my way inside a public pensions office for those working in the tourism industry: there are just two Dell computers in one large room, and lever-arch files dating back 30 years. No one ever paid for the data to be computerised, I am told, and the result is that one day's work takes three.
I think there are two very different conclusions you could draw from this reporting. The one I think the Guardian wants you to reach is that the public sector does a poor job because it is starved for resources.  The remedy for this diagnosis is bigger government budgets, of course.

But the conclusion I see is based on the Fundamental Axiom of Government: "government exists to give power and money to politicians, government employees, and clients of the government." Pensioners are not the clients of the rulers. The pension office employees are. Investing in computers for the office would displace labor with capital. That is not in the interest of any of the bureaucrats or politicians in the decision making chain.

Recall what I said recently about protectionism in Greece: it is difficult (compared to the recent past) for an EU country to create important restrictions which artificially prop up employment in tradable sectors. it is easier to create artificial floors in non-tradable sectors like bureacracies. Neglecting to digitize records is one way of doing that.

Don't think this only happens in Greece.  The Indiana Toll Road is set up so that drivers get a stamped ticket when they entered so that the toll-taker at the exit knows where they got on.  For a long time the ticket was given out by a person in the tollbooth.  The state government resisted replacing these people with the sorts of automatic ticket dispensers you see at garages until late last decade.  They similarly dragged their feet about E-ZPass for the same reason.

2 comments:

  1. > the Fundamental Axiom of Government: "government exists to give power and money to politicians, government employees, and clients of the government."

    I like that. ;-)

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  2. i think some clever dude in Massachusetts thought that up ; )

    I would have linked it, but there's nothing but a 403 page to point to anymore. Shame.

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