Technocrats Take Over Greece
By Staff News & Analysis - August 04, 2010

Greek Government Hauls in Billions in Back Taxes … In a bid to increase revenues, the Greek authorities are employing all kinds of clever tricks to crack down on tax cheats, including using Google Earth to find undeclared swimming pools. But efforts by the government to liberalize markets could unleash a wave of civil unrest. There are very few people who can speak passionately about statistics and use words like "logical beauty," "great purity" and "pure poetry" when talking about ordinary numbers. But when Nikolaos Logothetis, 57, expounds on numbers, it sounds like a love poem. "The science of statistics has its own language," says Logothetis, a tall, thin Greek with a carefully trimmed beard and professorial glasses. "We only have to listen attentively to what it has to say, if we want to understand the ills afflicting our country." This is a remarkable statement to make in Greece, which currently has the reputation of being the home of fudged and forged statistics. – Spiegel Online

Dominant Social Theme: Now Greece will be run efficiently.

Free-Market Analysis: Those who bother to read the Daily Bell semi-regularly will know that there has been feedback discussion about the Bell's perspective that austerity for Southern Europe is not a good thing. Much pushback to this perspective has come in the form of comments that it "serves the Greeks right." Of course we believe all this to be some kind of dominant social theme purveyed by the power elite. If verbalized, it would go something like this: "The Greeks and other sunny countries are really corrupt and it is a good thing that reality has slapped them in the face. Now uncollected tax dollars can be put to good use."

It is interesting that such analysis emerges in Der Spiegel, which is among the most mainstream of publications in Germany. The idea, of course, is that Germans pay their taxes and the German state manages the taxes well and effectively. This ignores the huge amounts of money that pour into Switzerland from Germany because in fact Germans like most normal and sane people do not like paying taxes, especially exorbitant taxes – which even the most efficient state wastes. We are not by the way advocating that people avoid lawful taxes. What we do maintain emphatically that taxes are to a large degree a waste of money.

Taxes go to help the poor and indigent, to furnish services for the middle class and to pay for military defense and to furnish the paraphernalia of the state. These are the basics. But in fact, the free market through charity can probably provide better services to the poor and indigent. The middle class generally does not need services such as government-provided health care and old-age retirement programs, for middle class people can do better on their own in terms of providing for their own security and health. Probably the less military spending a state does the better and it is unclear (to us anyway) that a thriving Leviathan (bureaucracy) is a blessing.

So there you have it. Most of what the modern regulatory bureaucracy does is feed on citizens like a slug, fattening on various forms of taxation and then finding ways to justify even more of it. People know this instinctively, which is one reason why people fight so hard to lower their taxes and why some are driven not to tax avoidance but to tax evasion.

We have started with taxes, but let us extrapolate a little. We don't think government generally is efficient – or that if it is efficient, it provides any great benefits as a result. In fact, we think modern regulatory democracies are terrible places to live in and constantly getting worse. The US in many ways is an evolving authoritarian society; in observing the European Union we regularly get the feeling that Brussels would like to ape the US as much as possible as soon as possible.

We are not for an efficient, modern, Democratic government of any kind, therefore. An inefficient regulatory democracy is livable because it means very simply that the regulations that spew out of the legislature are regularly and roundly ignored. An efficient regulatory democracy is a most uncomfortable place with authorities actually enforcing a full panoply of niggling rules and regulations that over time can have fairly Draconian ramifications. (One in-the-news example that comes to mind is Lindsay Lohan who as the result of two minor traffic accidents three years ago has now been basically incarcerated for three-to-six months and is likely to lose a major movie role.)

Until recently, Greece was run in a fairly relaxed way (in between military juntas anyhow). The country was a tourist destination and every so often it would devalue its currency and banks and institutional investors, who could afford it, would take a bath. Many in Greece worked for the government because the private sector was not generating the necessary jobs. Nonetheless, Life was Good, or at least a little better than it is now.

Now, we are told by Spiegel, the Greek government is getting into the German swing. What's really going on? The Greek elites, harassed and bullied by the EU, are about to make it miserable for everyone else. It wasn't enough that the Greek elites walked off with EU funds while dragging Greece into the EU under a false pretext. Now these same elites are content, even eager, to make their fellow citizens pay.

For the foreseeable future life is going to be a whole lot grimmer for Greece. People who have avoided paying taxes illegally (maybe in order to sustain a livable lifestyle for their families) are now living in fear. People who turned to government jobs for a living are now seeing their futures disappear. The government will collect more money it is true, but it is money that may flow to the big commercial banks that helped Greece sustain its position in the EU. The money that Greece gained from these banks and from the EU itself has been wasted. Most of it likely hasn't gone to the average Greek, but to a handful of wealthy Greeks. The average Greek will be paying for years to come.

This is why we have long predicted that the fairly volatile tribes of Europe won't stand for such faux austerity – or not for years and years. The scam is too widely known. The unfairness is too evident in this era of the Internet. European media is filled with stories about how the citizens of various countries are struggling to cope with new, restricted circumstances because out of such privations a better Europe will emerge. We also note that the level of violence is rising.

We see no reason to celebrate either Greece's commitment to austerity or the socialist government's ability to squeeze more taxes from suffering Greek people. The euro itself made goods and services more expensive in Greece and other Southern European non-manufacturing countries. Credit card companies have done well in Greece.

After Thoughts

Now, as the financial crisis rolls on and austerity bites harder, there is no money to pay back those credit card loans. Taxes and back-taxes are being collected aggressively. As always happens in a regulatory democracy sooner or later, government is making it increasingly difficult for the average person to survive at any level above poverty. This is the brave, new world provided by the European Union. This is the state of affairs ushered in by a new and efficient Greece.

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