FT.com / Columnists / Wolfgang Munchau - What the eurozone must do if it is to survive.
Wolfgang Muchaus says amongst other things:
[T]he EU should at some point revisit the now almost totally decaffeinated proposals for financial supervision. What started off as a deeply unimpressive set of recommendations by the De Larosi?®re committee ended up further diluted as it proceeded through the EU’s legislative mills. The financial system remains the single biggest threat to the long-term stability of the eurozone economy. Fragmented financial regulation makes no sense in a monetary union and is potentially lethal.
But is that what finance wants? Maybe they don't want a Eurozone?
But it's also fair to note the FT reports today that:
Greece will be told this week to cut public sector wages and improve tax collection under a European Union initiative to prevent its financial troubles from destabilising the eurozone.
Greece has an appalling record in collecting tax going back over many years. The reality that states that fail to collect tax will in due course suffer major crises, and a threat to their democratic well being must be faced. Of course it can be argued that in Greece this is the result of a massive shadow economy, but the failure to tackle it is the culture of neo-liberalism that has promoted the idea that the state is harmful.
The evidence that neo-liberal economics is the cause of the problems we're in grows daily. What we can be sure of is that it offers no solutions at all.
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First before I am accused of being anti-Greek, I acknowledge that the Greeks practically created Europe in the clasiscal era and in the Byzantine era were wholly responsible for protecting Europe from the Moslem empires. However, modern Greece is borderline third world and the idea that it could be harnessed to economies like Germany and France, within a laissez faire framework, without incredible stresses on the economies or the shared currency was crazy.
“Of course it can be argued that in Greece this is the result of a massive shadow economy, but the failure to tackle it is the culture of neo-liberalism that has promoted the idea that the state is harmful”
No, Richard, it has nothing to do with neo-liberalism. There is a huge cultural gulf between the north and the south, and Greece, like Italy and Spain, is a country where tax dodging and low level corruption is a national past time. The fact that, for example, in Italy houses are taxed on internal floor space, and so new houses are customarily built with false internal walls that are removed as soon as people move in may have many causes, but neo-liberalism is not among them. And in Greece there are all the poles to signify roofs, which is another tax related practice, I believe.
Corruption, nepotism and crime over many centuries is a more likely cause than neo-liberalism.
To support Mad’s comments, the poles that you can see on the roofs of houses are for avoiding the Greek wealth tax. If a house is “finished: then its value is included in the owner’s assessment for wealth tax purposes. If the house is “unfinished” (ie: it still has the poles on the roof for the next floor to be added) then there is no inclusion for wealth tax purposes.
When you couple this with tax inspectors who request “incentives” for settling tax audits, you get a better picture of why the Greek economy is in the mess it is.
Richard, you may not like this, but these are facts!!!!
Richard M.,
May I repsectfully point out that Greece had a left-wing government for almost the entire period since joinig the EU under the PASOK and the Papandreou’s (father then son).
The low-level corruption, questionable tax practices and other form of bureaucratic abuses are not the exclusive preserve of the left in Southern Europe (witness the Spanish right in Andalucia), but PASOK did nothing to prevent their occurence.
Neo-liberalism hs got nothing to do with it.
@Ted B
You mean to say neo-liberalism has had no impact on some so called left of centre governments?
Pull the other one
@Richard Murphy
Ae you telling us that PASOK is too liberal and right-wing for your liking? It appears to me that PASOK was rather to the left of most European social democratic parties. The only exception was and is the level of defence spending.
Do you see it differently?
@Ted B.
I have no opinion either way
What I do know is it really doesn’t matter – your opinion is fixed
The Southern European cultural approach to black markets and bureaucratic corruption seems to me to be a far older tradition than “neo-liberal” economic theory. I would suggest that the former is an inspiration of the latter, rather than a consequence.