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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (248226)	3/28/2014 9:03:38 PM
From: neolib	Respond to of 543161

What does Krugman think of that?

To: Sam who wrote (248226)	3/29/2014 11:57:08 AM
From: KyrosL	Read Replies (1) \| Respond to of 543161

That article's title greatly overestimates the progress in Greece. Greece needs extreme structural changes to remove dysfunctions that have been built over many decades by both "conservatives" and socialists. Few of these desperately needed structural changes occurred during this crisis, so the opportunity is almost gone. Instead, the Greek government took a meat cleaver approach to all public sector salaries and pensions, reducing them by an average of about 30%, and also instituted a 40% cut across all services. The huge public sector was reduced very little, although its costs dropped by 30%. Think of it as a gigantic sequester, but without firing anybody. Obviously this is not efficient at all. At the same time Greece has lucked out greatly on Mediterranean tourism, its main industry accounting for 15% of GDP. Record numbers of tourists visited last year, and another record is expected this year. It's the result of the situation in Egypt, Tunisia, Syria, Libya, and now Turkey. To give you an idea of the hundreds of dysfunctions built into Greece's economy, consider the situation with pharmacies. There are huge numbers of mom and pop pharmacies all across Greece. There are rigid rules and regulations as to who can be pharmacist, the distance between different pharmacies the list of products which pharmacists can sell (and nobody else is allowed to sell, like supermarkets), and even the prices at which the products can be sold (in general, no discounts allowed). Things like vitamins, and a whole host of other non-prescription drug products can only be sold by pharmacies. It's a situation much more reminiscent of the former Soviet Union than a modern capitalist economy.