The report from the International Monetary Fund is remarkable in its candor: Efforts to bail out Greece were fumbled as the IMF, the European Commission, and the European Central Bank all tried to promote their own agendas with little regard for the lowly Greek citizen. Happily the disclaimer appeared on the front page: “The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Greece or the Executive Board of the IMF.”
That said, the staff noted that the purpose of the Greek bailouts in 2010 and 2011 was to “restore market confidence and lay the foundations for sound medium-term growth through strong and sustained fiscal consolidation and deep structural reforms, while safeguarding financial sector stability and reducing the risk of international systemic spillovers.” In that single sentence, the staff exposed the various agendas and conflicting purposes and goals, making their accomplishment virtually impossible. It was like trying to drive a bus to opposite parts of a city, simultaneously, by a committee. It failed miserably, and the real lesson to be learned was never even mentioned: Let the owner of the bus drive it.
Let’s parse those objectives: First, "restore market confidence." The only way that can happen is if the market is left to its own devices, letting individuals make their own personal decisions about how best to direct their own lives, with a minimum of government interference. That would never be allowed to happen in Greece.
Next, "Lay the foundations for sound medium-term growth through strong and sustained fiscal consolidation and deep structural reforms." This is IMF-speak for temporarily slightly lower government spending and increased compliance with Greece’s perverse income-tax laws. However, income-tax evasion in Greece is widely accepted as a national pastime. As a percentage of the total economy, the underground economy in Greece is more than three times larger than in the United States and it takes four times as much government effort to collect taxes from those above ground as it does in the United States. It’s part of the culture of corruption in Greece.
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