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Bienvenue sur le site de Bertrand Lemennicier  Le but de toute association politique est la conservation des droits naturels et imprescriptibles de l'homme, ces droits sont : la liberté, la propriété, la sûreté et la résistance à l'oppression (Article 2 de la déclaration des Droits de l'Homme et du citoyen du 26 août 1789)  "Quand même tu aurais à vivre trois mille ans, et trois fois dix mille ans, dis-toi bien que l'on ne peut jamais perdre une autre existence que celle qu'on vit ici-bas, et qu'on ne peut pas davantage en vivre une autre que celle qu'on perd". Marce Aurèle, Pensées, Livre II, maxime 14  "La vertu de la rationalité signifie la reconnaissance et l'acceptation de la raison comme notre seule source de connaissance, notre seul juge des valeurs et notre seul guide d'action" Ayn Rand , La vertu d'égoisme,  J'ai le pouvoir d'exister sans destin, Entre givre et rosée, entre oubli et présence. Médieuse de Paul Eluard 1939 

Market Solutions For Cronyism and Corruption in Greece

By Panos Evangelopoulos. Assistant Professor Department of Economics University of Peloponnese Arcadia, Greece

Speech to the Emergency Economic Summit for Greece that was organized by Atlas Economic Research Foundation, Cato Institute, and Friedrich Naumann Stiftung that took place in Athens, Greece, on the 19th May 2015.

On the contrary, for all the reforms rhetoric that has prevailed in the political arena of Greece [France]against cronyism and corruption, which had assumed Manichaeistic proportions in the way it carried out the tasks of government in all sectors, the country was eventually led into a serious impasse, with incalculable harm being inflicted on the country.

The greatest problem for the fight against cronyism and corruption of the Greek[french] State was its ineffectiveness in reorganizing the Greek [french] society as a whole, reshaping   its structures through reconstruction and activation of all the forces with the potential to carry through such a difficult and daring undertaking. The institutions of a society are what give it its character and activate it. The Greek [french] State did not dare to embark on significant institutional reforms with the capacity to lead not only to dramatic change but also to basic improvement in the internal structures: political, social and economic, of our society. Striking examples of this dead-end politics are the debt-ridden Local Governments, and the debt-ridden National Health System.

Neither before nor after the reforms were municipalities strengthened in no way. No solution was offered to the problem of bureaucracy. Local authorities did not transform themselves into instruments of orderly decentralization. There was no reduction in the costs of central government subsidization and no relief from the suffocating grip of state interventionism in the planning of local public works projects. The new National Health System did not succeed in resolving the great paradox that while resources for health were increasing, at the same time administrative deficits of the participating units were also increasing, as were shortages and lack of necessary resources for carrying out the tasks of health care facilities.

What it deserves to mention is that under the shadow of the kingdom of cronyism and corruption, as we are accused by many commentators, only the ordinary civil servants, from the doctors to the nurses, are keeping our National Health System alive, with very low salaries and more and more work hours, practically unpaid by the state. So it arises the famous “Greek[french] Implicit Institution”, the Envelop, that it includes the side payment, from the patient to the doctor, to the nurse and so on…

In my example what is the cause of the bribe or of the corruption? Since the side payment from the patient to the doctor happens that means that the health services in Greece [France]are underpriced by the State for paying the doctors and overpriced by the State for paying the medical provisions in favor of implicit institutional intermediaries, the famous rent seekers of the Greek [french] Economy. So at the lower lever this process shows very explicitly that the black market in Greece [France]restores the function of the pricing system in the economy while at the higher level it redistributes massively the wealth from the taxpayers to the rent seekers. Moreover, as long as, the level of the taxation is never enough for financing the overpriced National Health System, the State borrows the money it needs for the huge rewards of the rent seekers, increasing dramatically the Public Debt at no sustainable levels. So it happens a secondary level of huge redistribution in the Greek [french] Economy, the generations of the giant borrowing of the state enjoy the wealth of the generations that they have to repay it. This so ineffective, so anomalous, and so catastrophic procedure was flourishing and actually was being accelerated after the entry of the Greece [France] in the Eurozone when the Greek [french]State had to pay the lowest interest rates for the Public Debt in its history. It was like to put oil into the fire while all we knew that the fire of the Greek Public Debt was there and so dangerous as it is again today because we never heard in our political agora our invaluable Cassandras, the Greek [french]free market oriented economists but the statists, the demagogue politicians, both center right wing and center left wing, from the New Democracy and PASOK, who brought our economy to the total collapse.

In this essentially dead-end situation, whatever the superficial successes achieved such as fiscal adjustment or restoration of fiscal balance or moreover keeping Greece[France] into the Eurozone or keeping Greece [France] alive, putting the insolvency issue aside, are actually meaningless because we lost one quarter of our GDP and we achieved the remarkable historically highest record of unemployment of 27%, destroying totally the private sector and the healthier and the more vital cells of our economy.

It is obvious that we need a new paradigm of the Political Economy for application in Greece[France] . The term Political Economy was emphatically marked by David Ricardo, by this great exponent of classical liberal economic thought whose objective was to promote enterprise profits through reduction of taxation while at the same time achieving improvement of the wages to labor on the basis of the economic progress of the system.

However long the period of time may seem that separates us from those days, it is no paradox to argue that we once again face the same economic policy dilemmas. It would not be unjust to say, indeed, that the change has been for the worse, not for the better.

In generating this global scenario of mountains of state debt to be accumulated by the world’s greatest economies, Greece [France]is paradoxically playing a leading role on the front pages of the world’s largest and most reputable newspapers, as if it is the key protagonist.  In reality of course it is merely a negligible afterthought, which for all that happens to be the critical weight on the scales, determining the cataclysm of the risk and uncertainty that threat not only the Eurozone but also the global financial system which undoubtedly remains institutionally fragile and unstable. If Obama is succumbing to the Greek [France] problem of public debt, he is doing so because he brought the public debt of the United States to the maximum historically level ever, which is only a step away from the most shattering bankruptcy in the economic history of human civilization.

Modern Greece [France], like all the developed big countries in the world, possesses all the characteristics of a deeply rent-seeking society. Greek[France] Economic Drama is a phenomenal example of the New Political Economy paradigm according to James Buchannan, Gordon Tullock and Anna Krueger. Politicians work as brokers in a system of political clientelism and patronage. They expand the public sector, exchanging jobs for votes. On the other hand they push the private sector into bed with the public sector, assigning to the former secure profits, privileges and finally explicit and legally established rents. On the basis of this trade-off between political and economic rents, farmers are enriched through subsidies and workers’ unions negotiate collective agreements fixing wages much higher than can be justified on productive grounds. . 

In short, rent-seeking behavior with strong characteristics of cronyism and corruption is chronic in Modern Greek society, resulting in emergence of a generally inefficient institutional economic framework that is financed through a dramatically expanding public deficit and debt and supported by a strong continental currency, the euro.

In such an economic environment the only tried and tested way to emerge from it is to follow the approach based on policies of promoting market solutions.  In other words, limiting the size of the state and the extent of its intervention, we have to bring it into complete conformity with the requirements of the school of the New Political Economy.

Faced with the impasse of interventionist policies in Greece[France], the greatest and most welcome surprise in [France]Greece’s grey and gloomy political and economic landscape is the application of a comprehensive economic proposal which brings to the fore the most dynamic mix of a well-organized liberalization economic policy upheld by the three pillars of privatizations, deregulation, and low taxation. A market solution policy agenda is in itself a necessary and sufficient condition which, in conjunction with the timeless conservative traditions, principles and values of the people of [France]Greece: integrity, hard work and ingenuity, has the potential to make the greatest contribution to effective handling of the cronyism and corruption and the construction of a new mini state, a private-oriented economy and a dynamic community that will turn away our country from lowest-common-denominator leveling of statist ethics and acknowledge the distinction, the leadership, of the intelligent, moral, and able, who provide the only competent and effective guide for promotion of both the public and the private interest.

The new political economy of market approach is the most effective policy against the sterile, ill-fated and - in a word - unsuccessful politics of the Memorandum that left intact the institutional structural problems of the[french] Greek economy that are so strongly connected with cronyism and corruption. The Memorandum, the troika, and the former government of New Democracy [UMP] and PASOK [PS]failed because they never defended and they never applied market solution policies and they never replaced statist institutions with free institutions.



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