Where goest thou Greece? While the Greek economy is falling off the proverbial cliff, this question stays on the mind of world leaders, keeps Brussels bureaucrats awake at night, and intrudes on the daily lives of 4 million Greek households. Should we expect in 2013 an end to, and a slow recovery from, the deep recession that has so afflicted the national economy? Will people slowly regain the decent incomes they used to enjoy before 2008? Or is the country headed for a permanent decline in its living standards that would put it on a par with its Balkan neighbors? Politicians seem to be betting on a substantial recovery, continuing to focus on short-term tasks like paying public sector wages and pensions for another month. And the public continues to put its hopes for an exit from the crisis on “silver bullet” pledges from politicians who promise to avoid or delay the structural reforms recommended unanimously by experts since 2008. Current data show that Greece has a lot of work to do before it comes close to fulfilling the preconditions for successful economic development laid down by Adam Smith in The Wealth of Nations: “peace, easy taxes and tolerable administration of justice”. International comparisons rank Greece in the bottom half of the world in terms of social tranquility, over-regulation and corruption. Under these conditions, a recovery in the near future seems improbable.
This is a summary of an article by Costas Azariadis, titled “Quo vadis Graecia?” and published in Kathimerini on 30 September 2012. The full article here.