Greek finance minister Yanis Varoufakis has just published another article, this time titled “A Blueprint for Greece’s Recovery,” on Project Syndicate.
It may be a bit premature to be thinking about grand recovery schemes while Greece’s public finances are circling the drain and the country is still struggling to secure its latest bailout, but Varoufakis’ interventions are always some of the most interesting of any European policymaker.
Here’s his basic message:
The barriers to growth in the past were an unholy alliance among oligarchic interests and political parties, scandalous procurement, clientelism, the permanently broken media, overly accommodating banks, weak tax authorities, and a weighed-down, fearful judiciary. Only the bright light of democratic transparency can remove such impediments; our government is determined to help it shine through.
He’s got some slightly more clear plans to make that happen (though they’re a little bit optimistic). He wants Greece to set up a powerful development bank, perhaps in conjunction with the European Investment Bank. This would allow dividends to be “channelled into the long-suffering pension funds.”
That would work by raising capital leveraged from state assets: “Instead of being viewed as a fire sale to fill fiscal holes, privatization would be part of a grand public-private partnership for development.”
Varoufakis goes on:
In this scenario, the task of bolstering social security would be completed with the unification of pension funds; the surge of contributions following the pickup in employment; and the return to formal employment of workers banished into informality by the brutal deregulation of the labour market during the dark years of the recent past.
One can easily imagine Greece recovering strongly as a result of this strategy. In a world of ultra-low returns, Greece would be seen as a splendid opportunity, sustaining a steady stream of inward foreign direct investment.
It’s all a little bit pie in the sky. Greece hasn’t suffered from a lack of government interventions in the economy in the past — rather from corrupted interventions. Varoufakis concedes that “regulatory authorities would be keeping a watchful eye over commercial lending practices,” but isn’t much clearer than that.
What’s more, the finance minister may not have time to institute his grand plans. Recent events have suggested he’s being sidelined a little, even by his own government.
For a good breakdown of some of Greece’s long-term problems, there are few things better to read than Pseudoerasmus’ “Greece from Postwar Orthodoxy to “Democratic Peronism’,” which takes a look at Greece’s political economy over the second half of the 20th century.