Thursday, June 14, 2012

Why one could vote for Alexis Tsipras! (but shouldn't!)

My thoughts on Alexis Tsipras and SYRIZA have evolved as shown in the following articles (in chronological order).

Cheers for Alexis Tsipras! And more...

While I have changed my argumentation as things evolved, my general line of thinking has remained unchanged, namely: Mr. Tsipras is an unusually charismatic leader at a time when Greek politics are desperately short of charismatic leaders; thus, he is a force to be seriously reckoned with. Secondly, Mr. Tsipras makes exactly the type of soundbites which a society in stress and distress loves to hear (and his opponents are dumb not to copy some of them!). The fact that Mr. Tsipras doesn’t support his soundbites with hard facts is not too surprising at this point. This is a political campaign and not a PhD examination. Finally, Mr. Tsipras is only electable if he allows himself to be advised that some of his soundbites must not be meant seriously. Here, Mr. Tsipras does not leave the impression that he will allow himself to change his mind and this is why he is not electable in my view. Below are the details.

1st, Mr. Tsipras calls for a National Plan for Reconstruction and Growth. Wonderful! I have argued since the beginning that this is necessary only that I called it a Long-Term Industrial Development Plan laid out for the period of one generation. The idea is the same; we differ as regards implementation. Mr. Tsipras seems to think that throwing other countries’ savings at the Greek economy and giving the state a predominant role in distributing them would take care of all problems. I argue that only when other countries’ investors start trusting the Greek economy to invest there can there be a chance for a future.

2nd, Mr. Tsipras uses several other wonderful soundbites which go down like honey. Such as: ending Greece’s corrupt and inefficient political and regulatory systems that have ravaged the economy over the past decades; averting the country’s evolving humanitarian crisis; creating a new path to growth through transparent government; enacting a tax reform so as to identify the wealth and income of all citizens, and to distribute equitably the burden of taxation; etc. My ears can't get enough of such soundbites!

3rd, Mr. Tsipras outs himself as a fiscal conservative. He calls for stabilizing public expenditure at approximately 44 per cent of GDP and reorientating this expenditure to ensure it is well spent. This has been my point for ages. Mr. Tsipras also aims at increasing revenues from direct taxation to the average European levels of 44% over a four-year period. This, too, has been my point for ages. If you do the math, you will conclude that Mr.Tsipras plans to balance the budget within 4 years!

4th, Mr. Tsipras apparently knows the difference between what one shouts into public megaphones and what one communicates officially to negotiation partners. Into the megaphones he shouts things like “declaring the MoU null and void”; “calling Germany’s bluff”; etc. The small print reads quite differently and more sensibly.

So, with all of those wonderful perspectives, why not go out and vote for SYRIZA, give it an absolute majority and await the Golden Age for Greece? (and for Europe, for that matter!).

As flexible as Mr. Tsipras is here and there, in one area he seems to be totally unflexible if not so say ideologically dogmatic. He does not seem to trust that “economic agents” will take the right decisions in a market-based economy as long as the incentives/disincentives are set properly by the government. Instead, he trusts the elected government more to take the right economic decisions than the free economic agents. Privatizations will not happen under his regime; instead, there will be nationalizations. The public sector will not shrink; instead it will expand. Foreign investment will not come; instead, it will depart. Capital will not enter the country voluntarily; instead, Mr. Tsipras thinks he can force it to come. Greece will not become a modern economy; instead, it will return to the 1960s.

Ever since I observed the unusual political talent of Mr. Tsipras emerging, I had been hoping that someone might persuade him of the following: the future of Greece will depend on allowing the Greek people to unfold their willingness to work hard, their creativity and ingenuity, their power of improvization, etc. – to allow those forces to play out in as unhindered a fashion as possible. To entrust the future of Greece into the hands of politicians and bureaucrats, to rely on their creativity, ingenuity and power of improvization is what will return Greece to the 1960s.

So what do you prefer for your children? The 2020s or the 1960s? There is more than half a century between the two!


  1. The problem is not just Mr. Tsipras's credibility; it's an issue of alternatives. So let's first start with alternatives: Voting for the pro-memorandum parties. These are the parties that have brought the country to this point and now are called to be its saviors. They advocate the Pangalos logic "because I did not do the job I swore and was handsomely paid to do, namely voted for deficit upon deficit for 35 years before finding out that debt is a bad thing, appointed incompetent party members to key positions, threw and keep throwing money out the window and did nothing about tax evasion and publ;ic administration, it's EVERYBODY's fault and YOU(the rest) should pay for it".
    We are talking about Mr. Samaras who says he has agreed with his EU counterparts to renegaotiate the 'bad aspects ' of the memorandum, without specifying what they are in his view. And, you have Mr. Schaeubble saying it ain't so. We are talking about parties still ignoring their own laws to appoint their own incompetent friends. We are talking about parties that in the midst of this crisis, find a government land and 15 mil for such a productive investment as building a mosque and paying for eternity(with state money) a mufti. And of course, undertaking the obligation to do the same for any other religion.[the left, including Mr. Tsipras also voted for this]. Now if this simple thing is not a strong warning to stay away for such parties, I do not know what is. If I have a 100000euro debt, I certainly will not spend 100euros on a tatoo; even though it's a small percentage, paying the debt means cutting unnecessary expenses.
    As for the memorandum: In order for greece to be 'trustworthy ' to its lenders, it has to be completely untrystworthy, even fraudulent to its own citizens. For example:
    -paying the lenders comes BEFORE paying pensions and medical expenses- even though pensions and social security are money the pensioners and insured have PAID to the state
    -changing by law existing PRIVATE contracts. This is as silly as the german state intervening in Bundesliga contracts and saying players contracts, no matter what they say are only valid for another year and if the players do not agree to the new terms, they get minimum wage. Yet this was a troika demand implemented

    But leaving the pain aside, where is the gain? If you decrease wages in the private sector, then a) you lose direct and indirect taxes, b) pension and social security funds collapse and c) anyone who can will leave the country. And if you think foreign investment will flow in, think again: Would you really invest in a country where the government intervenes in PRIVATE contracts? Even if so, why invest now and not wait for more measures and further decreases? So if the choice is between defaulting now with a primary deficit of 5bn and followingthe memorandum and defaulting in a few months with a primary deficit of 30 bn, and german taxpayers being even more upset about losing even more bailout, I'd rather default now: It's certainly more honest.[the complaints about Greece not fullfilling ts obligations do not hold water: It was well known that this was a government elected on the basis of fraud as they did the exact opposite of what they promised and the measures taken were hugely unpopular-as withnessed by the demonstrations and also the fact that the troika demanded the two (then)main parties signing.

  2. First, whether we like it or not the election is always about alternatives. So let’s first take up the pro-memorandum parties.
    These are the parties that have brought the country to this mess and now the greeks are supposed to beg them to save them. We are talking about the parties that voted for 40 years for deficit upon deficit before discovering what a bad thing the debt is, appointed and keep appointing incompetent party members, threw and keep throwng state money out the window and done nothing about tax evasion(NOT practiced by the majority of the population) and public administration. And, according to the Pangalos logic, because these people failed to do the job they swore and were handsomely paid to do, it’s EVERYBODY’s fault and the rest must pay for it. Mr. Samaras leaks that he has already agreed to a renegotiation of the ‘bad parts’ of the memorandum with the lenders, without specifying what these ‘bad parts’ are specifically. Plus, major players like Mr. Schauebble have categorically denied this. In addition, we are talking about parties that still break their own laws to appoint their friends and parties which in the midst of this find a government land and 15mil to give for a very productive investment such as ... a mosque plus the obligation to pay a mufti for eternity, all with state money(plus of course the same for any other religion). [The left, including Mr. Tsipras happily co-voted for this]. So we are talking about people with 0 responsibility. If I had a 100000euro debt, I would not be spending 100 euros on a tattoo. The 1000 000 euro is made up of ‘small; pieces like the 100 euros. If I waste them on tatoo, they need to be saved from somewhere ele, such as food or medicines.
    In order for the state to be trustworthy towards its lenders, with the memorandum it signed it agreed to be completely untrustworthy, even downright fraudulent towards its own citizens, such as
    -pay the lenders before pensions and social security(medicines), although these are money that the citizens have already PAID.
    -intervene and change existing PRIVATE contracts. This would be tantamount to the german government unilaterally changing Bundesliga players contracts: no matter what the contract says, it will be voided in a year and if the player does not agree, then he gets minimum wage.
    Mind you, the previous government was the result of fraud(it did the exact opposite of what it had promised) and the huge demonstrations made thetroika demand signatures from the two major parties(not the country or the people)

    But the point is not the pain, it’s the lack of gain: When you decrease wages in the private sector, you lose direct and indirect taxes, pension and social security collapses and whoever can, leaves. So if it were up to me, I’d rather default with 5bn primary deficit than with 20 after a few months. Because the deficit is increasing. It’s more honest also to the german taxpayers who will be angry for losing even more. As for investments, would you invest in a country where the state intervenes in private contracts? Even so, why invest now and not let this go further down, so wages will be asked to fall even more? So the pro-memorandum alternative is out of the question.

  3. Now comes Mr. Tsipras: Mr. Tsipras has 3 major problems: 1) he has not shown competence-on the contrary(see the mosque example). In chess, sacrificing the queen if you have seen a forced mate in 4 moves may be a brilliant move, but you'd be better off not doing it if you have not seen the mate and play the right first, butthe wrong second move.
    2) he has adopted a rather uncivillized attitude towards France and Germany -the point was exactly to explain that "thanks, but we cannot follow that path because it goes nowhere"
    3)he is completely off the walls with respect to other noneconomic issues, such as illegal immigration "give them travel documents and send them to europe"
    However, note that the "creativity, ingenuity and power of improvisation" is stymied not by high wages, but by "do-nothing jobs" getting paid much more(and with the new measures, ingenuity will be even less attractive), corrupt and incompetent managers, whose strategy is outsource everything so they have their next job waiting for them.