Maybe Freer Markets Would Help Greece

See What’s Broken in Greece? Ask an Entrepreneur from the NY Times, 1-30-11, business section page 1 (or BU1). Excerpts:

"For decades, Greece has been a wonderful place to be a lawyer, a pharmacist, an architect, a university president or even a truck driver— all occupations protected by an array of laws that have shielded them from local and foreign competitors. Greek pharmacists are guaranteed a minimum profit on their sales and charge some of the highest prices in Europe. And because they have fixed minimum fees, the 40,000 or so lawyers in Greece receive more for their time than their peers in many other European countries."

"The Greek economy is riddled with distortions — the number of trucking licenses has remained unchanged in Greece since 1971, for example, and the country is among the world’s leaders in lawyers per capita. It has one lawyer for every 250 people, compared with about one for 272 in the United States."

"The cost of labor in Greece from 2005 to 2010 has been, on average, 25 percent higher than in Germany,..."

"Quite simply, Greece has had trouble producing goods and services that people want to buy..."

"The International Monetary Fund and the Greek government agree that lasting progress can be made only by instituting reforms that would make it easier for Greek companies to produce export-quality goods. Such measures include cutting taxes, easing the path for companies to win investment permits and — as entrepreneurs like Mr. Politopoulos hope — scrapping outdated laws that restrict business production."

"George P. Zanias, the top economic adviser to Greece’s finance minister, George Papaconstantinou, said: “Historically, the supply side of the economy has been neglected — it was just a question of increasing demand. Vested interests built up and economic distortions increased.”

Companies in Greece had grown fat and lazy by selling their products in a protected local economy that was forever stimulated by government deficit spending, Mr. Zanias said. Over the years, Greek companies felt little need to emphasize exports, and the country became one of Europe’s most closed economies, with exports accounting for just 20 percent of economic output — about half the average for the euro zone."

"“Greece has never been an easy place to do business,” he [Zanias] conceded with a sigh."

These thoughts were echoed by Nobel Prize winner Christopher Pissarides. See Greece Needs Growth Policies: Alongside Cuts, Nobel Winner Pissarides Says. Excerpts are:

"...the country should cut corporate taxes and reduce the number of state workers to revive the economy."

"...taxes on companies should be cut to 10 percent to help boost foreign direct investment, while the introduction of Individual Retirement Accounts could attract savings equivalent to 5 percent of gross domestic product within a decade,..."

"Public payrolls should be cut to 700,000 by 2015 from 1.1 million through the sale of state companies, which would reduce the wage bill by 8.6 billion euros (11.9 billion), according to the article. Giving companies the right to build and maintain infrastructure such as roads and airports tax free for 30 years would lift productivity by as much as 40 percent..."