In a rush to raise funds, the Greek government has – since 2011 – been trying to sell off state assets. Two years ago, 39 airports, 850 ports, railways, motorways, sewage works, energy companies, banks, thousands of acres of land for development, casinos and Greece’s national lottery were all put on the market.
The sale was deemed necessary to help pay back the 110 billion euro debt Greece incurred in return for being bailed out by the “troika” of the European Union, European Central Bank and the International Monetary Fund back in 2011. Under Prime Minister Antonis Samaras, Greece worked doggedly to receive each installment of funds, the latest being secured last week.
Again and again, Greeks have been subjected to austerity measures including job and pension cuts. Such policies have been championed as the antidote to save economies ridden with massive debt largely due to an article, Growth in a Time of Debt, by Harvard University economists.
However, Thomas Herndon, a University of Massachusetts graduate student, has discovered that some of the calculations in the study contain “major errors. In particular, Herndon found that the Harvard economists had “accidentally only included 15 of the 20 countries under analysis in their key calculation (of average GDP growth in countries with high public debt)” — Australia, Austria, Belgium, Canada and Denmark were missing.
Herndon and his professors have now published their results in draft form. They note that, while there is a correlation between high levels of debt and lower growth, the “most spectacular results” of the Harvard professors’ research fall away in their analysis. There is still a connection between high debt and lower growth, but it is a “much gentler” one, plus “there are lots of exceptions to the rule.”
Regardless, Greece’s Fire Sale Goes On
Greek officials have been quiet about prices for this or that island or government building, says the Telegraph. Yiannis Milios, chief economist for the opposition Syriza party, has been arguing that the sale is simply a move in the wrong direction and that the government should instead be seeking public-private partnerships:
Experience shows that the privatisation of public goods is a very bad idea. With water, for instance, the quality falls but the price rises, which is totally wrong. The government is very good at finding legal formulas to work its way round supposed guarantees of public interest. It is not a good idea at all.
Utility companies and the likes of the operating-at-a-loss Hellenic Railways Network have proved hard to sell, not least because of unions that have vowed to fight privitization. Indeed, Stelios Stavridis, the current government official in charge of the privitization effort, has only been in the job for just under a month. His predecessor resigned (rather than being fired) due to the slow pace of sales for these five state assets and others:
1. The Greek embassy in London’s Holland Park
Photo by remittancegirl/Flickr
2. The Port of the Island of Poros
Photo by Tilemahos Efthimiadis/Flickr
3. The Athens police headquarters
Photo via Tilemahos Efthimiadis/Flickr
4. Four Miles of the Afandou coast on the Island of Rhodes
Photo via •• FedericoLukkini ••/Flickr
(5) The Abandoned Athens Ellinikon Airport
Photo via g6ahn/Flickr
The loss of so many state properties is certainly a symbol of how difficult things have become in Greece. Employment is predicted to rise to 30 percent, over 20 percent of the population lives in poverty, children are going hungry and the economy is shrinking for a sixth straight year.
Bitter memories and psychic scars remain in Whitwell, England, where the late Margaret Thatcher closed unprofitable coal mines in the 1980s. Thousands of miners and others lost their jobs after she privatized nationalized industries like coal and steel; many have lived out the rest of their lives on welfare. Greece’s current mass privitization effort may produce funds in the short-run to shore up the government’s finances. But what will be the long-term legacy?
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