Monday, February 9, 2015

Wrong policies for Greece

From today's Open Europe news summary:

Greek PM refuses to change course ahead of crucial week of meetings with Eurozone partners

"...Greek Prime Minister Alexis Tsipras...reiterated his plan to increase the minimum wage, halt privatisations, reopen closed public broadcaster ERT and tackle tax evasion."

Increasing the minimum wage will increase unemployment. Halting privatisations will decrease what Murray N. Rothbard calls "private purchasing power remaining" or PPPR; i.e., resources confiscated and squandered by government cannot be used to satisfy the real needs of the market. Reopening public broadcasting will increase government spending still further--thus, reducing PPPR--and will give the government a propaganda outlet. Tackling tax evasion, although probably a worthy goal in a low and equitable tax environment, will further reduce PPPR and drive many Greeks to desperation. In other words, if pursued with vigor, all four of these policies will make matters worse not better.

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