Market Solutions For Cronyism and Corruption in Greece

By Panagiotis Evangelopoulos

Assistant Professor at University of Peloponnese

panagiotis evangelopoulos

By Dimitris Hadgopoulos, TA NEA

For all the reforms rhetoric that has prevailed in the political arena of Greece against cronyism and corruption, which had assumed Manichaeistic proportions in the way it carried out the tasks of government in all sectors, the country was eventually led into a serious impasse, with incalculable harm being inflicted on the country.

The greatest problem for the fight against cronyism and corruption of the Greek State was its ineffectiveness in reorganizing the Greek society as a whole, reshaping its structures through reconstruction and activation of all the forces with the potential to carry through such a difficult and daring undertaking. The institutions of a society are what give it its character and activate it. The Greek State did not dare to embark on significant institutional reforms with the capacity to lead not only to dramatic change but also to basic improvement in the internal structures: political, social and economic, of our society. Striking examples of this dead-end politics are the debt-ridden Local Governments, and the debt-ridden National Health System.

Neither before nor after the reforms were municipalities strengthened in no way. No solution was offered to the problem of bureaucracy. Local authorities did not transform themselves into instruments of orderly decentralization. There was no reduction in the costs of central government subsidization and no relief from the suffocating grip of state interventionism in the planning of local public works projects. The new National Health System did not succeed in resolving the great paradox that while resources for health were increasing, at the same time administrative deficits of the participating units were also increasing, as were shortages and lack of necessary resources for carrying out the tasks of health care facilities.

What it deserves to mention is that under the shadow of the kingdom of cronyism and corruption, as we are accused by many commentators, only the ordinary civil servants, from the doctors to the nurses, are keeping our National Health System alive, with very low salaries and more and more work hours, practically unpaid by the state. So it arises the famous “Greek Implicit Institution”, the Envelop, that it includes the side payment, from the patient to the doctor, to the nurse and so on…

In my example what is the cause of the bribe or of the corruption? Since the side payment from the patient to the doctor happens that means that the health services in Greece are underpriced by the State for paying the doctors and overpriced by the State for paying the medical provisions in favor of implicit institutional intermediaries, the famous rent seekers of the Greek Economy. So at the lower lever this process shows very explicitly that the black market in Greece restores the function of the pricing system in the economy while at the higher level it redistributes massively the wealth from the taxpayers to the rent seekers. Moreover, as long as, the level of the taxation is never enough for financing the overpriced National Health System, the State borrows the money it needs for the huge rewards of the rent seekers, increasing dramatically the Public Debt at no sustainable levels. So it happens a secondary level of huge redistribution in the Greek Economy, the generations of the giant borrowing of the state enjoy the wealth of the generations that they have to repay it. This so ineffective, so anomalous, and so catastrophic procedure was flourishing and actually was being accelerated after the entry of the Greece in the Eurozone when the Greek State had to pay the lowest interest rates for the Public Debt in its history. It was like to put oil into the fire while all we knew that the fire of the Greek Public Debt was there and so dangerous as it is again today because we never heard in our political agora our invaluable Cassandras, the Greek free market oriented economists but the statists, the demagogue politicians, both center right wing and center left wing, from the New Democracy and PASOK, who brought our economy to the total collapse.

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