Michael Lewis’ latest book – Boomerang
Thanks to David Pescod’s “Late Edition”, we reprint some information from Michael Lewis’ latest book – Boomerang.
As readers might recall, we have previously discussed Michael Lewis who has a knack for looking at the economic mess the world is in, and explaining the issues in understandable terms.
His examination of Greek “normality” is fascinating.
A Look at the Debt Problems
Boomerang, a quickie look at the debt problems in Europe by taking a trip to Iceland, Greece, Ireland, Germany and California (a state looking at big fiscal problems) for a quick view of what went wrong.
He writes, “In Greece the average government job pays almost three times the average private-sector job”.
The national railroad has annual revenues of 100 million euros against an annual wage of 400 million euros, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year.
Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true.
‘We have a railroad company which is bankrupt beyond comprehension’ Manos puts it to me. ‘And yet there isn’t a single private company in Greece with that kind of average pay.’
The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something.”
Lewis continues, “The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all.
The problem wasn’t the law — there was a law on the books that made it a jailable offense to cheat the government out of more than 150,000 euros—but its enforcement.
‘If the law was enforced,’ the tax collector said, ‘every doctor in Greece would be in jail.’ I laughed, and he gave me a stare. ‘I am completely serious.’ One reason no one is ever prosecuted—apart from the fact that prosecution would seem arbitrary, as everyone is doing it — is that the Greek courts take up to 15 years to resolve tax cases.
A Moralistic View
A normal capitalist system allows excesses to occur, but they naturally fall apart in due course. Readers are reminded of our series of blogs discussing 10 points to correct the excesses of the capitalist system.
The excesses of Greece remind us of the excesses of Wall Street where the purveyors of those excesses than convinced the government to bail them out and then provided themselves with enormous bonuses as a reward for outwitting the government.
Is Germany Correct in Being Reluctant to Bail Greece Out?
In our previous blog, we talked about Germany printing money in the 1920’s which caused enormous inflation, and the resulting reluctance in Germany to fall into similar inflationary pressures.
How We Should View the European Debt Crisis
The excesses of Greece and Italy and Iceland and the other nations, are being brought back to reality by this crisis. Regardless of the expected failure of the mounting of a massive bailout, the world will continue, and it will continue in a normal fashion after these excesses are wiped from the system.
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