It’s been two years since Greece started tilting off the deep end and, despite a deal being reached for a second bailout, problems of social unrest still persist as further austerity is pursued since the first round failed to yield the desired results.Â That shouldn’t come as a surprise though as the government has only sought tax increases and public expenditure decreases without liberalizing much of its regulated economy.Â While the private sector still suffers under a needlessly complex regulatory regime, more money was squandered in return for spending cuts.Â Basically, the government ends up the only benefactor in the agreement.
To make matters worse, it looks like Germany is willing to lend aÂ helpful hand in this process, via The Local:
The German government is prepared to send 160 financial experts to Greece to help the country overhaul its tax collection, the business weekly WirtschaftsWoche reported Saturday.
Hans Bernhard Beus, deputy finance minister, told the magazine that the tax officials are ready to jump in to help the ailing country. They would need to at least speak English, but about a dozen of the volunteers speak Greek, he said.
This maneuver is a blatant attempt for German Chancellor Angela Merkel to save face and her coalition in Parliament as Germans want Greece out of the Eurozone.Â Instead of representing her constituency, (since when has what “we the people” want ever mattered to public officials anyway?) Merkel is going to do her best to ensure the Greece government actually succeeds in abiding by the terms set in the new bailout package.Â This means sending a few more highway men over to soak the already suffering people of Greece.
Though fairly well known, the history of tax evasion pervasive in Greece has recently become a hot button issue for obvious reasons.Â While the government desperately attempts to shore up its own finances, last year’s tax evasion amounted to $11 billion or 4% of GDP.Â Tax evasion is typically listed as a “problem” for Greece- economist Martin Sullivan calls it “disrespectful”- but evasion is only a problem if one considers the person who flees from a mugger a problem for the mugger himself.Â Like tax breaks which see their fare share of demonization, tax evasion is simply a means to keep less earned income out of the greasy palms of politicians.Â Since private individuals who produce and earn their income through voluntary measures are necessarily more prudent in their spending than public officials, tax evasion results in a more efficient allocation of goods.Â As Rothbard pointed out,
If a tax is onerous and unjust, evasion might be highly beneficial to the economy, and moral to boot.
In actuality, it isn’t hard to imagine that Greece’s economy has stayed afloat not in spite of tax evasion but because of tax evasion itself.Â That $11 billion not subject to thievery last year was left to those in the private sector to spend and invest as they saw fit.Â It didn’t go toward funding political causes, crony capitalists, or public workers.Â In the end, those funds weren’t wasted.
This attempt at further pilfering to mop up the excesses of Greece government shows the lengths bureaucrats are willing to go to to preserve their own unproductive hides.Â Much like the rest of the circus acts constituting the “saving of the Eurozone,” this attempt by Germany is yet another step in the wrong direction.Â If Greece really wants to come out of this storm in tact, the key isn’t increasing tax revenues but of leaving more money out of the public sector to actually be used in wealth creation.
Germany’s desire to aid in further robbery is reflective of the same reactionary measures all states use when pressed with financial difficulties.Â Excessive taxation rates and business stifling red tape causing too many citizens to avoid paying into wasteful government coffers?Â Send in more jack booted thugs armed with clipboards and the threat of imprisonment as their weapon of choice!
And the cycle of impoverishment continues.