Tuesday, December 13, 2016

Poul Thomsen and the IMF's "pro growth" policies for Greece

The IMF's Poul (the Ghoul) Thomsen has written about taxes and pensions in Greece in the context of the Fund's contribution in assisting to "Make the Greek Budget More Growth Friendly". This is part of the IMF's newly discovered anti-austerity mission for Greece. Although seemingly relatively sane compared to the rest of Greece's EU "partners'" demands - and especially our colonial overlords in Berlin - of 3,5% budget surpluses for as far in the future as anyone can see, the Fund is in fact helping drive the ongoing negotiations to the rocks. This because in order for the IMF to concede the fiscally obvious regarding surpluses, it demands in return draconian measures against sections of the poor and a further dismantling of labor relations, which is considered, rightly, politically unfeasible, impossible for the current government to even contemplate. (I should note however that as recently as two years ago the IMF was skeptical but approving of 4% + fiscal surpluses for Greece (p.10 and fwd), every year, all the way to the mid 20s)

Simply put, PT's report consists of fallacies, half-truths and misrepresentations piled one on top of the other, the sort of which, when this Austerity Disaster first started, I delighted in shredding apart point by point. As it seems increasingly pointless I'll stick to some basic highlights.

1. IMF as a growth friendly institution: this is the baseline by which all numbers provided by the IMF should be measured.

2. Average salary / tax burden on average salary in Greece (p.9)

3. Disposable income collapsed as a result of the policies that the IMF led the pack of "lenders" in inflicting. So now the IMF laments the "steadily declining tax collections", as if they didn't cause this income collapse, and as if the GDP (as shown in 1, above) didn't plummet at rates reminiscent of wartime. Similarly, as incomes and revenues collapsed and taxes rose, "accumulating tax and social security debt to the state" was a natural consequence, again, of the IMF's own prescriptions

4. I'm not sure how Chart 2, on declining tax collection rate in Greece, jibes with Eurostat statistics showing total tax revenue almost monotonically increasing during the same period

5. Also interesting to note that Greece will have beat the fiscal bailout targets for two consecutive years, basically by improving the collection rate, through, among other factors, exactly the sort of installment and deferral schemes the PT is lamenting. 

6. Public healthcare is in a disastrous condition in Greece, although public expenditure in healthcare has been more or less stable across the past two budgets. However the murderous initial reduction in healthcare spending imposed by the IMF and the EU between 2010 and 2014, is not even mentioned. These reductions were dictated by the troika. PT sounds like he just heard of all this.

7. Greek pensions, the true story. This is from last year, public contributions have since been slashed by 1% GDP, so assume things are worse, and already over 50% of Greek pensioners are around the poverty line

8. The IMF wants to further "liberalize" mass layoffs, in a society that is straining under a 23% unemployment rate, and the Ghoul actually makes the case for this by pointing out that if we dropped even more pensioners below the poverty threshold, then the Greek state could afford better unemployment benefits - and thus I assume it would be cool with the laid off to lose their jobs. Order of magnitude calculations, combined with the dismal - in both remuneration and duration - existing unemployment benefits (i.e Unemployment Benefit Replacement Rates 5y), show that this would offer negligible improvement, provided mass pensioner euthanasia wasn't a prerequisite. How easing layoff laws can possibly help lower the unemployment rate, is one of those things only the IMF executive and similar neoliberal market faith-healers understand, and certainly the IMF's own research teams reject.

9. The Ghoul also fails to mention that the new, improved IMF anti-austerity platform includes refusing to reinstate collective bargaining agreements, which were discontinued originally at the IMF's insistence earlier during this crisis. It also wants to make going on strike more difficult, further hamper unions' already severely diminished capabilities, and allow employer lockouts. This is surely not a step in making anything more fair.

10, Poul Thomsen: "Greece pays an average nominal public pension similar to Germany’s". This is an updated version of an obsession of his.
Wikipedia: The average pension in 2012 [in Germany] €1263.15 per month
Eurostat: Pensioners in Greece receive an average 882 euros per month, 713 euros from basic pension and 169 euros from supplementary pensions (2013). 
Eurostat II: Expenditure on pensions in Greece was lower as % GDP than Germany's until 2007. Then the crisis came and all periphery countries saw the expenditure percentage of pensions explode proportionally to the degree of damage austerity (did I say IMF imposed austerity?) inflicted on their economies.

11. Chart 6, makes little sense until you realize that poverty rates are at 60% of median income, and median income has plummeted in Greece as we saw. So despite the fact that all pensioners in Greece are significantly poorer than what they were in 2007, they haven't lost as much as the economy on average. That's why the working poor in Greece appear by that graph to have increased over the period by just 1%. As pointed out:
The risk-of-poverty rate is even higher when current income is compared to the poverty threshold set in 2005. When measured that way, the deterioration of living standards is startling as 42.2 percent of Greeks have dropped below the poverty threshold of 2005, from just 16.3 percent in 2010. That amounts to an almost threefold increase in just five years.

But finally, as I reconfirm my utter contempt for the IMF and its Murder of Ghouls and Minions, I have in all fairness to point out that compared to the German government they are outright enlightened.
Which is why Europe is doomed.