Saturday, August 4, 2012

What's Really Wrong With Greece? It Lacks Secure Property Rights, and US Property Rights Keep Declining

The Washington Post had a most interesting piece on property rights in Greece.

Greece faces difficult odds with privatization
The gods lived at Mount Olympus, but the gamblers live at a casino on Mount Parnitha, and, lately, Greek leaders have been praying to strike it big here.

The Greek government owns an unusual half-stake in this mountaintop casino, the second-largest in the country, and Prime Minister Antonis Samaras has vowed that selling it — along with dozens of other properties, buildings and companies across the country — will be a top priority in last-ditch efforts to save the Greek economy.

But with time ticking on Greece’s bailout, and the country’s future on the shared euro currency ever more in question, the odds are stacked against him.

Greece owns large swaths of sectors like gambling that in other countries are in private hands. The arrangement helped derail Greece’s finances in the first place, with powerful unions bidding up workers’ salaries to unsustainable levels and money leaking to politically connected contractors. Now, few investors want to bet their money on these properties in the middle of what Samaras has called “our version of the Great Depression.” And it is not politically attractive to sell off Greece’s crown jewels at fire-sale prices.
Greece is the collectivist dream of every socialist Marxist big government statist. Socialists have been ruling Greece for decades and its corrupt government and powerful public sector labor unions have literally plundered and bankrupted the nation, in addition to stripping Greeks of their property rights and liberty. Nobody summarized the state of Greece better than Michael Lewis in his awesome book Boomerang.
As it turns out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piƱata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past twelve years the wage bill of the Greek public sector has doubled, in real terms – and that number doesn’t take into account the bribes collected by public officials. 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 bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a years. Twenty years ago a successful businessman turned minister of finance….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…..and there isn’t a single private company in Greece with that kind of average pay.”
Back to the Washington Post article, a Greek government official opines on the very problematic issue of privatizing Greek state owned property and business with the statement “There’s just no market”.

He's probably right but why? Greece does not have secure property right and in fact has some of the least secure property rights protections in the western world. Of course, insecure or state restricted property rights are also a chronic socialist statist dream. There are organizations that track and rate nations on the security of their property rights. International Property Rights Index uses several benchmarks to assess the security of property rights to arrive at an overall rating and index.  These benchmarks include legal and political environment, personal property rights and intellectual property rights.

The top 10 nations with the most secure property rights, here.:

1. Finland           8.6
2. Sweden          8.5
3. Norway           8.3
4. Singapore       8.3
5. Switzerland     8.3
6. Denmark         8.2
7. Luxembourg    8.2
8. New Zealand   8.2
9. Netherland      8.1
10. Canada         8.0

The United States (7.5 Index Ranking) is ranked 19, behind the top 10 and also behind United Kingdom, Austria, Hong Kong, Australia, Germany, Japan, Ireland and Belgium.  America is a nation that is experiencing a decline in the security of property rights, largely because of the growth of government power that hacks away at property rights.

Greece ranks 57th on the list with a pitiful 5.6 and is lower than Rwanda and many other nations deemed 2nd or 3rd world.

Secure property rights are the absolute and only foundation for liberty and prosperity, and the stronger they are the greater the prosperity and liberty of the people.  Without economic liberty, there can be no liberty and without secure property rights, there can be no economic liberty.

Greece is such a totalitarian collectivist mess that it can't even sell off its massive state owned real estate and business holdings because without secure property rights, there will be no buyers.  Simply put, nobody with money will invest in any property and asset when it can be seized or plundered at will by government, its goons and the corrupt rent seekers perennially attached to the state (oligarchs, plutocrats, corporatists, fascists, public sector unions etc.).

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