Reforms in Greece. An exemplary record. But the wrong track. 3 graphs.
Greece is champion reformer. According to austerity mythology, we did not have a financial but a ‘rigidity’ crisis, aggravated by uncompetitive price levels. Which had to be solved with structural reforms and by bringing the price level (read: wages) down. Which is what Greece did, much more than any other country. But, as we do not have a rigidity crisis but a monetary crisis this did not work, of course. Some data: via Frances Coppola we learn that Greece has been the most ardent reformer of the entire Eurozone (graph 1, OECD data). Via Paul Krugman we learn that no country cut government expenditure as much as Greece (by a long shot: graph 2, Eurostat data). And Eurostat also teaches us that no country has been as succesful as Greece in lowering relative and even absolute prices (graph 3, Eurostat data). Coppola and Krugman are, understandable, aghast about the hypocrisy of the prime ministers of Ireland and Finland, who are lecturing Greece about something which it did much more succesfully than they did. And then there is the argument: “the Irish suffered for nothing, so the Greek have to suffer too“. Sigh.
Remark: the Krugman graph jpg has a lot of white below the actual graph.
Graph 1. OECD shows that Greece did reform
Graph 2. Krugman shows that Greece did cut government expenditure
Graph 3. Price data shows that the Greek relative price level declined much more than the Irish or the Baltic one