Productive standard?

Recently, both the Bank of Greece and a team of economists at Alpha Bank sounded the alarm: The production gap – i.e. the difference between the GDP we produce and what we could produce with full exploitation of the available production tools – reached zero. For the economy to grow, investments are needed. Otherwise, prices will keep rising. In order to attract investments (and not just a few data centers for cheap labor or placements with low risk and high profits in real estate), prayers are not enough. What is needed is reforms and a new economic model.

Changing the economic model, as a slogan, is on everyone's lips. As an action, however, it is absent from the pre-election party programs.

This speechlessness is not new. Greece is not active in the debates taking place in Europe's institutions on the revitalization of its productive base (eight months after Joe Biden's Inflation Reduction Act). Athens is also silent on the debate on the European Chips Act, which aims to boost the production of semiconductors and secure the EU's supply chains.

Generally speaking, the leaders of our country are not crazy about discussing production, productivity, or new technologies. But there are important questions that need to be answered: Which direction do we want to move toward? What do we want to produce? What can we aspire to produce? On what economic/productive base do we imagine Greece living/ prospering tomorrow?

Others believe that these issues are decided by the “free market,” that politics should not be getting in its way, beyond the occasional back-room deals, and that the state should step aside. While throughout the developed world the ideas of inclusive development and of a modern state that creates strategies, without which there can be no development, are becoming dominant, in Greece, the fairy tale of trickle-down economics survives, while concepts such as “industrial policy” and/or “sectoral policies” are viewed suspiciously, believed to promote excessive state intervention.

But even those who do not share such ideas are not presenting any alternative plans for a new productive model. In fact, some interesting and productive workshops that had been organized by grassroots efforts on the subject did not see their findings taken into account by the architects of the various campaign programs.

It is the fault of the very bad political tradition in Greece where parties present a list of promises instead of programs – promises for everything and everyone, that all audiences listen to with pleasure, even if they know that pre-election promises are not binding but for those who hear them. In such lists, there is no room for productive models.

Why? The current model is based on two elements: cheap labor and an abundance of very small and, for the most part, non-productive businesses, which often survive by evading taxes and social security contributions. This hinders innovation, stifles productivity and weakens the competitiveness of the economy. For this to begin to change, we need: (a) a modern state, able to manage and cooperate efficiently with the private sector, with reforms across the board; (b) to stop the myth of small businesses being the backbone of the economy, declare war on tax evasion and support the creation of large, powerful businesses, with various forms of ownership; (c) to preferentially support salaried work in terms of wages, taxes, using social policy and with the creation of well-paid jobs for the educated, young generation of our country.

But these changes presuppose political clashes. Now we have an election coming up. The ideas that will become a material force to resolve our problems are not for now. Either way, those ideas have waited for years – let them wait a little longer.