InterestingJanuary 29, 2015 Tim WorstallYour Tax Money At Work41 CommentsGreek public sector wages rose by some 60% in real terms between 2000 and 2008. previousLeast surprising story of the daynextWhat a Wazzock 41 thoughts on “Interesting” Andrew M January 29, 2015 at 10:21 am And by a lot more if you count the rising net present value of their gold-plated pensions over a period of falling interest rates. By all accounts their public-sector pensions would make a British civil servant blush. bloke in france January 29, 2015 at 10:31 am It would also be interesting to learn how much public sector numbers rose in the same period. Shinsei1967 January 29, 2015 at 10:46 am It’s interesting that the arguments in support of Syriza from all the usual suspects are predicated on the assumption that ‘”ordinary” Greeks didn’t benefit at all from the financial profligacy of their elites and so have no moral reason to be held to the debts that these elites incurred. Ian B January 29, 2015 at 12:09 pm You know the old saying; beware Greeks bearing gilts. KJ January 29, 2015 at 12:18 pm They should never have joined the EZ, things were relatively fine beforehand but even Syriza seem to believe they can maintain the ‘impossible triangle’, poor deluded fools. Ralph Musgrave January 29, 2015 at 12:35 pm I agree with Shinsei1967. In addition, the popular story about it all being fault of the Greek elite is similarly flawed: that is, every lawyer, doctor and taxi driver in Greece fiddles their tax returns to an extent that is unheard of in most other countries. E.g. the declared income of Greek lawyers is equal to what they spend on mortgage interest and repayments: so they spend nothing on food, clothing etc? Ha ha. See: http://www.foreignaffairs.com/articles/142196/pavlos-eleftheriadis/misrule-of-the-few JeremyT January 29, 2015 at 1:46 pm Since presumably no lawyers, doctors or taxi drivers voted for Syriza, I guess they’re now toast. Sob. Surreptitious Evil January 29, 2015 at 1:55 pm Slightly OT, apols. Greece apparently collapsed because, among other things, 21% of the workforce were in the public sector (according to the article Ralph linked.) According to the ONS, the thankfully-not-independent Scotland was running at some 23% in 2013. Andrew M January 29, 2015 at 2:15 pm Surreptitious Evil, % of workforce in the public sector is a fairly meaningless figure. If the council outsources the bin collection to a private company, the government is still paying roughly the same number of people’s salaries. Outsourced workers might no longer be die-hard left-wing voters, but they still know better than to vote for tax cuts. For economic purposes, the only meaningful figure is the % of GDP spent by government. For political purposes, the only meaningful figure is the % of voters dependent on the state for their livelihood: including civil servants, NHS staff, outsourced workers, pensionsers, unemployed, etc. In most Western nations that adds up to about half the electorate. Ian B January 29, 2015 at 2:16 pm What Andrew M just said. Snodgrass January 29, 2015 at 2:57 pm I have made myself quite unpopular in several places by pointing people to Greek GDP curves for 1995-2015 rather than 2008-2015; in those, the effect of the global financial crisis appears as the end of a bloody great bubble atop a reasonably smooth growth curve. Greek GDP growth 2000-2015 was equivalent to 4% annually. It’s much the same kind of unpopularity as you get for pointing out that British civil servants got the pay rises they’re not getting in 2009-2015 in advance over the period 1998-2004. Bloke In Italy January 29, 2015 at 3:25 pm Andrew M – correct of course. Any idea where there might be a graph of the &age of the dependent voters over time and across different countries (and indeed across different regions within countries)? Andrew M January 29, 2015 at 4:12 pm Bloke in Italy – not a clue, sorry. And it’s not even clearly defined: you might be working full-time but still claiming tax credits and/or some benefits (especially child benefit): does that make you a dependent of the state? And we all receive implicit health insurance through the NHS, so we’re all dependents to some degree. Andrew Duffin January 29, 2015 at 4:14 pm By how much did public sector wages in the UK increase over the same period? Bloke in Costa Rica January 29, 2015 at 4:16 pm I wonder what slimy backroom deal the EU will wangle to stave off the disintegration of the Eurozone this time. Bowing to the inevitable has never been their style. The Bubbles’ bubble has well and truly popped, and pretending otherwise risks a real catastrophe rather than a very painful period of accommodation to the new reality. Ian B January 29, 2015 at 4:16 pm The State economy is now so thoroughly entwined with the notionally private economy that it is impossible to separate them, sadly. There is not even an official accounting available of government “funding”, there is so much of it leaking out in grants and contracts and credits and so on. When you think of all the notionally private sector companies living off government contracts to some degree, it all becomes beyond analysis. But it is reasonable to conclude that one reason the “middle” class are so keen on the Courageous State is an awareness of how much of their income comes- however indirectly- from it. Van_Patten January 29, 2015 at 4:28 pm Ian B Absolutely – I think nominally Richard Murphy is in the Private sector but he is so dependent on largesse from Charities, left-wing think tanks and Trade Unions who derive a large part of their incomes from the taxpayer that he is a part of the state behemoth. That is the challenge facing anyone wanting to take an axe to the state…. bloke (not) in spain January 29, 2015 at 4:46 pm “..it is reasonable to conclude that one reason the “middle” class are so keen on the Courageous State is an awareness of how much of their income comes- however indirectly- from it.” You do indeed, nail it, Ian. Why there’s not the slightest chance there’ll be any sort of “libertarian revolution” coming from the direction of the middle-classes. They’ve far too much of a stake in the status quo. Can you imagine the panic if there was a real attempt to “solve the housing crisis”? Snodgrass January 29, 2015 at 5:36 pm Andrew Duffin asked “By how much did public sector wages in the UK increase over the same period?” According to figure 7.2 in http://www.ifs.org.uk/budgets/gb2011/11chap7.pdf about 30% Andrew M January 29, 2015 at 5:36 pm Also plenty of middle-class voters are dependent on the state not through direct payments but through regulation, e.g. lawyers, Energy Performance Certificate compilers, etc. Britain comes off fairly lightly in such stakes – it’s far worse in the Land of the Free™. Bloke in Germany January 29, 2015 at 9:38 pm So Greece’s lack of creditworthiness has nothing to do with the euro and everything to do with Greece being Greece. bloke (not) in spain January 29, 2015 at 9:54 pm Contrary to popular belief, it’s the middle classes who are most dependent on & benefit most from the State. For those at the bottom of the heap, past the benefit cheque the State provides a patchy, irregular & unreliable service. They live in areas the councils don’t exert themselves to maintain, their schools are indifferent, their law enforcement services under resourced. Even their subsidised housing only looks subsidised against prices resulting from the middle class preoccupation in turning housing into a store of wealth. The bottom certainly isn’t responsible for the debt mountain. Who lends money to poor people? And poor people aren’t lenders. At the top, the wealthy can largely look after themselves. Between them you have those who depend on the State. They rely on the State to provide the regulations safeguard all their professional niches. the police who protect their homes & businesses. That guarantees the banking system provides the credit that funds their mortgages, borrowing, credit cards. The investment in the infrastructure they make the most use of. If HS2 is ever mistakenly built, it’ll be the middle that’s its passengers. Without the protecting arm of the State around their shoulders the middle-classes would be lost. Rob Harries January 29, 2015 at 9:59 pm Can anyone explain why, aside from Public Choice Theory examples of self-interested capture why the Left regard rehiring public sector workers, increasing the cost of labour (I mean pay rises) and its existence (not just stuff we want like schools and hospitals but everything) as somehow beneficial for the working class, especially those who don’t work in the Public Sector. Sure some lower income people probably, if accessing services get more than they pay (direct and indirect) but we still have to pay for it and sometimes for things you wouldn’t privately pay for anyway. Take the uniform support of LU workers, sure you might want to pay them more to ensure a good service, the true cost of labour may indeed be high, but it adds to the cost of taking the tube, which existence is to get us from one place for another, not as a form of well renumerated employment and I don’t see how its in my or anyone’s interest (unless related to LU workers) to see them paid more. Same goes with every other PS job, its true if you pay poorly then you get poor workers/service, but I don’t see how anything beyond getting the best possible service for as little money as you can, is in the interest of the ‘CLASS’. Rob Harries January 29, 2015 at 10:07 pm Note: I know LU is a statutory company and not subsided but it has a similar effect and the direct wage bill of LU isn’t that high a percentage of expenditure, but its a good example for illustrating the question. The Oilfield Expat January 29, 2015 at 10:46 pm Contrary to popular belief, it’s the middle classes who are most dependent on & benefit most from the State. Quite. Listen to who squeals the loudest when anyone mentions cuts. It’s not the poor. bloke in france January 29, 2015 at 11:02 pm Spain & IanB I kind of agree, but if the state is 54% of the economy what can you do? Sit on a pillar? By your reasoning the defence lawyer for someone wrongly accused of tax fraud is paid for by the state. OK, he’s paid for initially by the defendant, if he has deep pockets, but when he wins the case he gets costs and the state pays. I also wonder whether some state employees do actually earn their corn. Many a jobbing builder has come a cropper when taking on a council job thinking he could get away with his usual bodge, only to find that the spec really did mean what it said on the tin. Not to say they’re not all shits and charlatans, just that you need to take a slightly more nuanced view. Martin Davies January 29, 2015 at 11:34 pm The state is also very good at making changes to contracts. Biggest penalty total for changes I can recall was in excess of ten billion pounds, Many hundreds of changes, some small some big. All with penalty clauses coming into force for the changes….. State would run a lot smoother if MPs had less chance to interfere. So Much for Subtlety January 29, 2015 at 11:48 pm bloke in france – “I kind of agree, but if the state is 54% of the economy what can you do? Sit on a pillar?” One of the reasons that Saudi Arabia is such a sh!thole is because the Saudis have oil money. A lot of oil money. The money the Saudi government can hand out is grossly bigger than the money anyone else can hand out because the State is so much wealthier than the rest of society. That buys a lot of support, mercenaries, press coverage and so on. The Economist has regularly pointed out this as one of the causes of continuing oppression in places like Saudi Arabia. Of course it also applies to the West. The “welfare state” is so large it can and does buy off almost everyone. Sit on a pillar? Perhaps not. But there needs to be something more dignified that licking the Saudi Royal’s collective backsides or whatever the Western equivalent is. “By your reasoning the defence lawyer for someone wrongly accused of tax fraud is paid for by the state.” And lawyers clearly know this as the legal profession from judges on down seem to be involved in a massive effort to make sure there is as much legal work available as possible. They do not want criminals locked up because that would mean less work. “Many a jobbing builder has come a cropper when taking on a council job thinking he could get away with his usual bodge, only to find that the spec really did mean what it said on the tin.” Many? Name three. So Much for Subtlety January 29, 2015 at 11:51 pm Bloke in Germany – “So Greece’s lack of creditworthiness has nothing to do with the euro and everything to do with Greece being Greece.” More accurately with Greeks being Greeks. Although many here call it racist, there is no such thing as Greece really. Just a lot of Greeks. It is the Greeks to make Greece what it is, not the climate or the geography or whatever. Certainly not Frau Merkel. Personally, I don’t blame them. It is important to “live in truth” as Solzhenitsyn put it – to avoid the petty dishonesties of Greek life. But if everyone else is doing it and you are only going to get screwed over if you don’t, how long would any sane person continue to live an honest life? It is one thing to mock Greeks for refusing to pay their taxes, but have you seen what happens to Greek taxes? Bloke in Costa Rica January 29, 2015 at 11:55 pm It’s a well-known feature of welfare states that the middle classes end up capturing the lion’s share of the benefits, even if those benefits were not targeted on them in the first place. They’re also better organised and more politically effective when it comes to lobbying to keep those benefits, which is one of the reasons why there is such a persistent ratchet effect in spending (another major one is the ‘concentrated benefits and diffuse costs’ problem). Jack C January 30, 2015 at 12:28 am BiG, Greeks will ever be Greeks, however the the EZ was an enabler for all sorts. Up until EZ entry their idiosyncratic attitude was a problem for them and their creditors. Afterwards, who wouldn’t lend to Greece? They were part of the union, with their budgets closely monitored by the ECB (ha ha), so what could go wrong? Greek Cyprus was very different to the mainland, being under-pinned by a British-style legal system. The bribe culture endemic in Greece didn’t and doesn’t exist. Opening a business was no different to the UK, even for foreigners (the latter being particularly welcome). But give a free money tree to politicians and you’re fucked. Roue le Jour January 30, 2015 at 3:05 am Reading this thread one could get the impression there was no middle class before the welfare state created it. Rather than rubbish the middle class as a whole, it would be more accurate to say that there are an awful lot of people in the middle class that would not be if it were not for state interference, and are very keen to see that interference continue. State bourgeoisie, as it were. Edward M. Grant January 30, 2015 at 6:17 am I kind of agree, but if the state is 54% of the economy what can you do? Sit on a pillar? At some point, the productive just say, ‘no more’, and stop working. I know several people on the Internet who have or are doing just that, shutting down their business and either living off savings or cutting back and doing as little work as required to survive. When enough people do that, the whole thing collapses. There’s a reason the Romans made quitting your job a capital offence for many in the productive class, as their empire neared its end. They needed the taxes to pay the bread and circuses to retain the support of the welfare class. The Stigler January 30, 2015 at 10:35 am and the problem with state workers is that the private sector rarely wants them. You might have 5 years experience in management in the public sector, but the private sector view that as lower than someone in the private sector with 2 years experience. Everyone knows that the public sector is often a bit of a holiday camp, and that the place is more about bureaucracy and making sure the boxes are ticked than actually making improvements. Rob January 30, 2015 at 12:05 pm There’s a difference between a middle class dependent on the State for law enforcement, public infrastructure et all and a middle class dependent on the State FOR THEIR INCOME. 99% of the population would lead a thoroughly miserable life in the absence of effective law enforcement and public infrastructure. bloke (not) in spain January 30, 2015 at 1:23 pm Sure Rob. End of civilisation as we know it. But let’s say we reduced the State to what we had in 1900. Who’s jobs just went? This was when the Empire was run by 35 men & a cat in an office off of Whitehall. But there were plenty of plumbers. JeremyT January 30, 2015 at 2:32 pm Spain Indeed. In 1913, we had about 9,000 civil servants running the entire empire with no computers or data networks. I think that’s a decent target for downsizing. Cal January 30, 2015 at 3:44 pm >So Greece’s lack of creditworthiness has nothing to do with the euro and everything to do with Greece being Greece. Not exactly. Greece has been Greece for a long time and has seen some bad times, but it was the Euro entry that has made everything much much worse. Cal January 30, 2015 at 3:49 pm >Without the protecting arm of the State around their shoulders the middle-classes would be lost. Not for long, though. The middle-classes, even the ‘State bourgeoisie’ as Roue le Jour called them, would soon adapt. Charlieman January 30, 2015 at 6:06 pm SMFS: ‘“(bloke in france) Many a jobbing builder has come a cropper when taking on a council job thinking he could get away with his usual bodge, only to find that the spec really did mean what it said on the tin.” Many? Name three.’ You, SMFS, have never shown any fucking ethics. You don’t understand the concept. So Much for Subtlety January 30, 2015 at 11:03 pm Charlieman – “You, SMFS, have never shown any fucking ethics. You don’t understand the concept.” My own pet stalker. How cute. OK. Can you please explain to me what is unethical about asking someone for three examples of what he speaks? Is asking for two examples ethical? One? Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.