Question from Slovakia

Today is vote day on the EFSF, here is the question:

Today, Slovakia has the lowest average salaries in the euro zone. How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?

Here is more.

Comments

"Sulik: No. There's not going to be a domino effect along the lines of "first Greece, then Portugal and finally Italy." Just because one country goes broke doesn't mean the other ones automatically will."

I'm not so sure but I hope he's right.

I just wish we could recruit this guy to run for President. This guy actually sounds sane...

Saving the savings of the people who saved money in banks is much cheaper than saving the banks which have made bad decisions -- this it the key economic issue. Protecting the savers is what the gov't should do, not protecting the investors who speculated badly.

"The rules must be followed" -- Greece, er, the (elected) Greek gov't, has NOT been following the Growth and Stability Pact.
The gov't has been making unsustainable promises, like so many democratic governments.

The Greeks did NOT save enough for their pensions, nor do they pay enough in taxes for their gov't employees -- the gov't needs to pay out less money, and thus need less money.

If needed, the Greek gov't should pay what it owes to other Greeks in Greek bearer bonds, so that it borrows from those to whom it owes cash.

The first countries to break teh rules were France and Germany, so its hard for them to start with “The rules must be followed”. Slovakia on the other hand might be the voice of propriety here.

It's worth re-reading Michael Lewis's excellent 2010 Vanity Fair article, "Beware of Greeks Bearing Bonds". He describes the country's terrible attitude to tax collection, and the ridiculous entitlements of public workers.

http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010

"The average government job pays almost three times the average private-sector job. The average state railroad employee earns 65,000 euros [$88,000] a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true."

"The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s."

The EU is the new NATO. This is Slovakia way of avoiding becoming a Russian satellite again.

This is the crux of the matter. In the world of realpolitik Slovakia is trapped between giving in to EU demands or being at the mercy of the reemerging Russian state.

Besides, like all other eastern european countries they have benefited in the past from the EU including money transfers. It's time to pony up.

That doesn't make it right. Greece has also benefited from the EU in the past, including money transfers. When will Greece have to pony up?

There has never been a single year when net per capita transfers to Slovakia exceeded net per capita transfers to Greece. Despite the fact that Greece has a higher GDP/capita. This is the consequence of a system that has new EU countries on different conditions than the old EU countries.

What is the total of those transfers? Greece has been on the dole since inception, Slovakia only recently.

It definitely puts things into perspective. I am actually surprised that the larger states are putting Slovakia into this position; the quote;

"We're supposed to contribute the largest share of the bailout fund measured in terms of economic strength."

definitely puts things in perspective. Is this really a good time to penny pinch by trying to offload part of the pain on a small economy?

"SPIEGEL ONLINE: Mr. Sulik, do you want to go down in European Union history as the man who destroyed the euro?

Richard Sulik : No. Where did you get that idea?"

My spendthrift uncle doesn't want to throw away his life savings to rescue his nephews from all the debt they're in and it's gonna destroy the family what a mean mean man how utterly atrocious................

Do you mean to say thrifty instead of spendthrift?

Why yes, yes I did... thanks.

It's an attempt to use fresh debt to solve the debt crisis. That will never work. But, for me, the main issue is protecting the money of Slovak taxpayers. We're supposed to contribute the largest share of the bailout fund measured in terms of economic strength. That's unacceptable.

SPIEGEL ONLINE: That sounds almost nationalist...

How dare a Slovak politician protect the money of Slovak taxpayers. This crackpot needs to get such old-fashioned fiduciary notions out of his head. Think globally, act globally.

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