Greek Tragedy ( Capitalism in crisis....again! )

[theVOID]

I never suggested that Capitalism was to blame for the Greek situation.

Glad you've clarified that, because leaping to defend a position that states so tends to give an impression to the contrary.

I specifically said "Modern Capitalism",

Ah right, the part where you're going to complain about Mercantilism but attach some pointless qualifier to capitalism and throw it in quotes the same way people use "Cronie Capitalism" when attacking Mercantilism...

and to ensure that people did not misunderstand me, I defined "Modern Capitalism" as "Privatise the profits, socialise the losses."

1. Capitalism prescribes no such thing as "socialise the losses", quite the contrary, it says that losses are a sign you're wasting resources and being inefficient, a warning that similar practices could lead to failure. Under a capitalist system there would be no rescuing of collapsed companies by the taxpayer - they would be sold to a competitor or entrepreneur who would re-tool the business and attempt to compete, the investors would recover the value of the sale and likely loose most of their investments, some employment will be lost for the short to mid term during the restructuring - If you're going to be talking about corporate-government bedfellows just call it what it is and don't attempt to sneak responsibility for it onto capitalism by adding a little qualifier like "modern", it's genuinely about as dubious as Glen Beck calling a moderate right wing government with a few more entitlement programs than he wants "Socialism".

2. This is hardly applicable to Greece in any case, there are no profits, there is no big winner that gets to pocket all the wealth, there are no investors being rescued by massive corporate packages - both the Greek and foreign investors are almost unanimously at a loss, the banks are unlikely to recover the majority of their loans and could even loose all of it, we have a failed state with huge debts and no ability to produce the goods and services necessary to pay back that debt, they are in a position where the only emergency loan they can attain is one that requires they sell state assets and make public sector cuts.

I personally see no problem with the age being set at 52 on an 80% rate.

Because you can't do math? It's patently unsustainable! And it's 58 sorry, 52 is partial retirement and 56 is the average on record.

Someone works from 18-56 on average (a lot of Greeks are in tertiary education but many also work from a younger age), 38 years, then lives to 78 (average Greek life expectancy) they have retired for 24 years relative to 38 of work. They have 38 years work to pay for 24 years retirement at 80% of their last wage. If the average person earned the equivalent of 400,000 Euros over their life, 10,526 per year, they get back 8,421 on average per year for 24 years, 202,104 Euro or 50% of what they've earned on average as an individual - And this is assuming everyone works, it doesn't take into account any beneficiaries which only make the numbers more staggering.

The big problem in this situation is that the "modern capitalists" (please refer to my original definition for it again) are currently in control of Greece and have managed to push, as of 2010, the corporate tax rate down one percentage point each year until it drops from 25% to 20% in 2015. As long as this is in effect, the Social Security system will only get worse. Why did you not know this?

You're assuming that Social Security in Greece is funded via the corporate income tax, this is false, Greece has contributions from the employer and employee, 28% of the wages value compared to 16% from the employee, 6% shy of the average needed to sustain the scheme with the generous figures above, and it's expected to cover unemployment and health insurance too! These payments by an employer are a transaction classed as an expense and are completely aside from income which is taxed after these contributions have been made - "Why did you not know this?" because you didn't look, you're of the mindset that every problem is somehow linked to business and taxes, if corporate tax is going down well look no further, that's gota be why Greece has a huge debt problem - You want to know why corporate tax is going down? Because they need people to invest in Greece but nobody in their right mind want's to, they have to make it attractive because they need the trade, industry, jobs and revenues.

Greece is nowhere near as pro business as you're suggesting either, considering this little left-wing nation with a 40% of GDP public sector is apparently being run by "modern capitalists" - For instance, Greece taxes 20% of the total value of any commercial entity when it is sold as a whole or upon larger acquisitions and mergers, that means if you want to sell a business the government takes 20% of it's value outright. Also, considering the profit is taxed, then dividends are taxed and salaries are taxed, an income tax rate of 20-25% alone is a rather dubious method painting the picture.

Let us look at the current exchange rate of Dollar versus Euro:
http://www.google.com/search?q=euro+vers...ess&ie=&oe=

Okay, but how about a source and not a picture?

http://quotes.ino.com/chart/index.html?s...l&a=50&w=1

Now lets look at the income tax rate of the supposedly "progressive tax system" they have in Greece:

The employer deducts tax from the employee and transfers it to the tax authority every month. Income tax brackets in Greece for the year 2008 are 0% (up to 12,000 euros), 27% (from 12,001 to 30,000 euros), 37% (from 30,001 to 75,000 euros) and 40% (above 75,000 euros). For tax year 2009 the respective rates will be 0%, 25%, 35% and 40%.

Isn't that funny, you're figures leave off the top tax bracket, even for 2008, and they're not quite the recent figures are they?

Tax % The Tax Base (EURO)
0 1-12,000
18 12,001-16,000
24 16,001-22,000
26 22,001-26,000
32 26,001-32,000
36 32,001-40,000
38 40,001-60,000
40 60,001-100,000
45 100,001 and over

http://www.worldwide-tax.com/greece/greece_tax.asp

The cut off at 40% starts too low and contains everything higher than that low number.

45% for 100,001 and over. It's a fairly normal bracket, it's the same as Australia and higher than here in New Zealand, and their corporate tax rate is only 3% lower than ours and 5% lower than Aus, so to imply that these factors are a cause of the problems without considering the fundamentals of the economies is absurd, I assure you that is where Greece's problems lie and that is why the situation is fundamentally different from other countries with similar taxes and revenues per capita.

Plus the VAT or GST in Greece is 23% compared to the 15% in New Zealand and 10% in Aus, that's a big revenue contribution, especially for the Greek tourism industry which is I believe their largest industry.

75,000 Euros is rounded equivalent to $100,000 USD.

That's about right for the year so far, it's been historically lower.

Now look at the next lowest bracket. This is the bracket of pay where the middle class / skilled workers tend to fall under.

That's not true, the average is in the 18% bracket, the average incomes in Greece are around 12,000 Euros/year or $17,000 US, they have lower take-home income but more benefits compared to most Euro nations with a higher share of the public sector being funded by businesses and high income earners, a more significant problem is their lack of employment relative to countries with similar incomes and tax revenues, a problem stemming from their pathetic productive sector and their utter lack of investment in it, which is only 21.6% of GDP, everything else is service sector and government spending. The huge difference is the amount they import, they have a staggering trade deficit.

This braket is taxed at 3% less than the upper bracket. 3% difference?!?!?! This makes the mass of consumers (the middle class) under a much heavier burdon than the richest people of the country.

Not in terms of percent it isn't, It's even less true given the numbers I cited, the Rich have more money but are taxed at a higher rate, that's the same everywhere essentially.

I will remind you that the price of milk doesnt change regardless of wether you make 1$ an hour or $10,000 an hour.

Red Herring, this has fuck all to do with their debt crisis, I can find you countries with lower wages, taxes and smaller debt problems easily, Greece is compared to the rest of the world in a group of moderate to high incomes.

So naturally the only people who can AFFORD to invest is the rich becuase they have such larges sums of spendable income that is hardly taxed compared to the working class. Now we take this information and shine it under the light of the fact that there are tax excemptions in Greece as well.

Which is a symptom of the countries mismanagement not the cause of the problems. They could afford to invest if they had any real measure of responsibility for their savings and retirement, this function was largely seized by their government as far as the middle and lower class is concerned and they absolutely fucked it up, they have a huge service sector because that's what you sell to people to win votes - Their investment in the productive sector is abysmal, that is why they cannot afford to manage their debts, they don't produce anywhere near as much as they consume and have to borrow to sustain the mess they've created.

Tax Exemptions
There are several cases of Tax exemptions under the Greek taxation system, these are as follows:
Proceeds from the sale of shares that are traded on the Athens Stock Exchange.
Income from ships and shipping.
A dividend received from a Greek company.
Capital gain from sale of a business between family members, as defined by law.

All of these tax exemptions are more likely to benefit the upper income earners, and not the actual workers of the country.

And stopping this would have prevented a debt crisis how? These are all measures to give Greece an advantage over foreign competitors and to make Greek businesses more attractive to investors both foreign and nationally, being an export economy no tariffs on imports lowers the cost of living for all consumers... you speak as if these would hurt their position... I hardly think so. Besides, how many dozen countries around the world are comparable with these conditions? I'm willing to bet it's a substantial number, these are relatively commonplace policies yet Greece is the one in a debt crisis, so they're clearly insubstantial.

So now you have very filthy rich Greeks not only dumping the burdon of funding the country on the backs of the workers, but they also do not have to pay taxes for sales of stocks, income from shipping (which is a major income source in Greece), dividends from company stocks, and capital gains from transfering wealth between family members.

*Yawn*

As I've said, Greece is comparable to a great many other nations in terms of taxes, income, policy and size who are not in a debt crisis, you are completely overlooking the fundamental problem with Greece, malinvestment, in an effort to blame the boogie men.

Anyone with a basic understanding of economics can easily see that the "privatise profits, socialise losses" is very much in effect in Greece, and it will only get worse as these rich people, who already barely pay any taxes, will have the taxes of the corporations lowered from 25% to 20%.

You haven't given one single example, let alone shown it to be anything like a significant factor in their situation, and yet you assert "Anyone with a basic understanding of economics can see that"...

Their problem is not enough producing, too much consuming, too much entitlement. They consume more than they produce in their country, they need to borrow to sustain that, they didn't bother to invest in production, it's not a difficult thing to grasp, yet all you've done is rave about tax rates which couldn't possibly account for the massive void in their trade deficit even if taxes were higher and you haven't so much as described one causal chain for any of it.

The problem in Greece will only get worse as the years go by. Why? Because the same people who are screaming "taxing the rich will kill jobs" fail to point out that the tax rates on the rich HAVE been going down and there is a direct connection between the decline of jobs and the decline of tax rates for the rich.

*Yawn*

You want to see jobs? Jack the tax rates up on the rich and then give them incentives of tax breaks for the creation of new jobs. As long as the rich get to keep huge sums of cash with no strings attached, then the profit motive of capital fails to keep the rich moving forward. Lets make sure the profit motive stays on the rich shoulders as well as the mid class.

Have you really failed to understand the specific situation in Greece to the extent where all you're going to do is spout rhetoric?

Simply put, there are examples of nations that are either side of Greece in terms of wages, taxes, size of the public sector, private sector, regulations and the like but the vast majority of them are in nowhere near the situation Greece is in, the fundamental difference in most cases is not the tax level or whether family members can sell each other businesses or whether corporate tax is 20% or 35%, it's their failure to support a productive sector significant enough to generate the wealth needed to sustain their standards of living.