New York Times
January 27, 2015
The mix of austerity policies imposed by the International Monetary Fund, the European Central Bank and the European Commission and implemented by the Greek governments for the past five years led to unprecedented misery and anger. The unjust and unfair across-the-board spending cuts and the enormous tax hikes to pay off massive debts targeted the symptoms and not the root causes of the crisis. The backlash brought a coalition government of radical left and populist right. A government like this, which is Euro-sceptic and anti-reform, will not solve Greece's problems.
Greece is wrecked not just by debt but by the institutional flaws with its economy. Debt relief and other such measures would be beneficial, but Greece can only overcome its crisis by implementing crucial structural reforms.
Greece’s economy is not free and competitive. Powerful cartels are shielded with barriers to entry by newcomers and foreign investors. There are still numerous closed shops and professions. Public sector unions are overprotected in comparison with private sector employees. Policies to improve competitiveness and to carefully deregulate or privatize segments of the economy can invigorate it.
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