WU professor tells Greece how to turn economy around
“When you give a teenager a credit card with no supervision, they max the debt,” said Washington University economics professor Costas Azariadis. “That’s what Greece did.”
Azariadis believes that Greece is in a terrible financial position and needs to make large changes to overcome its economic woes.
While others have done research and suggested ways to turn Greece’s situation around, Azariadis and his colleagues have given specific prescriptions for the Greek Parliament.
Newspapers around the world published articles on the economists’ work, ranging from Athens-based papers to Business Week.
This summer, Azariadis, along with Tufts Professor Yannis Ionnides and London School of Economics’ (LSE) Christopher Pissarides, wrote a paper called “Development is the Only Solution-Seventeen Proposals for a New Development Strategy” to generate discussion and help the Greek government improve its situation. Azariadis believes that with Greece’s large debt, the only way to make the country’s income grow enough to repay the debt is through development.
“The idea is very simple: Suppose you are in debt. Find a much better job and make your income grow,” Azariadis said.
The group’s development strategy presents seventeen ways that the government can specifically improve the status quo, including doing away with corruption and improving the country’s education and infrastructure.
According to Azariadis, Greece’s problems can be pinpointed to corruption and a lack of infrastructure. Bribes and embezzlement are not out of the ordinary in the Greek government. There are issues with highways and railroads, and the education system poses many problems.
Greek officials can also improve the situation by lowering taxes on capital gains, which should consequentially increase foreign direct investment, according to Azariadis.
Greece’s problems now reach beyond the scope of bailouts from the European Union and the International Monetary Fund. According to Azariadas, immediate development improvements are necessary.
And, Azariadas maintains, the fact that Greece’s standard of living has remained so high despite the country’s increasing debt has only exacerbated Greece’s problems.
“Fixing the problems has been postponed time and time again. We’re at the point of now or never,” Azariadis said.
Azariadas predicts that the proposal he co-authored will better the situation within five years if implemented thoroughly. Otherwise, Azariadas and his colleagues believe that the incomes of Greek citizens will decrease to 72 percent of average European Union income.
Azariadis is thankful for the media coverage his work has received this far. The professor hopes that this publicity will spark conversation, and that the discussion will consequently encourage the Greek government to make the big changes that he and his colleagues suggest.
Even though both Azariadis and his wife are Greek and Azariadis attended National Technical University in Athens, he has never published work on Greece before. Because of Greece’s unprecedentedly poor economic state, Azariadis felt compelled to research potential solutions out of loyalty to his home country.
“The problem is severe enough that people who care about Greece have to contribute to public discussion about what has to be done,” Azariadis said.