“We recognize that we cannot make the changes necessary to turn the Greek economy around through the political process. We have, therefore, unanimously decided to delegate the responsibility for new economic policies to an autonomous, politically independent institution. That institution will be staffed with experts of national economic management with no consideration to party affiliation.
The selection criteria for those experts will be their conviction that free market policies, under clearly established rules and regulations, are the most effective way to achieve economic well-being for our society.
We are taking a bet, if you will. We are taking the bet that such experts – if given the time and if protected from political interference – will achieve what we all want to achieve — to turn the Greek economy around from a corrupt, crony-driven economy towards a value-generating economy based on market principles.
Our commitment to that economic team is that we, as the parties with absolute majority in parliament, give them unconditional aircover for the remaining legislative period”.
A ray of hope would browse through the corridors of Paris, Brussels, Frankfurt and Berlin. If that is really to believed, they would say, then we owe it to them to support them.
That new economic team would probably signal the EU-authorities that, in order to achieve results over time, they can’t waste their time fiddling over budget deficits every couple of months or so. They would argue that “If our government had the guts to give us aircover for the remainder of the legislative period, then you better follow suit! Either you trust us, or you don’t”.
Given their qualifications, that new economic team would in all likelihood know from the start what needs to be done. If they didn’t, they would only have to read up on other countries which have accomplished similar feats before.
This could never work?
Well, it worked in Chile in the late 1970s. The then authoritarian regime knew it needed economic success but didn’t have the know-how for it. They put their bets on the Chicago-Boys and gave them aircover for about 5 years. The Chicago-Boys, out of their intellectual purity, made many mistakes which ultimately caused significant set-back’s (like not paying attention to how the private sector was wasting foreign loans on consumption) but Greece has already learned that lesson.
Here is my own bet: within less than one year, if the new economic team acted credibly, the rest of Europe would start paying positive attention to Greece. They would realize that Greece was on to something new. On to something which offered new business opportunities for foreigners. At the end of the day, foreign capital would, again, flow to Greece voluntarily because private capital never wants to miss out on new, good opportunities.
I bet you everything I own that this would work!