1. Leave both the European Union (EU) and the European Monetary Union (EMU).
These are very flawed institutions. In his prescient book Tragedy of the Euro, Professor Philip Bagus uses the term "misconstructed", which I think is very descriptive of the EU and the EMU. There is nothing that the European Union can offer any member that it cannot grant to itself by adopting unilateral free trade. EU economic regulations are systematically destroying what little remains of free market capitalism in Europe. The Euro is a fiat currency without any real political protection. All members can abandon the euro at any time, which would relegate the euro's purchasing power to that of the Zimbabwean dollar...in other words, worthless. Greece is running out of euros, which is causing the Greek economy to come to a standstill. Staying in the EU and the EMU will perpetuate Greece's loss of sovereignty. Leaving will force the Greeks to rely upon themselves. It very well may end the Greek welfare state, because it will become clear that the welfare state is at the heart of Greece's financial problems.
2. Repeal legal tender laws in Greece.
Allow Greeks to use whatever money they find useful. Do not reinstate the drachma. Forcing a people to use one currency is a form of tyranny, because whoever controls the currency controls the economy, and whoever controls the economy controls the people. Freeing the Greeks to use whatever currency they find useful will immediately get the economy moving back to some form of stability.
3. Liberalize ALL business and labour regulations.
Greece needs free market capitalism. Business and labour regulations are the means to enforce the socialist welfare state's predations upon the people. All Greece needs is enforcement of normal criminal and commercial law to prosecute theft, fraud, negligence, etc. These concepts are the result of the common law and can be different in different countries.
4. Scrap all government agencies that enforce the regulatory state.
These agencies are nothing more than predators upon the people. They do not contribute to the capital wealth of the nation, but destroy it instead. Obviously, scrapping all of these unnecessary and counterproductive agencies will go a long way to solving Greece's budget deficits by shedding their unnecessary yet highly paid bureaucrats.
5. Welcome investment from the entire world.
This is a crucial part of becoming a free trade nation. Allow outside capital to invest in Greece and give such investment maximum legal protection. Above all resist the temptation to nationalise or heavily tax foreign investment once it become clear that such investment is productive and profitable.
6. Reduce taxes to the minimum required to protect life, liberty, and property.
The sole purpose of the state is to provide such protection to its citizens and to provide an honest court system to punish criminals and resolve honest disputes. Extend such protection to foreigners and foreign investments. Again, shrinking government to these essential services will help cure the budget deficit.
7. Scale back and eventually eliminate all state provided pensions.
It may be inhumane to eliminate all old age pensions in one swift repeal, but the government should adopt policies that will end the provision of state pensions entirely over time. In his magnum opus Capitalism: A Treatise on Economics, Professor George Reisman presents one such method to eliminate Social Security in America. This method could become a template for Greece.
Author: Patrick Barron has been a consultant to the banking industry since 1985. He teaches Bank Management Simulation at the Graduate School of Banking, University of Wisconsin, Madison and Austrian Economics at the University of Iowa, USA.
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