Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
My friend David Dayen, who used to write with me at Calitics and now writes at FireDogLake, posits this argument - that Greece's problems are similar to California's, in that both have had artificially low levels of taxation in order to favor the wealthy, undermining the entire economy:

California Is Not Like Greece; Greece Is Like California | FDL News Desk

Greece simply does a poor job of revenue collection, and there are many reasons for this. One is that they have a large shadow economy, accounting for close to one-quarter of all economic activity. Second is that they have an unusually high number of tax evaders, and their collection programs haven't been able to crack down on them (unreported swimming pools are apparently a major problem). And third is their tax rates are simply too low to match their middle-of-the-road spending (at least for Europe).

Basically, this sounds like California in many respects, but not in the typical sense seen in newspapers and on talk radio. In fact, like California, Greece has a structural revenue problem. Both locations suffer from an underground economy, whether from immigration or deliberate tax evasion (which is why a path to citizenship would only boost the economy and reduce the deficit by bringing that underground economy out of the shadows). And both have tax cheats. But at the root, both Greece and California do not collect the revenue to finance the goods and services their populations demand. Nor are these demands out of line relative to those similarly situated - at this point, California spends less on K-12 education than any other state in the union; they are the only state without an emergency poison control center; they have the second-lowest amount of public employees per capita in the nation; and so on. This year they may end their welfare-to-work program. In both cases, the rich refuse to pay their fair share; in Greece, they basically shelter it, and in California, they are protected by legislative rules that allow a small majority to veto the budget and tax increases.

So yes, Greece and California are alike, but in exactly the opposite fashion that commentators typically opine. And so this drive to austerity misdiagnoses the real issue, whether in Sacramento or in Athens.

Is there any basis to this claim? If so, it would seem to be further evidence that the problem here isn't social democracy or a generous "welfare state" but instead tax giveaways to the wealthy.

And the world will live as one

by Montereyan (robert at calitics dot com) on Tue May 25th, 2010 at 06:04:08 PM EST

Others have rated this comment as follows:


Occasional Series