Having rejected austerity with the “no” vote on the referendum, Greece now sits on the edge of an even worse recession and economic collapse, unless the lenders write off or postpone the debt payments even further. The problem is that the Greek politicians have not provided a program of major policy reforms.
Only with radical changes could Greece rise like a phoenix from its economic mess. These are the measures which could quickly make Greece the most prosperous economy on earth.
1. Amend the constitution to eliminate all restrictions on peaceful and honest enterprise and human action. There would be free trade, without tariffs and quotas, with all countries.
2. Leave the European Union.
3. Crank up the printing presses and give each Greek citizen 10,000 new-drachma in paper currency. The new-drachma would be payable for taxes at a one-to-one ratio to the euro. One new-drachma would also pay for first-class postage to European countries. No new-drachmas would be created after this distribution except to pay previously-existing governmental pensions. Banks would be free to issue private currency redeemable in new-drachma.
4. Immediately replace the income tax, the value-added tax, and all other taxes with a tax on land value and a pollution tax. Replace judicial environmental restrictions with the levies on pollution based on the measured damage. Enable citizens to sue polluting firms that are not paying a pollution tax based on the damage. Allow real estate owners to self-assess their land value with the condition that the state could buy their land at their assessment plus 25 percent, and lease it back to the owner of the building at current market rentals.
5. Decentralize all government programs and bureaucracies other than the military to the 13 provincial “regions.” The Greek constitution already prescribes that the administration of the country be decentralized. The land value tax would be collected by the regional governments, which would then pass on a portion to the national government.
6. Pay the foreign lenders with futures contracts payable in new-drachmas maturing in 2025.
Greek democracy was restored in 1974. The politicians sought votes by legislating a welfare state funded by borrowing. With radical reforms, national welfare programs can be phased out as employment increases and programs are shifted to the regional governments.
A prosperity tax shift would bring in massive investment and quickly eliminate unemployment and tax evasion. Billions of euros held in foreign banks would come back to Greece to finance investment and production.
Without radical reforms, Greece will be stuck in debt, austerity, and poverty. Radical reforms are the only way out.