Monday, February 16, 2015

GrNew Deal

Holger Schmieding and Michael Burda think Greece needs to stick with supply side reforms, but admit a little window dressing for the proles would help;
We have a concrete proposal which allows both sides to save face and avoid the apparently inexorable train wreck. The ‘New Deal for Greece’ would consist of the following steps:
1) Greece refrains from actions that would breach its commitments under the existing programme agreements, and formally asks for an extension to the deadline of the old programme in which details of a new follow-up deal are hammered out.
2) In exchange for continued product and labour market reforms, Europe eases the targets of the Greek primary surplus, focusing less on austerity and intrusive supervision, and more on supply-driven growth.
More specifics followed, but they're sure the answer is in more flexibility in Greek labor markets and less government interference in the economy. Though keeping up appearances is necessary;
Greece raises the minimum wage in stages and links these increases to an improvement in private sector employment, but maintains lower minimum wages for young people and exempts very small enterprises.
Making the minimum wage law moot, for most.

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