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Free-As-In-Beer Electricity In Greece?
PolygamousRanchKid writes New Greek Prime Minister Alexis Tsipras will lay out his radical left-wing government's policies in a speech later on Sunday, firmly rejecting any more austerity forced on his debt-strapped country by its euro zone partners. In his first major speech to parliament as premier, Tsipras is expected to say that Greece wants no more bailout money, plans to renegotiate its debt deal and wants a "bridge agreement" to tide the country over until a new pact is sealed. A second part of the speech will touch on his government's social and fiscal policy over the longer term and is likely to repeat pledges for such things as a rise in the minimum wage and free electricity for poorer Greeks. Which gets me to thinking: with free electricity, wouldn't that be a great business opportunity, to build a cloud of servers in poorer Greeks' basements? Maybe that is the real plan behind the free electricity idea.
Real estate is the typical investment in underdeveloped economies. In developed economies you place your money in stocks and bonds, having a more than fair chance of getting a ROI equal or higher than the inflation rate. So, if a German or American has about $50,000 they'll place them there. In Greece the inflation was at 20% until the early 90s whereas bond interest rates were at 14% and the stock market was anemic (even worse than it is today). In other words, placing your money on stocks and bonds would *lose* you money.
Therefore Greeks placed their money in (old) houses or would build their own with the combined effort of three or more generations of a family. I don't think that an average placement of $25,000 per person, over a lifetime of work, in brick and mortar makes that person "rich" by any standard.
The problem reading the statistics is that the valuation of the houses is based on Greece's skewed "objective valuation" system. This system assigns a price per square meter of property for each area, however this valuation is not grounded on market values. It's arbitrary and usually 5x-20x higher than the market value. For example, the "objective valuation" of a derelict house I've inherited from my father in a mountain village near Kalamata is 250 Euros per square meter when the market value is less than 100, for well-maintained property (as I said, mine is falling apart). I've heard of worse cases, e.g. a 1000 square meter field in a mountain village which only connect to the nearest villages via a single dirt road was 180,000 Euros. Market value? About 5,000 Euros.
The idea behind this irrational system is that the presumptive income is based on the "objective valuation" system which has a high tax-free bracket (I think it's currently at 140,000 Euros). If the market valuations were used, very few people would have to pay taxes based on the presumptive income derived from their property.
So, yes, on paper Greeks are extremely wealthy because of the typical Greek solution of cooking up the numbers towards a desired effect and not towards objectivity. In reality Germans have more (neither far more, nor far less) personal wealth and in immediately liquefiable assets. I'm stuck with a derelict house I inherited from my father, without electricity, and with ever diminishing market value. I still have to pay 600 Euros per annum for property taxes for this house. So, what does this property actually count for? An asset of purely imaginary value 15,000 Euros or an annual liability of 600 Euros?
And a final note: your mass media may want to portray Greeks as tax evaders but that's not quite the truth. Two years ago I paid 85,000 Euros income tax out of 110,000 Euros turnover. That's an effective taxation of 77% thanks to the highest taxation bracket being 43% and having to pay 55% of your taxes as a downpayment for next year. The next year my income was a third of that. I've still not gotten back any of the money which was withheld from me two years ago. Yet, the government demanded that I pay OUT OF MY POCKET for the new taxes, including the property tax. I was one of the lucky few who had money in the bank, no loans and no family so I paid up. The majority of SMEs who saw their turnover shrink to crap due to the austerity have loans to pay, families to feed so excuse them if they don't pay their taxes because they preferred to not lose their 30-year-old 2-bedroom apartment with no central heating and not wanting to leave their children hungry. Some couldn't even do that and these are the exact people who will get up to 800KWh of electricity per two months for free, for a total cost to the state of 2 million Euros. Meanwhile your country makes 105 million Euros per year from the