The other inequality: how the state spends our money

By Nikos Konstandaras

Growing inequality between rich and poor across the world has rightly become the focus of much investigation and analysis. The Organization for Economic Cooperation and Development underlined the issue?s importance yesterday, reporting that income inequality has reached record highs in most OECD countries and remains at even higher levels in many emerging economies. In Greece, as might be expected, income inequality has worsened during the crisis, with our country showing the biggest divide among eurozone countries. In the EU as a whole, only Britain rates worse than Greece.

The comparison with Britain, however, suggests that inequality?s impact should not be measured only as the ratio between what the top 10 percent (or 1 percent) earns as opposed to the majority and the lowest 10 percent. What we should also focus on is what we pay the state and what we get in return in terms of services. Once again, Greece?s ?particularities? can highlight problems that may be less visible in other societies. Immediately, we see the huge cost of the many plagues of Greece: tax evasion, inefficient bureaucracy, chaotic and often conflicting legislation, institutions? lack of credibility and the triumph of moral hazard all conspire towards wasting the revenues that the state does gather.

This works to the detriment of those ? rich and poor ? who do contribute to society and benefits the cheats and freeloaders. The comparison with other countries is telling. In Greece a hard-working tax-paying, salaried employee will see more than half of his or her income going towards taxes, social security and other levies (including municipal fees, state television, taxes for third parties, and so on). Citizens of other EU countries may pay similar...