The Fact-Checking of Garett Jones

"The NYT apparently deleted the offending paragraph rather than correcting the statistics. Anyone know the back story?"

This somewhat standard. The NYT edits their pages in such a way as to make themselves seem accurate, instead of making the corrections obvious.

Seems to me Miguel Madeira should get at least some credit for this. He pointed it out in the second comment of your original post.

14% labour force participation sounds low, compared to Canada, the UK or US. How does that compare to the other "PIGS" countries (Ireland, Spain, Italy and Portugal)?

I have started to question all the figures. Figures related to taxes actually paid versus those actually owed are so out of whack that it appears almost no one in the country is actually paying taxes. Currently the top tax rate, for those who actually pay, is less than 25%.

What is considered a government job? If the government is paying all the bills of some organization it is a government job even though it may not be government.

Also the main portion of their debt seems to be in pensions and the like so actual government employment may be irrelevant.

US govt spending as a percent of GDP has run from below 10% 100 years ago to roughly 45% today. In spite of the Stimulous wasteful spending, we are right on track with where government spending growth would be based on the past 80 years.

The CIA reported that government spending in Greece is 40% of GDP. This means 60% of the country has to pay for all the debt, in excess of 100% GDP, and the other 40%.

"Anyone know the back story?"

My theory - if you have 14% civil servants, it is very natural that you will have about 1/3 of families where ONE of the members works for the State; then, in a second hand report, you will have "1/3 of the families dependent of state jobs", and in a third hand report you will have "1/3 of the population works for the government".

Another possibility could be that NYT report counts also with employees of state-owned corporations and OECD statistics not.

Somebody should write to Clark Hoyt at the Times about this.

Dr. Caplan,

Have you been to Greece?

Yes, I've been to Greece, though only for two days.

As have I been to Greece on a business trip, one which meant poking around odd corners of a university, a couple of manufacturing plants and so on. And I live in Portugal. Greek GDP per capita is supposedly 50% above Portuguese (PPP basis, according to Wikipedia).

I just don't buy it. I have some experience of countries with very different living standards (Russia, US, UK, Portugal, Italy) and while anecdote, or a feeling in my water, isn't as reliable as actual statistics, my first feeling on wandering around Greece was that, Wow! this place is poor, poorer than Portugal.

Not sure that helps anyone very much but there it is......

I think it's really hard to know just walking around how well off a country is. I think you have to go on HDI to answer that question, but as of 2007, at least, it actually wasn't that bad, and it looks like it was definitely better off than Portugal:
http://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index

"The NYT apparently deleted the offending paragraph rather than correcting the statistics. Anyone know the back story?"

That's standard industry practice. Newspapers really haven't gotten the memo that we want to hear them admit that they are wrong so we can build trust that they will make corrections. They still see themselves as dispensers of truth who must simply correct inaccurate facts by replacing them with accurate ones.

wow, rarely have I seen economists making such crass mistakes. Judging a country's GDP by a random visit of a few days?!?

Having lived in Greece 18 years, about 8 in Germany, 3 in Spain and 2-3 in the US I can say that what you can tell by a random visit is the amount of money efficiently spent on public goods, and little else.

Otherwise a visit in the midwest would lead the German visitor to think he is in a poor country (horrible highways, bad sidewalks, badly constructed houses, almost no public transit), while he is just in a country that does not value public goods and infrastructure.

Similarly, in Greece there is a very big divergence between the public purse and private wealth/incomes. Greeks are relatively rich, for example Athenians richer than the average German, their state though is poor, much poorer than the German state, and this shows in relatively bad roads (often better than US highways though), trains etc

In Greece there are quite many publicly owned enterprises.
According to ILO (http://laborsta.ilo.org/STP/guest) Share of employment (as of 2007):
Greece: Gen government 8,9% +publicly owned enterprises 13,7% = 22,5%
Germany: Gen gov 10,2%+ pub. Owned enter. 4,1% = 14,3%.
In reality the difference may be bigger (often quoted 1/3 of labour force is quite plausible), because Greece statistics on public sector employment are as reliable as the public finance data.

In the Greek press the number of public sector employees is reported as anything ranging from 700,000 to 1,200,000 which represents ~10% of the total population. Different numbers are probably due to the inclusion (or not) of people working in state-owned enterprises (the "wider" public sector), or people working in non- or semi-permanent jobs.

I would not say that this population is completely useless (it includes e.g., medical doctors, fighter pilots, engineers in state-owned businesses besides bureaucrats) but it's a good guess that there are too many bureaucrats and do-nothings in the public sector.

I don't know whether Portugal has a similar tax evasion problem, but Greece certainly does have a huge one. Declared incomes are very small compared to real ones and there is a rampant problem with illegal immigrants who pay absolutely no taxes while they make free use of both schools and hospitals.

A three-pronged approach that will limit the number of state employees, reduce bureaucratic obstacles to private enterprise, and tackle tax evasion is more than enough, IMO, to handle Greece's financial woes.

"The CIA reported that government spending in Greece is 40% of GDP. This means 60% of the country has to pay for all the debt, in excess of 100% GDP, and the other 40%."

Err - no. At least half of government spending is transfers and people then pay taxes on transfers (VAT at least). Also the main proposals causing the ructions in Greece are to reduce pension spending and wages in the public sector.