Tag Archives: public sector

The Business Enterprise and Today’s Society (Reposted)

Dr. John Psarouthakis, Executive Editor, www.BusinessThinker.com

Founder and former CEO, JPIndustries, Inc., a Fortune 500 industrial group

 

We have been in the midst of a fundamental and historic shift of how the economies around the world develop. With the collapse of the centralized and state control model of the economy what we have now, however, imperfect it maybe, is the model of the “Free Market.”

This shift is occurring in parallel with two other sociopolitical expressions:

  1. Smaller government, though the last few years this seems not to have been happening.
  2. The need, indeed the demand by our society to provide assistance, protection, and distribution of economic benefits in a “fair” way

What we are witnessing is a major shift on “how we can fulfill our expectations of a humanistic society” while we keep the state’s interventions and control power at minimum.

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Public Sector Size and Quality

Periklis

Dr. Periklis Gogas is an Associate Professor of Economics, International Economics Department, Democritus University of Thrace, Greece

Matthaiou

 

Ms. Maria Matthaiou is a PhD Candidate in Economics, Democritus University of Thrace, Greece

 

It has been widely thought that the main cause of Greek crisis is the size of the Greek public sector, i.e. both the percentage of government spending in the total GDP and the number of public servants of the Greek government. Nonetheless, the international experience shows that a large public sector (as a percentage of the country’s GDP) is not necessarily restrictive to growth and prosperity. In the following graph, we can see the size of the government in various European countries and their relative effectiveness. We can easily observe that Greece with a 48% share of government spending in total GDP is below the average. Nonetheless, Greek government spending effectiveness in the quality produced is trailing the other countries by far. France, Austria and the Scandinavian countries that are members of the EU sustain a far larger government sector but the quality of the services produced is significantly larger than Greece’s. Moreover, these countries exhibit a higher per capita income and standard of living as compared to Greece.

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The Business Enterprise and Today’s Society

drjohn11aDr. John Psarouthakis, Executive editor, The Business Thinker magazine, and Founder and managing director, JP Management Center, llc.

 A lecture at the Institute for Advanced Studies in the Humanities, University of Edinburgh, Scotland.

We have been in the midst of a fundamental and historic shift of how the economies around the world develop.  With the collapse of communism, the centralized and state control model of the economy has also collapsed. Other socialist State models, i.e., Sweden, UK before Margaret Thatcher, have also collapsed.  What we have now, however, imperfect it maybe, is the model of the “Free Market.”

This shift is occurring in parallel with two other sociopolitical expressions:

  1. Smaller government, though the last couple years this seems to have moderated quite a bit
  2. The need, indeed the demand by our society to provide assistance, protection, and distribution of economic benefits  a “fair” way

What we are witnessing is a major shift on “how we can fulfill our expectations of a humanistic society” while we keep the state’s interventions and control power at minimum.

Before I deal with this question (shift) let me digress in to a bit of history .  .  .  .  After all, how can a Greek like myself discuss such matters without referring to HISTORY .

These great shifts of power are not without precedent.  What is new is the rapidity of change that we are witnessing.  When such major shifts of power occurred in the past, they had a great impact in the ways the society functioned.  Examples:

  • The emergence of secular values over religious values and authority during the 16th, 17th and 18th centuries.  Power centers changed.  Princes of church gave way to princes of land, who,  in turn, gave way to the chiefs of industrial, commercial and financial wealth.
  • Societal institutions and the most firmly established organizations were forced to conform or disappear with the passage of time.These shifts took place not without sacrifice of then well established ways of life.  Now, let’s get back to the question I posed earlier.  Let me repeat it.

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