Chapter 24: The democratization of rent seeking in modern Greece
We describe the evolution of the power struggle in Greece among key economic and political stakeholders, who have tried, via strategic positioning and rent-seeking activities, to influence economic policy during the postwar decades. We split the postwar decades into three periods: the catching-up period, the overt populism period of 1973–93 and the 1993–2008 period of stealth populism. In each period, we identify the important players to see how they managed to forge a sustainable winning coalition, and to understand how they shaped policies. The three periods vary substantially in terms of the inherent degree of economic inefficiency that they brought about; the first period was characterized by a concentration of rent seeking mainly among the economic and political elite, whereas the middle period exemplifies the ‘democratization’ of rent seeking. The middle period’s proliferation of rent seeking received some legitimacy from large segments of the population due to widespread, and often ideological, perceptions of long-lasting unfairness in the distribution of economic and political power. The covert populism of the last period used an unsustainable expansion of foreign borrowing to allow for an intensification of rent seeking while providing a semblance of fiscal rectitude.
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