[sx]

I am not advocating something that extreme here. Not sure how familiar you are with Greece. Each of these organizations is overstaffed to a great extend. Then some of them are totally useless, like the public railroad. On the top of that there are businesses that would be very healthy in the private sector (see banks) and that the government has absolutely no reason to be in. The fact that the government is actually in those businesses, profitable or not, screws up the incentives of everyone involved.

[mfukar]

I happen to be somewhat familiar, since I've been living there for 26 years. The majority of state enterprises (or those the state has a share in) right now are profitable, with the notable exceptions of a) railroads and b) the off-the-books units created by ministries to handle short-term tasks. Could they benefit from a restructuring and would lay offs be helpful? Probably so.

Does the state's involvement in public corporation screw up incentives? Telecommunications is a good example of why not. Banks still don't convince me; they pay taxes with interest rates significantly less than 18-20%, which is the norm and they have resisted any and all attempts of the state for policy changes.

Personally, I am more concerned with other issues: the legislation that often proves to be shortsighted and inefficient, limited (and that's a euphemism) opportunities to young entrepreneurs, poor education, but the one thing that bugs me the most is that Greeks (yeah, I'm one of them) have no regard for public interest. The why is a longer story than what can fit in this post.

PS. You hinted to "shut down the money-loosing public businesses" as the "more appropriate solution"; if you're not advocating for it I may have to brush up on my English comprehension skills.

[sx]

A point with which I strongly disagree is that some public businesses are profitable so we should leave them alone. First of all, it's trivial to be profitable if you control a monopoly. Also, being profitable doesn't mean you are efficient, some things could be done much more effectively in the private sector. Also, by being overstaffed, even if profitable, you are not allowing all these people working for you to do something more productive.

Beyond that, when talking about profitability, you should consider pension plans and future obligations. Some of these businesses might have a positive balance sheet for the year but what's going to happen if you consider their future, inflated, obligations. A good example are the pensions the Public Electric Company employees get. They are mostly funded by the government.

Let's see why it screws up incentives: -- What do you think any of the people working in the public sector tries to optimize? Is it the successe of the business they are working on? Do they try to advance their careers? Or do they try to work as little as possible? -- If an employee is not good, is a government controlled company ever going to fire them? -- The guy who controls the supplies in the hospitals, does he ever have to report to somebody about that? -- Do you know a single person in the public sector that he has ever been promoted or fired because of his skills or lack there of?

[mfukar]

A point with which I strongly disagree is that some public businesses are profitable so we should leave them alone.

A point which I didn't make. Improvements can always take place. But no matter; not all businesses I was talking about are monopolies. In fact, the telecom sector is free since 2001, and it's doing great, considering HTO possessed 100% of the infrastructure up to that point.

Incentives are given by management. It is extremely easy for any business to motivate their employers, as it is easy to lay off slackers. It mostly does not happen; this is a result of corruption, incoherent legislation, and poor law enforcement as well as financial and management review (among others). I've already mentioned those factors, I view them as extremely dangerous for our economy and I highly doubt they'll be waived in any reasonable amount of time. I think we mostly agree on this part.