“Without party blinders”, as he states, but as an economist who has special knowledge on the subject, Nikos Papandreou, in his article in the “Economic Review” desecrates the initiative of the government and Adonis Georgiadis to hold down prices with the “household basket ».
“For the prices of essential consumer goods, the current government has adopted an original and so far highly successful policy. I say this without party blinders,” Nikos Papandreou writes, among other things, in his article and continues:
“The price control model dubbed “the household basket” is an example of smart economic policy. Clever because so far it shows that it has succeeded, and without government costs. A flexible policy, which is adjusted every week and responds in this way of speed to the incredible liquidity of today’s markets. It has the additional advantage of not altering the positives of the market, it is easily implemented, without the need for the state to set up a whole bureaucracy of auditors.
Let’s take a look at what the infamous “household basket” is. The “basket” includes products with the cheapest price of the week, eg a liter of milk, half a kilo of rice and other 640 similar products. The requirement to stay in the highly advertised basket is that the Monday low price stays that way for at least a week. Next week he may have the first other brand of milk. As you can see, this control method does not change the market data. Prices are those that are born from the market and not from some administrative mechanism. So, the basket promotes competition around the product with the lowest price. Thus, it forces the other same products to have corresponding prices in order to stay in the game.”
And he adds in another part of his article: “Returning now to the “basket” issue, the clever thing about this policy is that it avoids the huge problems that arise from hard price control. Has the measure succeeded? It seems that the prices of the 600 or more products that have entered the household basket have remained the same. At the same time, the “out of the basket” products, as the Minister of Development said in an interview, in order to keep their customers and not to leave them, also adopted more attractive prices. I mean the measure also pushed the products “out of the basket”. – example that competition in the crisis can work to our advantage”.
The comment of Adonis Georgiadis
Development Minister Adonis Georgiadis, who does not often receive praise from his party rivals, posted the article by Nikos Papandreou with satisfaction and commented:
«I don’t know @NicosPapandreou personally. I appreciate him as an intelligent man. In any case, he is the first to write an article in purely economic terms and to understand the utility and the way the basket works. Read it is interesting!»
Georgiadis’s popularity rose
It should be noted that as Stratos Fanaras reported yesterday, presenting the Metron Analysis poll, in the main Mega news bulletin, Adonis Georgiadis was in 3rd place in the popularity of the ministers and his rise is due to the success and response of the “basket” of the household”.
See the full Metron Analysis poll showing a 10.2 point difference in ND from SYRIZA here.
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