2011: E.U. Countries--States Of Corruption

If the European Community is to stay together, its national governments will have no choice but to rediscover in 2011 what Jean-Baptiste Colbert, Louis XIV's finance minister, knew: that "the art of taxation consists of so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." And if they do not expedite the discovery by themselves, the bond markets will force the changes upon them.

Start with Greece. The world appeared surprised that Greek governments lied through their teeth for many years concerning their GDP, debts, and other national aggregate measures. Yet in 2006, Eurostat, Europe's statistical bureau, threatened Greece with lawsuits over its statistical lies.

Greek politicians responded by stating that the size of their country's black market was greater than 25% and even made explicit reference to improper accounting for prostitution. They implied that there was nothing worrisome about those silly macroeconomic numbers preoccupying bureaucrats. The facts were far better on the ground than the official numbers suggested.

Reuven Brenner holds the Repap Chair at McGill University's Desautels Faculty of Management.

Read full article: Forbes, January 7, 2010