The injustice of the justice system

A key missing element of the ongoing fiscal adjustment and reform program in Greece is the re-engineering of the anachronistic, slow, and unfair legal system. Drawing from a large body of research, I argue that improving the institutional environment protecting investors and speeding the judicial process are necessary conditions for restoring competiveness and growth. Correcting the injustices of the legal environment is also needed to raise opportunities for young entrepreneurs, lower inequality, and restore civic capital. First, I go over international indicators measuring de jure and de facto legal quality so as to put the devastating situation that one observes in Greek courts into a global perspective. Second, I discuss the main channels linking legal institutions to economic efficiency and inequality. Third, drawing on recent policy reforms in other countries, I lay down some proposals to improve the efficiency of the legal system.

This article has been written by Elias Papaioannou. The full article here.

A short version of the article in Kathimerini newspaper here.

About E_Papaioannou

Dartmouth College

This entry was posted in Banking and finance, Justice, Public sector productivity. Bookmark the permalink.

2 Responses to The injustice of the justice system

  1. Achilleas says:

    Although neither an economist nor a legal professional, I found this paper of the utmost interest.

    I think it is important to mention that the current state of the justice system in Greece is seriously threatening the future of small businesses. I know of many cases where businesses around Athens are threatened with bankrupcy because clients -often large corporate ones- are witholding payment for services rendered, which obviously has a knock-on effect as those businesses, in turn, can’t meet their obligations to others.
    Most businesses end up having to swallow the losses as any attempt at legal restitution is deemed too slow and costly and, due to real or perceived systemic corruption , are seen as unlikely to produce any tangible results. (I assume that recognition of legal precedent would in many cases speed things up considerably).

    Again, thank you for a very interesting paper.

  2. nicholas biniaris says:

    I want to congratulate professor Papaioannou for his paper on the Greek justice system. Very briefly I want to mention the following:
    Greece suffers from anomia, a socio-pathological condition of wider implication for Greece social, civil and political life.
    One and definitive factor for this is the distribution of justice. Effectively, the system is paralysed. Court decisions are handed out six or ten years after the first hearing. This practice does not actually provide any sense of justice. On the contrary, the slow pace and the cost of seeking any form of compensation, moral or monetary as a modicum of justice has undermined the sense of a just society and state in Greece.
    The economic impact of the failing justice system are huge. Both companies and individuals are affected by the cost and the inability to settle claims in a fair and expeditious way.
    The fiscal policy of the state is also adversly affected by its inability to collect taxes and penaties, and at the same time is inducing business and induviduals to behave irresponsibly.
    A key factor for this whole mess is the litigious nature ofrhabits of Greeks re-enforced by the arcane and outdated laws and legal system.
    No productive economic policy can succeed without an effective and fair legal and judicial system.

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