How Chinese Economic Policy Could Save Club Med Countries

Deep in debt, desperate to borrow for reduced daily operations, Mediterranean countries contemplate unloading valuable properties. Instead of selling desirable properties, investor Mohnish Pabrai urges Greece, Spain and Italy to create special economic zones that bypass stringent national labor regulations and lease these properties to skilled managers who could then hire millions of unemployed, thus generating revenue. Pabrai argues that “draconian labor laws have made the crisis countries uncompetitive.” Special zones in Europe would be similar to Kaesong Industrial Park in North Korea. Pabrai recommends that the countries establish zones with special rules favoring employers – guaranteeing for 20 years a minimum wage of $6.50 per hour, no unions and the right to terminate employees without cause with two weeks’ severance. Many multinationals would be intrigued by a free-trade zone in southern Europe. Pabrai concludes, “If the freedoms and social benefits that Europeans have won since the creation of the EU must come at the expense of mass idleness, then the project has already failed.” – YaleGlobal