"Όλα τα λεφτά" (All the Money): Greece's Economic Woes

As we all know, Greece is in the middle of one of the worst economic crises that any modern country has seen since the post-World War II era.  In fact, their debt rating is now the lowest in the world, ranking them below the likes of so-called “Third World” or developing nations such as Ecuador, Ghana, and Sri Lanka.  This has been a massive blow to the Hellenic ego, and the ramifications of the European Union-mandated austerity measures have stirred the pot further in a country whose people, as we all know, don’t need much of a reason to strike or demonstrate.  But who has the moral high ground here?  The EU, led by Germany, which is hesitant to throw good money after bad to bail Greece out?  The people of Greece, who are demanding that the benefits and services they have come so accustomed to receiving be fully restored?  Or the Greek politicians, who have inherited a legacy of mismanaged and misdirected government programs from their predecessors?

I think we can throw the politicians out of the moral high ground discussion right off the bat.  I’m not one to bash all politicians as corrupt, and they aren’t all, but in the case of Greece, the political system has allowed decades of cronyism, corruption, poor leadership, and entitlement to fester into a wound that is killing the modern Greek state.  Has the government of George Papandreou been handed a hell of a mess?  Absolutely.  But many in the present PASOK government have been a part of the dysfunctional machinery of Greek government for years, and they can’t simply blame New Democracy and Karamanlis for leaving them with this problem and claim that they are the solution.

So what about the Greek people, who are suffering through this economic hardship and having their way of life turned upside down?  Well, this is a dicey subject, and I’m sure I will anger some people with my beliefs on this subject.  In many observers’ eyes, Greece became a leftist entitlement society once Andreas Papandreou took over in 1981.  The economy of the past 30 years has been imbalanced toward state involvement and has been unfair to much of the private sector, particularly small businesses which would have helped drive the Greek economy and raise much-needed revenue.  Instead, these businesses were subject to some 250 arbitrary and politically self-serving laws and regulations that placed Greece toward the bottom of the list when it comes to ease of doing business (109^th  out of 183 countries on the World Bank’s list, behind countries like Paraguay and Bangladesh).  As we all know Greek immigrants in America and around the world tend to be entrepreneurial and do very well with restaurants, shops, contracting and other small businesses. But in the climate of modern Greece only the most dedicated and those prepared to cut corners survive the anti-business environment.

Due to the promises of high pensions, “free” healthcare, and other social services made by successive Socialist governments, businesses have also been stymied by excessive corporate taxes, revenues from which were designed to fund all the programs Greeks were promised while politicians pandered for votes.  These entitlements are a large part of today’s problem, as the bankrupt nation is no longer able to deliver on its promises.  Statistics bear out that Greeks work some of the longest work weeks in Europe, and a certain amount of security that all these hours of hard work should translate into a comfortable retirement is to be expected.  But the Greek governments of the past 3 decades have promised the world to its people, all the while knowing that the day would come when the well would run dry.  Do I blame the Greeks for being upset?  Absolutely not.  If my government promised me something I depended on and then couldn’t deliver I’d protest as well. (Social Security, anyone?)  What I do hold the Greek population responsible for is relying too heavily on handouts from the government and hiding their heads in the sand while the treasury evaporated. (Before anyone jumps on me for that statement, let me say that it’s not a personal attack on Greeks by any means.  I hold them responsible in the same way I hold the American people responsible for allowing our government to devolve into the partisan, do-nothing nightmare it has become.)  Then there are recent reports from the IMF that an estimated 65% of Greeks don’t pay income tax (or even file tax returns) and I wonder, “How can Greeks be surprised by the fact that there’s no money left?”  It’s like going to a bank where you don’t have an account and asking to withdraw money every month.  If you don’t pay in, you can’t expect to take anything out!  The Greeks have gone to the well for a generation and it has finally run dry. 

The revolving door of Greek politics has allowed the same corrupt lawmakers to take alternating turns in the ruling government for 30-plus years.  It is these politicians who are responsible for falsifying economic reports to gain access for Greece into the European Union (to its seeming detriment), which is where we shall look next.  Much of the ire of the Greek population has been steadily aimed at Germany for what they perceive as bad faith from their EU partner in their time of need.  But is Germany really the villain here?  As the strongest European economy, Germany is providing quite a large share of the bailout funds given to Greece, at the expense of their own population which has done no wrong in this situation but is still paying the price.  One could say that the Germans voted to be a part of the EU, their government ratified Greece’s inclusion, and they knew the risks if one of the member states fell on hard times.  But, fair or not, the Germans feel that the Greeks have brought this situation upon themselves (in combination with the global economic downturn) through poor economic strategy, stifling regulation and over-reliance on their government for entitlements.  As mentioned, it has been determined that Greece, along with Spain, Portugal, and Italy, did not meet the economic standards set forth as conditions of EU membership.  But in their haste to be accepted as a modern European country and a player in the international scene, Greece conveniently “tweaked” their reports to the EU in order to gain access to the club.  Obviously the Greek officials who did this deserve the most blame, but EU officials did not perform their due diligence and, in their own haste to expand the Eurozone, allowed subpar economies into the fold, to the potential detriment of all member states.  That potential has now been realized in countries across Europe, and the crows are coming home to roost.  As the key economic and political force in the EU, Germany must accept some of the blame for the current crisis in Greece. 

So what’s the solution to Greece’s current situation?  How can the country get out from under its past economic decisions and emerge as a real player in Europe and in the global economy?  Some in Greece and around the world feel that the country is beyond repair, and many Greeks are actually leaving the country to find opportunities.  Most Greeks feel that the current crisis will be a very difficult time, but will result in an improved Greece at the end of the experience. That’s a topic for another day...          

Σας ευχαριστώ για την επίσκεψη (Thank you for visiting)
Todd

The Time I Went to Greece with my Parents by Andrew, age 9

                                                           

I went to Greece when I was 5.  Greece is nice and pretty. I like it but it's hot. We went to the Acropolis and Parthenon in Athens. I also met some of my Greek relatives. I met my Theos and Theas, my grandmother, a great grandmother and lots of cousins. We also went to a lot of beaches.  We drove all over Greece and saw lots of mountains and old ruins.  My favorite places in Greece were Nafplio and Athens, and the beaches.  My favorite foods there were makaronia me kema (spaghetti with meat sauce) and what I called “matias” (“eyeball” eggs, over-easy).

On the way home we went to England. It rains there a lot but it’s nice. It didn’t rain too much while we were there. I got to ride on the London Eye and see Stamford Bridge, where my favorite soccer team, Chelsea FC, plays.  In Salisbury we saw the cathedral and we saw Stonehenge and the Roman baths in Bath. We had some tours on buses and we saw lots of attractions, like Buckingham Palace, Big Ben, Parliament, and the Tower of London.  We also went to Cardiff in Wales and saw the castle and harbor there.  We stayed in hotels and we rode on trains. I came home and met my grandparents at the airport in Maryland and they drove us home.