Soon, the Greek debt will rise at $500bn. That’s the kind of debt that no small country can repay, unless it has invented, internationally patented, and marketed anti-gravity. So, let’s see why we’re where we are today, and what can be done about it.
– The origins of the problem
One thing you have to understand about Greece is that since it became independent, 190 years ago, there hasn’t been a single time when the Greek economy and standard of living was “good”. See, if you look at Germany, France, UK, and even Russia and Romania, you will find stretches of time that measure in years where you could say that these countries had a “mini-golden age”. Greece never had such a golden age in the modern times. It was always under the danger of defaulting. And it has, at least 3-4 times. From the Irish Times: “According to a study by economic historians Carmen Reinhart and Kenneth Rogoff, the Greek state has been in default for almost one out of every two years since it was founded in the 1820s.”
This financial situation has led to dictatorships, kings, and democracies come and go, like on a vicious cycle. And until the 1980s, this has kept the Greek people from living at the same standard as their European counterparts. In the 1920s, the bureaucracy had become so big that the public sector grew not only in numbers, but also in power. A law was enacted where from the moment you became a civil worker, you effectively couldn’t get fired.
This quickly created a two-tier citizenship in Greece. The powerful civil workers (who retire early, some of them work few hours, some of them working in offices are indeed lazy etc), and the private sector, which remained very underpaid, very hard working, and who’d retire at the age of 65. When Europeans today complain about the lazy Greeks, they must understand that Greece has a virtual cast system, and that not everyone is equal in it.
So, because of this social schism, the private sector had to resort in tricks to stay alive. They’d avoid taxes as much as they could. As the years went by, this whole mentality of corruption and “under the table business” was spread to every part of the state. From the poor workers, to the richest. Tax evasion is what everyone does, from the poor worker who pumps gas to your car, to the biggest construction company of the country. Being street smart was now how everyone was getting by in Greece. Want to see a doctor? Pay him under the table. Want to have your car pass the yearly examination? Pay the guy who does the checks. Want to get your case be heard at some civil office? Pay the clerk to just move his/her ass to go and find the file. In all truth, this kind of mentality was in Greece for centuries, but it amplified with the rise of the civil workers in the 1920s.
I was born in 1973 in Athens. In the first years of my life I lived in both big cities (Athens, 1-3 yo), small cities (Preveza, 4-7), towns (Louros, 12-18), and mountain villages (Skiadas, 3-4 & 8-11). One thing I remember very clearly from that early time is how many times I’d eat beans during the week. It was bordering to 5-6 times a week. Beans were our staple. And not just my family’s, but most of the people we knew too. We’d be lucky if some goat broke a leg, and my uncles had no option but to kill the goat, and share the meat among the family. The standard of living was a bit better in Athens, but not a whole lot better.
But after the inclusion of Greece’s in the European Community in 1981 something happened. Money poured in from the European countries to Greece. FREE MONEY, that is, in almost the most literal definition of the words. Not once in the past a country was ever so lucky to receive so much free money. That was such a major opportunity for Greece to get it right. Europeans wanted Greece to be part of the future European Union, and to be able to be as developed, money had to be given to Greeks, to make roads, businesses, develop more their agriculture etc, etc. In three decades, 240 billion Euros of European subsidies were given away to Greeks.
Instead, the money found three destinations. Divided, 1/3 went where it was supposed to go. Indeed, some new roads were made, some new athletic infrastructure etc. The other 1/3, the one that was given to businessmen to modernize their business and bring them to a European standard, went into building new houses for their family and buying cars. See, that money was like candy change for a street kid. Money was poured in to very poor people, so the natural reaction was to buy “luxuries” (if you can call a house that its floors are not made out of cow manure, a luxury — that was the case for many houses in Louros up to the late ’80s). Because the socialist PASOK wanted to be re-elected, they didn’t do anything about the situation. They just let the people “become happy”, so to get votes again. And they did.
The last part of that 1/3 (and maybe even more than just 1/3), was eaten away. By people who had access to it. Be it politicians, civil workers, the mob, rich people, it doesn’t matter. The point is, billions of dollars were eaten away, and that money never went where it was supposed to. They are probably in some Swiss banks right now, if they were not always spent away in cars, swimming pools and what have you. The point is, Greek lost a unique opportunity with that money back then, to modernize the country.
Another thing that was and is part of the problem, is the oligarchy in Greece. The career politicians are coming from families of politicians. While there are similar examples in the US too (e.g. the Kennedys), Greece has taken that to the extreme. 90% of same people are getting elected and re-elected all the time, and when they die, their kids, or their proteges, are taking over. The Greek political parties are like football clubs, with fan clubs, and fans that can be trusted to make trouble when asked. They are all populists, they are shouting at each other in a way that would land them in jail in any other parliament in this planet, they are short-sighted, and they are incapable of understanding what they’re into (consider that Greek ministries are NOT offered to academics or people of knowledge, but to these elected — so a dentist that got elected, might end up become head of the Education Ministry). Not to mention that the title of Greek President had true powers before 1988, and became just a ceremonial title after constitutional amendments that the Prime Minister of the time passed, ensuring that there’s only “one” person in power. The whole thing is power-gripped, and corrupted. Unfortunately, even if a new government takes over, the same underground people will still move the pawns. The only way for Greece to free itself from this political mob, is to not allow any of the politicians, behind-the-scene workers and their immediate families of these political clubs to be elected for 30 years. Take away their be-voted citizen right, destroy all political parties that have more than 5% of popularity. Politically, Greece must start from scratch in that front.
As much as I’d like to put all the blame to politicians and call it a day (as many Greeks do), the truth is that Greece is a form of democracy (yes, just a form). And as such, the citizens are responsible as to who they vote. Back in the ’80s and ’90s, you could have this bright chemist, or theoretical physicist, or mathematician just finishing up his university studies, and instead of trying to setup a research company to try and create “the next big thing in the world”, he has to go through almost two years of mandatory army service (doing nothing all day after the first 3 months of basic training, killing any urge to change the world via a new product, and forgetting what he learned at school), he then comes back to mom & dad and asks them to go and kiss the ass of their local politician to get him a job as a civil worker — sitting down all day, doing nothing of note, that is. And politicians did put these bright people in dumb, filling and data-entry positions, because they wanted to re-elected. Everyone was winning in their microcosmos they lived in.
But the country was losing in the big picture. Greece became a country that did not produce anything. Except feta, olive oil and tourism, the country was just living on virtual growth. And the civil workers made it difficult to get out of this terrible situation, by asking the government to “lock” certain modern professions (so only civil workers could do them), and by making it difficult to incorporate an LLC. Do you remember that Greek Android company that Google bought last year? The reason its two guys left Greece and tried their luck in the Silicon Valley wasn’t because they couldn’t get an internet connection from Athens, but rather because creating a new private company in Greece was a pain in the ass until recently, when finally Papandreou made it easier with a new law (acknowledged by the two engineers in a separate video interview).
At the same time, Europe has part of the blame too. They poured all this money to Greece, and they never checked it properly if the money was going where it was supposed to. They trusted Greece to be an adult, while Greece was just a little poor kid on the streets, and was just learning to become a spoiled teenager after it got adopted. As much as I’d like to put all the blame to “external forces”, zombies, Europe, vampires, and politicians in the last 30 years, the truth is that a lot of the blame goes to every Greek citizen. Every single one of them. They brought all this on to their heads for the last 90 years, and especially during the last 30 years.
Ah… the ’80s. What a nice time (*chillwave music plays in the background*). The time that we switched from beans and wild vegetation soups to chicken, beef, pork and Prada belts. Guess what kids: you now have to pay for a standard of living that was not symmetrical to what you generated as a country.
The blame of Europe does become more apparent and more serious in the last 10 years, when they started lending Greece even more money, on the promise that they will get their money back. There was no collateral, and they kept lending. That was not just a financial mistake on their part and for their customers, it was a crime against Greece. Every responsible bank is supposed to do the math if someone has the money (or the will) to pay back. ECB didn’t do the obvious math, even after Goldman Sachs helped Greece to cook the books. That’s how far the Greek corruption went, as to making illegal business with the GS sharks. Instead, Greece is now paying the price and GS still strongly sits in Wall Street like nothing happened (a bank that should taken apart by the US government in my opinion, for the problems they created to at least the American people recently).
And if the lending of money wasn’t enough, the paranoia that Turkey (also a member of NATO) will invade Greece has led to an arms race. Think of what was going on: France was lending money to Greece, to buy French arms. Let alone that most (all?) of the 12 Phantoms Greece bought in 1988 have crashed since during exercises (second grade quality?), killing most of their pilots. Not to mention that because of bribery to civil servants from foreign medical companies, Greece pays 3x the amount of money for medicines and medical instruments than any other European country.
– So what can we do?
There are only two things that can be done, and unfortunately, Greeks today are opting for the wrong option. When will the citizens see the big picture? Don’t get me wrong, both options are SHIT. There’s no way back to the old standard of living. But there is a difference between SHIT and SHITTIER.
Shit option #1: Austerity measures, more bail-out debt
This is the solution that the current Prime Minister is trying to pass. The advantages of this plan is that, at last, more laws will pass that will make free enterprise and growth a possibility (but definitely not a certainty). At the same time, crazy pensions, 14 months of payments for 11 months of work, and other crazy civil worker benefits like these, are all cut out. Personally, I’m looking forward to these kinds of social changes. For the long run, even if it stings 1 million civil workers who have learned to expect a specific standard of living that is not analogous to what they offer, it’s the right decision. If bankruptcy fear is what drives Greece to corrects the sins of the past, well, then that’s what it takes. The truth is, the kind of civil worker system that Greece has is not sustainable. It must be shrinked considerably.
The disadvantage of this plan is that Europeans are asking to privatize all national wealth. From transportation to healthcare, from banks to selling islands. I’m all for privatization of certain elements, but as a socialist myself I believe that a righteous government should have the upper hand when it comes to resources that are important for its citizens in the next 100 or 200 years. For example, while I’m for selling a few small dry islands that no one is living on them, I’m against of selling water. With the dangers of global warming, overpopulation, and the decline of the sea life, owning potable water is very important.
Greece must be bailed out, but without selling out its main life lines. These must remain property of the people. Papandreou should only sell parts that are not vital to life in the future.
Shittier option #2: Bankruptcy and back to drachma
This is the easy solution. But easier said than done. See, with bankruptcy, and going back to the newly devalued drachma, Greeks can start anew. Unfortunately, this is not what is going to happen. Have you ever seen what happens when you remove the Hi-Fi system from the room of your teenager kid? Hell, that’s what. He comes back and trashes the place out of anger.
I’m Greek, I love Greece as my birthplace, and I terribly miss its beauty. But I do NOT trust the Greek people to live like Zimbabweans do. Because that’s what is going to happen if Greece exits the Euro. Forget buying a new cellphone every year, or a new computer. These will all be parts of the past. Instead, the standard of living will go back 20 years, and the country will need between 30 and 100 years to get back to its feet — if civil war doesn’t tear it apart before that time. Expect a lot of violence. Lootings, rapes, robbings. When Argentina defaulted 10 years ago (an argument that many Greeks bring as a positive example), 25% of its citizens had to live (and some still are) under extreme poverty.
In my opinion what Greeks ask today when they riot, or when they write such half-truth articles, is not a viable policy. It’s a pipe dream. They think that if they are left to their own devices, and Europe ungrips, things will be good. No. Things will be way, way worse. The international market is like a web, and no country can live alone. Greece does not even have oil, it imports 100% of it. Greeks who riot to leave the European Union and NATO are romantics, their idea of how to proceed can not work. Unless they want everyone to live the way people in North Korea do, which is not very nice, to say the least.
Instead, they strike, bringing the country to its knees even more, which results to requiring more bail out money to pay for these un-worked days. The more these idiots strike, the more the country dysfunctions. Strikes is the worst thing a citizen can do to an almost dead country. I’m extremely sad that the Greek citizens don’t see this. It shows great irresponsibility.
– Some further ideas
What Greece needs to do is simply:
1. Get bailed out by Europeans, by convincing them that Europe without Greece will crumble. Get their money, but this time use it right. So far, Europeans do want to bail out Greece, but this will change in the next few weeks (mark my words). There’s no time to waste, from the Greek point of view, bailout is better than bankruptcy. With the right measures, the debt will be paid back eventually. Refuse to pay a part of the debt if lawyers find that some of it was illegal (like Ecuador did). But this “trick” can’t be done for all the debt.
2. Austerity measures where it matters, where it makes the country stronger, no matter if some civil workers don’t like it. Lower civil servant pays (it makes no sense that a private worker gets paid $800, when a civil servant gets paid $1950 on average), cut off the big pensions to no more than $1000 etc.
3. Privatization of only non-essential parts of life (current and future life). Fight corruption at all levels. Transparency everywhere.
4. Like India, become an off-shoring center for many things, not just software.
5. Start industries, make smart people create companies and products that international markets would care to buy.
6. Cut out the army service to 3 months. Stop buying arms, only parts if needed.
7. Ask people to go back to the villages where they came from. Ask them to use the land, make food. Athens holds 1/2 the Greek population, a negatively unique situation in the world.
8. Clean up the political system. Disallow all politicians and people currently in power from getting re-elected or serving for a number of years. Instead, the people who are eligible for that period should be under 50 years old, and never have been part of any political association before. Bring new blood into politics and put smart specialty people as heads of the various ministries.
9. Go back to the tax books, find the holes, and make the citizens and corporations pay of what they owe (there are terror cases of corporations paying $0 when they should have paid $15mil in taxes). While that money might have left Greece for Switzerland long ago, I wouldn’t be surprised if what is owed to the state by its own citizens and especially its companies, reaches to the heights of a trillion dollars.
10. Tourism, tourism, tourism. Put people to work, remove the Acropolis, and move it to a secure location. Rebuilt the Acropolis from scratch, according to how the archaeologists think it looked like in 400 BC. Rebuilt the Colossus of Rhodes. Greece’s landscape is also unique for extreme sports. But as my mom says, who I always found her to be the epitome of the very average Greek (in a bad way): “Allo ti tha kanoume. Tha paroume to ale3iptoto kai tha pame na pidisoume apo tis speles na pame na skotothoume. Den mou fernoun fai aftes oi vlakeies”.
Oh, and Greece is not just the islands. So far, 90% of all tourists go to islands, and that’s stupid. I bet most non-Greeks have never heard of Vikos, even if it’s as deep as the Grand Canyon (if not more). Except goats and a few know-hows, no one visit it. There’s another wasted opportunity to make money off of tourists. I can find about 100 such opportunities, that if I had all the money the Ministry of Tourism had in the ’80s in its hand (or was supposed to have), Greece would not be in this situation today. Even with all the rest of its problems in its back!
Heck, the place I come from, Epirus, is one of the best “blind spots” in the whole of Europe that can do astronomy better than any other place (especially because there are high mountains, clean non-polluted atmosphere, and weather is good too). And what has been done for that? Absolutely nothing. Instead of building roads that go up a mountain, and facilities up there so European amateur astronomers know about it and visit, I’m pretty sure that the idea has not even crossed anyone in Greece’s Ministry of Tourism, ever.
As much tourism Greece has (and has quite some), and Greeks think that their tourism is top notch, the truth is that tourism in Greece SUCKS. There are so many things missing, so much missing infrastructure (from public toilets to golf terrains — there are none). There is so much opportunity there, that make my eyes cry. If all that is not enough, there you have the Greeks essentially banning kite-surf. If this last part doesn’t show how short-sighted Greece can be, nothing will.
Make no mistake, I love my country. I close my eyes at night, and before Morpheus has taken me away, I’m that kid again, chasing hens in my village. I love my birthplace. But the good citizen is the citizen who says it like it is. Unfortunately, it’s my fellow Greeks who I disagree with in this case — and this puts me at odds, because unlike most blogs discussing the situation, I put the blame on the citizens too. I disagree with the Greeks’ expectations about entitlement, their beliefs about other countries owing Greece just for being Greek and having invented democracy (I didn’t know patents can last 2000 years), their kind of non-sustainable aspirations of getting a job that you can’t be fired etc. But I do love them for being so open, for always saying what they think, for being laid back and cool. But I can’t stand this short-slightness, both at a personal and national level. I left Greece to get a better future (since there was nothing to do there for the business of my then-fiance, and after I specifically commanded my parents to NOT go kiss ass to try to make me a civil worker), but I always, always dreamed of going back. The people at the day to day basis are lovely, the nature is beautiful. Hopefully, one day the political and financial climate there will be stable-enough for once. I hope during my lifetime I see this coming to fruition, and Greece becoming a true 1st World country. Not in the name only.
Additional reading: this article by Vanity Fair. A lot of Greeks hated it and found it anti-Greek, but the author has his head screwed on perfectly. Kudos.
Update: Another good article, saying it like it is.