North & South

The Face of the Enemy

My friend Adrianne has started a group blog called Greece, Voices Inside. She started it in order to provide a forum for us who are witnesses to this crisis, a way, in her words,

… to voice some of what has been happening in Athens from the point of view of those of us who are here, to communicate the conversations “from the streets and kitchens” as a friend put it, to talk about what is not always in the news, or what many feel is “just part of the story”. 

She tagged the blog ‘beauty in chaos’ and invited me to post.

I’m not sure there is beauty in chaos itself. Or if there is, it is a horrific one that can only be discerned if you are not living in the midst of it. There is no beauty in the schizophrenic’s hallucinations and disintegration of thought. I witnessed this once and the fear I saw in this man’s eyes is something I will never forget.

Perhaps what my friend meant is that we must look for beauty—and the other things that make life worth living, the company of friends and the embrace of lovers—as we struggle to deal with the ever-present crisis that envelops us. And among the most beautiful of things we can find are the acts that express our deepest humanity, the care we extend to the people we love but perhaps even more to those whom we don’t know.

We need to be reminded of this, I suppose, because in the midst of crisis we may overlook beauty. It’s certainly easier to find the enemy. Many in Greece claim to have found him or, better, them. And not surprisingly, it’s not always the same enemy, and the enemy today is not the same enemy we pointed to at the start of the crisis.

I’m not sure I understand exactly what she meant by chaos. The crisis in Greece is not the chaos of utter disorder. The tragic irony is that this crisis has emerged from an arrangement of specific and identifiable forces acting in very predictable, if highly corrosive ways and almost wholly on the basis of their own group interests. The malaise of the Greek economy was created and in many instances is still being maintained by a very particular and perverse order, a system of massive inflows and outflows of money, favors and influence orchestrated by a densely interconnected and self-regulating nexus of labor unions, professional lobbies, political parties, and state suppliers and contractors.

Nor is it the chaos of state failure. Public services, never efficient in the first place, have been stressed. It may take over a month to get an appointment with a cardiologist, but you will be seen. Petty crime has increased and there are now areas of the city where most Greeks wouldn’t walk alone at night (and that is new), but there is none of the lawlessness of truly failed states. According to a survey conducted recently by the Institute of Small Enterprises, three out of four Greeks with a monthly income of less than €1000 have cut back on the amount of money they spend on food. The lines at the soup kitchens have grown longer. But the country is not (yet) being ravaged by hunger.

No, it is not chaos but rather an ever accelerating process of decay, first visible on the fraying margins of society,  in the abandonment one senses in the newly emerging ghettos of the central city but then increasingly deeper within the connective tissue of Greek society. The decay can be read along any one of what used to be thriving business thoroughfares of the central city—Patission and Aiolou and even the once grand Stadiou—but now speak more of flight than commerce:  many of the shops have closed, and the only life to be seen on the block are the immigrant peddlers who have set up their makeshift stands of cheap shoes and handbags along the sidewalk. The stores still doing business barricade their storefronts when closing for the day (and on days of protest rallies, during the day as well), as if awaiting the onslaught of an invisible enemy. A city besieged. A decade ago, Stournara Street was half jokingly referred to as Athens Silicon Valley: six blocks of shops selling personal computers, peripherals, DVDs, mobile phones and books on programming.  Three out of every five these stores along the street have since closed. For a while it became a hangout for  the junkies who had been (finally) chased from their previous Needle Park alongside the National Archaeological Museum and who have since been dispersed (many have now gravitated a half kilometer eastwards to the National Library). The street is symbolic not only of the effects of the crisis but also of at least a part of its cause. I used to wonder how so many shops could survive but they did booming business in the years before the crisis.  But very little of the merchandise sold on Stournara was actually produced in Greece. Stournara is a street that, like so many others in Athens, could survive only in an economy on a wild spending spree, an economy fueled by private consumption (much higher than in most other European countries), construction and borrowed public money.

The old order is gone and will not come back. The frightening thing is that we don’t know what will replace it. It is not at all certain that even with the enactment of legislation for structural reform that things will be turned around. Laws may be drafted along the guidelines of our economically more progressive Northern European paymasters but they will be implemented by the very people whose behavior the laws are meant to change.  And the Leviathan of the Greek public sector has remarkable and deeply entrenched defense mechanisms. The Greek daily newspaper Kathimerini reported (2.26.12)—and this after the austerity measures for the second aid package were approved—that while the central tax offices may be suffering from a shortage of personnel, 40% of newly hired taxation employees will start work at offices that are either not operational or will soon be abolished.

Even if there is political will for reform—and I’m not at all sure that there is—the Greek state apparatus and control mechanisms are not now up to the task of implementing reform. The State loses a staggering €15 billion through tax evasion each year. According to a report prepared by the EU Commission’s Directorate General for Taxation and Customs Union and cited in WirtschaftsWoche three-quarters of self-employed professionals such as doctors, engineers, notaries and lawyers declare income lower than what the tax authorities have determined as the minimum subsistence level. But the State cannot even fully collect the taxes on declared income; the Ministry of Finance reported in June 2011 tax arrears of €41 billion. The same EU report noted that the Greek state has claims of €63 billion in back taxes from the firms and individuals with the highest amount of arrears.

Taxation is only part of the picture. Transparency International’s annual survey of corruption in Greece reported that bribery cost the country €632 million in 2010. One in ten Greeks report having to paying a bribe for a service, largely in the public sector. Almost one out of every three Greeks who used the public health system reported paying a bribe.

The cost of corruption and tax evasion is exacerbated by the massive cost of inefficiencies, if not blatant waste, that is the legacy of concessions made to a slew of special interest groups—from taxi drivers and truckers to lawyers and pharmacists.

No new trucking licenses have been issued for four decades, although the volume of goods transported within the country tripled. Licenses became a highly prized asset, traded within the industry, passed on to family members or sold on the black market up to as much as €300,000. As the Foundation for Economic and Industrial Research (IOBE) reports, this monopoly meant that it cost more to truck something from Athens to Thiva than from Athens to Rome. This was supposed to change but two years have been wasted  and we’re still awaiting liberalization.

The privileges enjoyed by closed professions (especially the trucking industry) include an array of minimum prices and mandatory profit margins. Pharmacies were guaranteed a 35% mark-up, part of the reason why total expenses for pharmaceuticals in Greece for 2009 were twice the level of those in Belgium, which has roughly the same population. Protectionist measures were rife. Until quite recently, cruise ships were required to employ a high percentage of Greek as crew if they wished to start or end their voyage in Greece. No wonder that many operators bypassed Greece in favor of Turkey, Malta, Italy and other Mediterranean bases. These dysfunctionalities, together with the anti-entrepreneurial disincentives and convoluted bureaucracy of the public sector strangle competition, increase the cost of Greek goods and services and block investment and growth. The IOBE study estimates that opening up these professions would generate an increase in GDP of €35 billion in five years. Greek GDP would rise by 1% just by liberalizing the trucking industry.

The shockingly harsh austerity program that the Greek government was forced to move through Parliament in exchange for EU approval of the second €130 billion bailout package for Greece included cuts in the minimum wage and pensions. On their own, these cuts are almost certain to exacerbate the recession. Many Greeks attribute the savagery of these measures to a German-led plan to bleed the country dry and depress the value of state assets slated for privatization so that Germans firms can then come in and pick up prime properties for a pittance. These conspiracy plots are not only the stuff of tabloids and reactionary nationalist discourse. I have heard such stories even from ordinarily rationalist colleagues of mine (none of whom actually read the text of the bill that passed the Parliament, which also included a number of far-reaching structural reforms in addition to the wage cuts).

We have found a new enemy, and it is Germany. It’s not just the rabidly anti-German sentiment of the nationalist right-wing (or left-wing, for that matter) factions. It’s not just the odd protestor burning a German flag at a demonstration (I can’t remember the last time I saw a flag burn at an Athens demonstration).  A survey released just last week indicated that eight out of ten Greeks are negatively disposed or hostile to Germany.

Three fourths believe that Germany is increasingly hostile toward Greece. When asked, “what feelings do you have when you think about Germany, 41% replied “Anger/frustration/rage”. Only 1.5% had generally positive feelings. A slight majority (51%) of Greek respondents also believe that German economic strength is attributable in large extent to the lack of transparency in its firms’ business dealings outside the country and not to competitiveness of its economy and productivity of its labor force, the quality of its manufactured goods, its exceptional infrastructure or work ethic.

Perhaps this shouldn’t surprise us. As Richard Hofstadter noted in his essay The Paranoid Style in American Politicsthe enemy we think we see if often a projection of what we most dislike in ourselves and what we most desire to become, a projection of the ideal and the objectionable. It is revealing that Greeks would attribute German industrial and export success to precisely one of the factors that has been endemic to the failure of Greek competitiveness: corruption. (Just for the record, Transparency International’s Bribe Payers Index for 2011—a measure of the likelihood of companies from 28 major economies to win contracts abroad through bribery—ranks German firms as among the least likely to use bribery to gain business, in 4th place after the Netherlands, Switzerland and Belgium).

Conspiracy theories, as Roger Cohen once said, are “the ultimate refuge of the powerless”. It is much easier to reduce complex and often mutually contradictory economic processes to a single plan engineered by some personification of malicious intent— a cadre of greedy MPs or Angela Merkel—than to accept one’s own responsibility for the crisis at hand. I remember the Indignants who were camping out in Syntagma Square during the early days of the crisis. They would gather in front of the Parliament building when it was in session, focusing the green beams from their laser pointers on the windows of the MP’s offices, calling for the incarceration of the corrupt politicians who had lived well from the graft and kickbacks of the last two decades.  I have no doubt that many were, if not corrupt, then ethically lax with regard to the benefits of influence peddling. But it was ironic how the Indignants had distanced themselves from the machine politics they were decrying. How many of them, I thought, were part of the very system, how many had found their way into a sinecure in the public sector, how many had greased the machine of the Planning Commission or local Tax Office to get a matter of their through faster or without too much scrutiny, how many had performed services without a receipt or handed the local doctor an envelope with cash. And how many had voted for these men (and most of them are men) and the parties they served although all knew how mired these politicians were in graft and clientilist politics?

The conspiratorial discourse of Greek commentary on the increasingly salient “German question” is, for me at least, disturbing. The Germans are out to “punish” Greeks for their profligacy. Merkel and Schauble want to “reduce  Greece to its knees” and pave the way for German acquisition of Greek public utilities. Some have even detected nefarious motive in the willingness of the 160 experts from German taxation authorities who have volunteered to assist the Greek authorities in devising ways to more effectively collect taxes. I find it disturbing not because of the admittedly disagreeable undertones of nationalistic sentiment and the careless and uncritical thinking this discourse reveals but more because it perpetuates our unwillingness to look at our own culpability for the morass in which we are mired.

Of course I know that the motives of German political leadership are dictated primarily by the longer term interests of its constituents, including its banks, and short term electoral politics. But these interests are better served by a prosperous Greece than a perpetually insolvent one.

It is easy to blame the Germans or the troika or even a hundred corrupt politicians. But it doesn’t help.


Image: Geert Goiris, Suspension


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