Greece, Collapsing
Did you see Russell Shorto’s informative piece about everyday life amid economic collapse in Greece? It’s worth a look. For example:
By many indicators, Greece is devolving into something unprecedented in modern Western experience. A quarter of all Greek companies have gone out of business since 2009, and half of all small businesses in the country say they are unable to meet payroll. The suicide rate increased by 40 percent in the first half of 2011. A barter economy has sprung up, as people try to work around a broken financial system. Nearly half the population under 25 is unemployed. Last September, organizers of a government-sponsored seminar on emigrating to Australia, an event that drew 42 people a year earlier, were overwhelmed when 12,000 people signed up. Greek bankers told me that people had taken about one-third of their money out of their accounts; many, it seems, were keeping what savings they had under their beds or buried in their backyards. One banker, part of whose job these days is persuading people to keep their money in the bank, said to me, “Who would trust a Greek bank?”
Shorto found some pretty interesting people to talk to, and some hopeful stories. Some Greeks have managed to get out of the cities, and are eking out a decent existence in the countryside. One Greek entrepreneur offered this diagnosis of what happened to his country:
“This is a country with 300 days of sunshine per year,” he began, proceeding into a rambling, fast-paced discourse, the central point of which was that in buying into the euro, Greece tried foolishly to mimic other countries and in so doing shifted away from its natural advantages and way of life. “Working in offices is good in countries where there is lots of rain,” he said. “Greeks don’t need to be in offices. Athens has doubled in size in a couple of decades — it’s now half the population of the country! Two-hour traffic jams, man! After we joined the euro, the mentality totally changed. Suddenly it was like if you still live in the small village where you were born, you must be retarded. So Greeks left their islands and their villages and moved to the city, and they became maniacs. They started expecting loans and handouts.”
The modern Greek mentality, according to Evmorfidis, is a hyped-up version of the debt-ridden American consumerism of recent memory. “Greek people would take out a loan to buy a luxury car so they could say, ‘I have money,’ ” he said. “Crazy! I would run into someone I used to know, and suddenly he’s talking to me about the stock exchange. I say: ‘Come on, man! What do you know about the stock exchange? Let’s talk about apples and olives!’ ”
Let’s put the Greek problem in its proper perspective. Britain’s Great Depression in the Thirties has become part of our national myth. It was the era of soup kitchens, mass unemployment and the Jarrow March, immortalised in George Orwell’s wonderful novels and still remembered in Labour Party rhetoric.
Yet the fall in national output during the Depression – from peak to trough – was never more than 10 per cent. In Greece, gross domestic product is already down about 13 per cent since 2008, and according to experts is likely to fall a further 7 per cent by the end of this year. In other words, by this Christmas, Greece’s depression will have been twice as deep as the infamous economic catastrophe that struck Britain 80 years ago.
Oborne’s heart is clearly breaking over what’s happening to Greece, as would anybody’s, but I don’t know what’s happening to his head. He’s blaming the EU for destroying Greece, and calling on the UK to “[split] with Brussels and belatedly [come] to the rescue of Greece.” With what? With whose money? And on what assurance that Greece can be rescued? As Michael Lewis has famously reported, Greece wasn’t looted by EU barbarians; they largely did it to themselves. Excerpt:
“Our people went in and couldn’t believe what they found,” a senior I.M.F. official told me, not long after he’d returned from the I.M.F.’s first Greek mission. “The way they were keeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn’t even what you would call an emerging economy. It was a Third World country.”
As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.” The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses. The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.
Where waste ends and theft begins almost doesn’t matter; the one masks and thus enables the other. It’s simply assumed, for instance, that anyone who is working for the government is meant to be bribed. People who go to public health clinics assume they will need to bribe doctors to actually take care of them. Government ministers who have spent their lives in public service emerge from office able to afford multi-million-dollar mansions and two or three country homes.
First the hubris, then the nemesis.
Subscribe for as little as $5/mo to start commenting on Rod’s blog.