In an article published today, Prof. Yanis Varoufakis concluded that "Greek voters today have a unique opportunity to jolt Europe out of a complacency that is leading our Continent to a despicable peripeteia".
My gut told me that there was something wrong with this conclusion and I turned to Wikipedia for an answer. Hybris, it is stated there, "means extreme pride or arrogance. Hybris often indicates a loss of contact with reality and an overestimation of one's own competence or capabilities, especially when the person exhibiting it is in a position of power". Prof. Varoufakis has over 30.000 followers on Twitter (and when reading their comments one senses that they are indeed followers in the biblical sense).
I have been following Prof. Varoufakis' blog for about a year now. Notwithstanding the many good ideas and suggestions which I have read about possible solutions to the Eurozone’s problems, I have not read a single proposal what Greece could do on its own to improve its bargaining power versus the EU (other than being destructive). I have not read a single proposal what Greece could do on its own to improve its economic situation.
Prof. Varoufakis' blog ignores (I am beginning to believe “intentionally ignores”) that by all measures of hard and soft facts, Greece has become a terrible place to do business and a terrible place to leave one’s financial capital. It ignores that a country with such characteristics has no economic future. And it ignores that such a country MUST do something about this on its own!
Characteristic of the wrong attitude is the emphasis on the errors which EU-elites have made in the last 2 years (“…the past two years have been replete with a sequence of errors on the part of Berlin, Paris, Brussels and Frankfurt…”). Yes, they have not only made errors but also giant blunders. But the primary concern to Greeks should be that in the last 2 years virtually NOTHING has been done to reform the country towards a better economic future. Sorry, a lot of easy things have been done like cutting the purchasing power of those who are taxed at the source and who have always paid taxes. One has punished those who are least responsible for Greece’s mess today. What a sorry result so far! (even though one’s heart should go out to those poor suckers who are caught up in terrible games which their elites play).
Those who have been very supportive of the Greek cause in the last 2 years have time and again been deprived of their arguments by actions (or non-action) on the part of Greece. Those who are still taking the position that Greece is NOT like a banana republic of the Third World are continually being deprived of arguments. The latest blogpost of Prof. Varoufakis is but one example.
A banana republic of the Third World may indeed consider it as bargaining power that it has the nuke which can blow up both sides. Greece should NEVER do that. Not only out of respect for the EU of which it is a member but, above all, out of respect for its own ancestors who taught the world what civilized behavior is!
A First World country shows its bargaining power by bringing something constructive to the party. The first thing which Greece should bring to the party is its commitment to perfect the State of Law in Greece: a clear definition of properties and the rights and obligations that go with them (real estate registry); powerful institutions of impeccable standing; uncompromised law enforcement; clearly established control authorities; a modern and effective public administration; etc. Former President Nicolas Sarkozy, a friend of Greece’s, was once caught saying that “there is no state of law in Greece”. Should that not have been an alarm bell to Greek elites?
In day-to-day life in Greece I run into Greeks who are quite different from those Greeks who appear in public, be they politicians, opinion leaders, blog commentators or whatever. They are the kind of people where the rest of Europe would have no problem at all to help them reach a better future for their children. On the contrary, the rest of Europe would feel obliged to do this. The tragedy is that they seem to have zero representation in the public (even though I feel that they are the majority).
There is allegedly an African tribe who follows the rule of “when in trouble, ask yourselves what your ancestors would do”. All those Greeks who seek public attention to teach the world that everyone owes them something (except they themselves) should ask what their ancestors would make of such behavior. Plato, Sokrates, Aristotle — what do you say? “Don’t know thyself and blame others for it?”
I have not yet met a Greek who did not list among Greece’s greatest problems the size and inefficiency of the public sector. And yet, many Greeks can now arouse themselves for a party whose major objective is to make the public sector even larger? What would Plato, Sokrates or Aristotle have to say about this?
To all those who consider the future of Greece as subject for game or bargaining theories I can only repeat the Greek proverb that “any fool can throw a stone into the sea, but once he does, a hundred wise men can’t pull it out!” If you want to go to the bargaining table with a nuke in your hand, make sure the nuke is functioning well because you will only be able to use it once.
I commend Mr. Tsipras for having started a movement. It requires leadership talent to accomplish that. A country which is in as dire straits as Greece is today requires something like a national movement to “turn the corner”. Perhaps even a "new hero". Politics as usual won’t be enough. From that standpoint, Mr. Tsipras and SYRIZA would have a unique opportunity to steer Greece into a better future. What they require is advice how to use this historic opportunity the right way. If influential opinion leaders advise and encourage them to go down the wrong path, they do enormous disservice to the country!
My gut told me that there was something wrong with this conclusion and I turned to Wikipedia for an answer. Hybris, it is stated there, "means extreme pride or arrogance. Hybris often indicates a loss of contact with reality and an overestimation of one's own competence or capabilities, especially when the person exhibiting it is in a position of power". Prof. Varoufakis has over 30.000 followers on Twitter (and when reading their comments one senses that they are indeed followers in the biblical sense).
I have been following Prof. Varoufakis' blog for about a year now. Notwithstanding the many good ideas and suggestions which I have read about possible solutions to the Eurozone’s problems, I have not read a single proposal what Greece could do on its own to improve its bargaining power versus the EU (other than being destructive). I have not read a single proposal what Greece could do on its own to improve its economic situation.
Prof. Varoufakis' blog ignores (I am beginning to believe “intentionally ignores”) that by all measures of hard and soft facts, Greece has become a terrible place to do business and a terrible place to leave one’s financial capital. It ignores that a country with such characteristics has no economic future. And it ignores that such a country MUST do something about this on its own!
Characteristic of the wrong attitude is the emphasis on the errors which EU-elites have made in the last 2 years (“…the past two years have been replete with a sequence of errors on the part of Berlin, Paris, Brussels and Frankfurt…”). Yes, they have not only made errors but also giant blunders. But the primary concern to Greeks should be that in the last 2 years virtually NOTHING has been done to reform the country towards a better economic future. Sorry, a lot of easy things have been done like cutting the purchasing power of those who are taxed at the source and who have always paid taxes. One has punished those who are least responsible for Greece’s mess today. What a sorry result so far! (even though one’s heart should go out to those poor suckers who are caught up in terrible games which their elites play).
Those who have been very supportive of the Greek cause in the last 2 years have time and again been deprived of their arguments by actions (or non-action) on the part of Greece. Those who are still taking the position that Greece is NOT like a banana republic of the Third World are continually being deprived of arguments. The latest blogpost of Prof. Varoufakis is but one example.
A banana republic of the Third World may indeed consider it as bargaining power that it has the nuke which can blow up both sides. Greece should NEVER do that. Not only out of respect for the EU of which it is a member but, above all, out of respect for its own ancestors who taught the world what civilized behavior is!
A First World country shows its bargaining power by bringing something constructive to the party. The first thing which Greece should bring to the party is its commitment to perfect the State of Law in Greece: a clear definition of properties and the rights and obligations that go with them (real estate registry); powerful institutions of impeccable standing; uncompromised law enforcement; clearly established control authorities; a modern and effective public administration; etc. Former President Nicolas Sarkozy, a friend of Greece’s, was once caught saying that “there is no state of law in Greece”. Should that not have been an alarm bell to Greek elites?
In day-to-day life in Greece I run into Greeks who are quite different from those Greeks who appear in public, be they politicians, opinion leaders, blog commentators or whatever. They are the kind of people where the rest of Europe would have no problem at all to help them reach a better future for their children. On the contrary, the rest of Europe would feel obliged to do this. The tragedy is that they seem to have zero representation in the public (even though I feel that they are the majority).
There is allegedly an African tribe who follows the rule of “when in trouble, ask yourselves what your ancestors would do”. All those Greeks who seek public attention to teach the world that everyone owes them something (except they themselves) should ask what their ancestors would make of such behavior. Plato, Sokrates, Aristotle — what do you say? “Don’t know thyself and blame others for it?”
I have not yet met a Greek who did not list among Greece’s greatest problems the size and inefficiency of the public sector. And yet, many Greeks can now arouse themselves for a party whose major objective is to make the public sector even larger? What would Plato, Sokrates or Aristotle have to say about this?
To all those who consider the future of Greece as subject for game or bargaining theories I can only repeat the Greek proverb that “any fool can throw a stone into the sea, but once he does, a hundred wise men can’t pull it out!” If you want to go to the bargaining table with a nuke in your hand, make sure the nuke is functioning well because you will only be able to use it once.
I commend Mr. Tsipras for having started a movement. It requires leadership talent to accomplish that. A country which is in as dire straits as Greece is today requires something like a national movement to “turn the corner”. Perhaps even a "new hero". Politics as usual won’t be enough. From that standpoint, Mr. Tsipras and SYRIZA would have a unique opportunity to steer Greece into a better future. What they require is advice how to use this historic opportunity the right way. If influential opinion leaders advise and encourage them to go down the wrong path, they do enormous disservice to the country!
"I have not yet met a Greek who did not list among Greece’s greatest problems the size and inefficiency of the public sector. And yet, many Greeks can now arouse themselves for a party whose major objective is to make the public sector even larger?"
ReplyDeleteThis is one of the best observations I have read on this blog so far!
If you have been living in Greece you would realize how wrong this opinion is.
ReplyDeleteAnd you are always talking about politicians who most of the times they do nothing from what they say or promise.
You have no idea!
ReplyDeleteThanks for telling the world a very simple truth: there are many Greeks who "have their heads on their shoulders" but they are just too disgusted with this situation to bother and get involved in all the political jumbo-mambo that is killing this country slowly (or perhaps too fast, lately). Great article!
ReplyDeleteA simple Greek.
and great comment. Count me in as one of the disgusted.
DeleteAnother simple Greek
I don't understand what the obsession with the public sector is all about? The services department could surely use some decrease on the numbers of employees; right away in my opinion, since there is no use in stalling the cuts, only further losses. But the production department? For any private investor to want to buy a public company it means that he can make the compamy work and be profitable. Why should that profit go to the investor and not the government, where it can be used for the common good, instead of taking up space in the already overcrowded bank accounts of the private sector? Selling a potentially profitable asset is either admitting that you are useless as an owner; because of your laziness or inability to operate the asset, or that you are, in the case of public property, a fraud as a politician; working for someone else other than the common good. If the private sector is so good at doing business, then I am sure they can create their own ideas, directed at civilians, and profit off of them; not try to appropriate a public good. Living off of government contracts and assets and pretending to be a prime example of a capitalist businessman is so miserably wrong.
ReplyDeleteHi, i am the 9:26 PM.
Delete1) The cost of greek bureaucracy is 7% of GDP. Why? Because there are so many employees whose job is to simply put a seal or a signature on 10 different copies of the same document. Bureaucracy in Greece exists so that some pubblic servants can keep their jobs. It's that simple.
2) How many pubblic companies do you know in Greece that are profitable? OSE (the railways) became profitable this year, after the state paid off the... small amount of 10 bln of debts. ALL the rest are losing money. Is it a "pubblic good" to have for 30 years the DEKO workers (phone company, electricity, railway) getting 3000 euros or more a month, just because they were the "pretorians" of the political parties (especially PASOK)?
3) Greece needs money. Like yesterday. Assets, when properly exploited, bring money to the state through the taxes. Ex. Olympic Airways.
4) Maybe, just for a change, Greece should look at SUCCESSFUL economic models, not the ones that FAILED for 30 years in Greece (like having the state running everything).
5) There is no such thing as "goverment asset" once its sold. Vgenopoulos isn't "living off goverment asset". He bought Olympic, an indebted airline and is making money and paying now taxes (=net profit for the state).
I am always the 9:26 :)
DeleteIn one picture, here's what's the problem with the greek pubblic sector:
http://imageshack.us/photo/my-images/577/57626691.png/
Y Axis: Cost as % of GDP as of 2009 (the lower the better for state expenditure).
X Axis: Quality of Service (the more to the right, the better).
It's basically the ugly truth behind the usual tantra of SYRIZA economists saying that "the greek public sector isn't bigger than the average in EU".
It may be so, but it's inefficient. You have for example, Germany with lower % GDP cost than ours, light years ahead in quality of service than hours. This is what SYRIZA candidates "forget" to say on TV, when they reply "our public sector is perfectly normal in size, no need to cut it".
Hi,
DeleteThe problem is the public sector no argue. But why to give away companies like OPAP with big profits each year? Another example is OTE 10% is beiing sold for 400 milion euro and the profit of the 1st quorter of 2012 is 300 milions!!! when the other 30% was sold for 3 billions
There is a diference between shelling and donating. With the electricity company is going to happen the same.
To Anonymous of 8:54 on privatizations
DeleteIf OTE had been handled the way you describe it, I could see your point. It was different, however.
A few years ago, Deutsche Telekom acquired 30% of OTE for 3,8 BEUR and the option for the Greek government to put another 10% to Telekom for 400 MEUR.
Telekom's investment went so poorly that they soon had to write off 900 MEUR out of the 3,8 BEUR which they paid. A rather good return percentage albeit with a minus and not a plus in front.
The Papandreou government wanted to score points with foreign creditors that they took privatizations seriously. So they put the 10% to Telekom right away and sold it as a great success. In fact, it was nothing other than calling Telekom on its obligation.
Even though Telekom was contractually obligated to buy the 10% for 400 MEUR, there were substantial discussions in their board meeting about the transaction. They explored all possible avenues to get out of the contract but couldn't find a reasonable one. It could well be that they wrote the 400 MEUR off as soon as they made the purchase.
In general on privatizations.
Privatizations are no cure to structural budget problems because they are one-time gains. However, if the one-time gains are used properly (i. e. to gain time to cure the structural problems), privatizations make sense financially.
The much more important aspect of privatizations is the know-how-transfer from the new owner and a better corporate management. Yes, that may mean reduction of personnel. But it is far better to have a staff reduction to 80% but then have those 80% as sustainable jobs than to maintain 100% and all of a sudden find that all 100% have to go.
Someone told me (perhaps this is wrong) that in the National Railways the personnel expenses are 4 times as high as the company’s revenues. So you can take the amount of the government’s subsidies and divide it by the number of current jobs. Then you have the figure how much the government spends on the maintenance of each of those jobs. And then the question is whether the government couldn’t do better things for society with that money than to finance absolutely superfluous jobs.
@8:54 AM
DeleteΙn addition to what Mr. Kastner said, the problem with Greece is this: If you don't run a company as it should, then, in time of need it's better to sell it in order to survive. And by the way, nobody wants to buy something that ISN'T profitable. Nobody has money to waste on paying the accumulated debts of a failed state company. On the contrary, they prefer a company with a small profit. If Greece has ran the state companies in a different manner for 30 years, we wouldn't have to privatize anything now. But we didn't...
As for OTE, you think that the DT is nowdays happy about the purchase? With the Athens stockmarket at 1990 levels and the OTE stocks worthing a small fraction of what it was worthing when DT bought OTE?
The Greek state has proved that is unable to run state companies without huge damage. OPAP is the exception because of this:
http://marketfair.gr/index.php?option=com_content&view=article&id=769:opap-skylakakis-jeplymma&catid=51:2011-03-15-00-25-40&Itemid=93
And without the above, how long do you think it would remain profitable with this?
http://www.praktores.eu/news/item/531-πάμε-στοίχημα-τι-μισθούς-παίρνουν-στον-οπαπ.html?tmpl=component&print=1
And it's probably the exception that verifies the rule. But let's say you are an investor interested to buy a state company in Greece. What would you buy? Some company with a 10 bln debt (like OSE was until this year), or a profitable one?
Reminds me of DEH, shouting all the time "we are profitable". Yes, with free lignite as fuel, a state monopoly and a state financing of their pension fund... Until the moment where they aren't profitable anymore... And now ask for loans...
The classic story of the "ex-profitable" greek state run companies.
Bandolero.
FYI OTE has always been profitable with the exception of 2 years where huge OTE donnations for the olympic games plus a generous retirement plan in exchaneg for union concessions created a deficit. If I were the CEO that reported for the first time a 2 year deficit, even if that was by cooking the books, I'd be ashamed of a 580Keuro yearly salary plus 1,4Meuro pay to leave.
DeleteAnd, you may want to compare 'public' companies like OTE was or DEH still is with the competition. For all the heat they get, OTE and DEH
-produce their product
-transport it
-and fix their own faults
The competition, which only barely survives because of regulation) does none of the above. They only do two things: Advertising and billing(and somethimes not even that). That is ***not*** competition. As for DT writeoffs, I do not believe anyone put a gun in their head to force them to buy a share. And if one does not consider himself capable of running profitably monopoly companies like DEH and OTE or water, then what exactly makes qualifies him for the much more complex task of running a country?
To be perfectly honest with you, I am not sure that I understand what running a monopoly company has to do with running the country? Or had an OTE executive become a politician? I wouldn't know.
DeleteI have no details on why Telekom decided to invest. Of course, they invested out of their own desire and not due to any pressure. What I do know is that relatively soon after they made the investment they started regretting having made it. Perhaps they thought the challenge wasn't big enough for them if, as you say, OTE was always such a profitable and well-run company.
The logical chain is this
Delete: Premise 1)it takes competence to run
anything. The standard way of promotion in any well-run organization is :give someone a simple task. If he performs it well, this shows some competence, so you give him something more complex with a corresponding raise in responsibilities and salary; if this is also well handled, then here comes another promotion to deal with something even more complex
Premise 2): Running a country is a more complex and more difficuklt task than running a monopoly company
Premise 3) Consequently, before trusting someone to do the more complex task(i.e. run a country), one should have displayed some competence in at least something simpler, like running a monopoly company.
Converserly, if someone tells me "You know, I am not competent enough to run a monopoly company" -as do the proponents of "privatize everything"-, then I have to question why these people think they have the credentials to run an entire country.
FYI, Telekom has found a way to get something back, e.g. get paid by OTE for an unspecified "technology transfer". Which is legally fine, as long as the Board approves it, whatever one may think of such practices. What I am saying though is that there is always room for much improvement in pretty much any big company, but by any account OTE was profitable and is a much better company than any competitors. What Telekom apparently demanded and the Troika has effectively passed -pending the ultimate court decision-though is completely unacceptable, i.e. the state intervening to change existing private contracts by law. When a company aquires another(or a share in it), they also aquire its contracts and obligations. Would you invest or recommend investment in a country where the government intervenes in private contracts? I should also add that even if all OTE employees would freely agree to work for free and furthermore pay all operational costs(electricity, water, commercials, new infrastructure etc) out of their own pocket, hence a total cost not reduction, but Nullifizierung, what would this mean? It would mean that the Regulator would say: since you have 0 operational costs, 0 (or less)is also what you should charge alternative carriers. If you are going to make money this way, you probably win a Nobel prize.
You might also be interested to know that before telekom invested, the greek government is reported to also have discussions with Telefonica -to the point that Telefonica announced to its staff that the discussions for the aquisition were on track-a step normally taken only when the deal is certain-. What exactly happened and what went or did not happen under the table is something I will not spell out here.
Only one thing to add.The problem is not what the Greeks can or can not do.The only problem is, there is no ,or at least never was, the political will to do all the right things Greece is able to do.Have in mind there are strong suggestions there is enough wealth under our feet (yes I am a Greek living in Greece).Unfortunately also, there is an even stronger suggestion that the Greek non leaders had been on someones payroll.I know not one Greek that wouldn't work for a whole year without pay to give Greece the power to kick start and set their lives at hold for a year,given they don't die from hunger or loose their homes. So yes the ordinary Greek is a proud person that don't want to beg or to borrow and not pay back.And yes, unfortunately, I am not that proud of our non leaders (minor exceptions)so far.
ReplyDeleteCostas Aslanis
There is no hope with Mr. Tsipras. He is simply a lousy copy-cat of Andreas Papandreou. He even copies his mottos. You need to understand, that in 1981, the destruction of Greece started. The socialist Papandreou, took a debt of 23% of GDP and in 10 years brought it above 80%, with explosive trend. He gave money and priviledges to everyone, using a cheap populism which is what "bound" his followers and the opposition majority to his path. Tsipras is simply following his example "promice everyone what he wants to hear". There are 1.200.000 jobless people, most of which are young. To these, Tsipras is like music to their ears. There are also the union leaders of the PASOK establishment, who lived their golden age during the PASOK statalism, who now flee towards SYRIZA too, as their last hope to avoid the restructuring of the pubblic sector that would mean their loss of power and priviledges.
ReplyDeleteUnfortunately, the pro-memorandum parties have been fighting an uphill battle. The haircut of the greek debt was insufficient (consider that in the past, Greece has defaulted several times with debt at 150%, now it's 165%). The program has virtually destroyed all economy sectors. The result is the deep recession. Part of the blame is with the goverment that was hesitant to clash with its former "clients" in professions or worker unions. But, either way, the economy is on its knees. There is no cash flow in the market. No economy can ever recover, if you destroy all sectors that produce wealth with overtaxation.
That's how SYRIZA rose from 4% to probably over 25%. SYRIZA is not the solution. SYRIZA proposes to return to practices that brought us here. More statalism, like PASOK in 1981 (nationalise everything, no firing personnel in the pubblic sector, taxate more the private sector). Unfortunately, Greeks will have to suffer in the hands of SYRIZA too, before deciding that the solution should be doing the OPPOSITE of what was happening for the last 30 years.
Ι vote for this: http://www.dimiourgiaxana.gr/intl/index.php/en/our-positins
Probably won't even get to the Parliament. Why? Because it doesn't sell populism like Tsipras. When for 30 years, the people have been "drugged" by the left (and a center-right that was "leftified" in order to survive politically), in easy solutions, they still seek the answer to Tsipras' comfortable lies.
Historically, after the previous defaults, Greece takes 10 years to recover. Then, new parties come up and rebuild the country. Right now, capable people avoid messing with politics, because they don't want to mess with the dirt of the populist parties. They are the "silent Greeks". For many years they 've either voted the "lesser evil" or abstained from the vote.
As for Mr. Tsipras, if he gets elected, he won't "nuke" the euro. It's just populism. The problem is, when you put impossible terms on a nation, Mr. Tsipras thrives. Because when you claim that a country with 7% recession and 22% unemployment, is going to pay off a debt of 165%, nobody beleives you (at least in Greece, maybe the Germans believe it). So you have hordes of people saying "We 're doomed anyway, so why not vote for Tsipras, we 've nothing to lose, at least, if we default now, we won't pay the debt".
The problem is, unless there is a change in the greek program and debt terms, even if Samaras wins on Sunday, his goverment will not last long. People need to see a concrete ray of hope. Otherwise, Tsipras will become in a few months and at that point, it may be the people itself asking for him to "nuke" the euro (and Greece of course).
P.S.: Yes, i am Greek.
Wow! I have looked up the website of Recreate Greece. I think your voting decision is a good one! Why in the world the liberal parties which got 6-7% the last time can't team up escapes me. I had also heard very good things about Stefanos Manos of Drasi but couldn't find any program which they stand for. Some time ago, after an ouzo or two, I wrote up a little party program myself, which is below...
Deletehttp://klauskastner.blogspot.gr/2012/04/here-is-party-to-vote-for.html
Dear sir,
DeleteIn the current elections, Dimiourgia Xana (the liberal party above) is actually allied with Drasi of Stefanos Manos. But the polls indicate, that despite their coalition, they will struggle to reach the 3% required to enter the parliament.
The other liberal parti of Dora Bakoyanni (Phileleftheri Simmahia), merged a couple of weeks ago with New Democracy.
The problem is that New Democracy and SYRIZA have polarized the vote so much, that the small parties are crushed. Many people will vote New Democracy only because they don't want SYRIZA to win. This includes many liberal voters too.
It's been the classic recipy of PASOK and New Democracy in the past 30 years, now it happens again with New Democracy and SYRIZA.
SYRIZA says: Vote me and i will cancel the troika program.
New Democracy replies: Vote us and we will renegotiate. Cancelling it means exiting the euro. So if you let SYRIZA win, we exit the euro.
So they squeeze small parties like the coalition "Recreate Greece+Drasi" (last polls were giving it 2%).
As i said, historically, it takes 10 years for the new parties to emerge "victorious" in Greece. And this happens once the economy has started recovering. In the meantime, people hope in the parties they already know, even if they are tested and failed or are obviously populist and dangerous.
Greece is full of ruthless hope vendors.
Oh, Mr. Kastner, about Mr. Stefanos Manos. You need to understand, that his problem, is that he is... bad politician. He is too blatant. I mean, when you have 700.000 pubblic servants, and 2 days before the elections you go on tv and say that hundred of thousands should be sacked, you 're not being popular. Moreover, when you don't go out like Mr. Tsipras and say that you will give money to everyone, again, you are not gaining votes.
DeleteManos is like a technocrat who tries to impersonate a politician. In a country with loads of populist parties, Manos, becomes an option, only when all else has failed. So, people will want to be let down by Tsipras and probably more others, before accepting reality and turn to Manos. And of course the pubblic servants will never vote him. For them, he is the devil.
You need to understand, that for example in the 60s, every mother's dream was for her daughter to marry a merchant or a lawyer. A pubblic servant was "one who earns 3 and 60" (low wage). With PASOK since 1981, a pubblic servante became a good groom for the daughter, specially if worked in the pubblic enterprises (electricity, phone company, railways), who had much higher wages than a normal pubblic servant. That part of Greece will always hate Manos and vote for Tsipras, now that PASOK has "disappointed" him. They are powerful, because the pubblic servants move as a "herd" and vote as one. That's why no party wants to touch them. Almost all of the 1.200.000 jobless greeks are from the private sector. Nobody cries for them or for the businesses that closed and fired them.
Many Greeks actually think that the pubblic sector is the one that produces the wealth of a country. And so they find SYRIZA's position for bigger state, a natural thing. That's what PASOK did in the 80s. Statalized everything, made the country hostile to enterprises and even good part of the private sector changed into getting contracts through ties with the political parties. Worker unions became so strong and tollerated in any wild action, that drove investors away (Greece used to have a NISSAN factory, a PIRELLI one, greek textile industry, small electric appliances industry, even a healthier weapons industry than in the late 90s).
Mr. Kastner,
DeleteI have read your "program" in the link above and it's... too common sense for Greece. In Greece, common sense is absent.
Imagine, that since 2009, i personally think that there was NO properly organized information campaign from the goverment, to inform the people what is exactly the problem of the country, why it occured and how it needs to be fixed.
You talk about imports-exports. Greece was running huge trade deficits. It's getting smaller, not so much thanks to increased exports, but more due to the cut in local consumption, but there was no organized campaign to explain to the people that they should support more the greek products.
Privatization of state assets... Brrrr... The left would fill Athens' streets with protesters and the right would fear that they would end up in a Court for selling them at low price.
Greece is a country, that due to the political manipulation of the ghost of the dead junta, has an overall leftist ideology, very hard to go against (think for example, that the leftist hooded youngsters that regularly burn Athens, communicate their attack strategies and plans through the servers of the Athens state university and the state allows that).
As for "efficient public administration"... Even the New Democracy is afraid of the political cost and says will reduce the number of civil servants by 150.000, by... waiting for them to retire. This is why i said that the center-right in Greece was "leftified" in order to survive politically. You have the left with maximalistic promices and you couldn't beat it. So the center-right, at the end, in order to manage to take power at some point, became PASOK itself...
And now, yet again, the hardcore of ex-PASOK voters, who were bred like this in the 80s, are moving en masse to SYRIZA. That's why SYRIZA skyrocketed its percentage. As i say, "PASOK never dies". They 've destroyed with populism so many Greeks, that even though the PASOK party is now falling, its populist part survives, only now in SYRIZA.
That's why i say, that, Greece may start recovering, only after the people try also SYRIZA and see the ugly truth.
Populism is a hard beast to kill...
"And yet, many Greeks can now arouse themselves for a party whose major objective is to make the public sector even larger? "
ReplyDeleteMr. Kastner,
I am the poster of 9:26 PM. In order to understand that, you need to study what happened in Greece from 1980-1990. You will understand how the greek economy was effectively "sovietified", but income rose through pubblic overspending and borrowing. To many of the Greeks that lived in that period, it was a golden age they can't forget and to this day, can't grasp that it was a dead-end policy that brought us to the current disaster.
Mr. Tsipras himself, is the product of the spoilt leftism populism of the time. In those years, Mr Tsipras grew up in a lassive regime, where for example, occupying your school for trivial reasons became a "fashion", with no conseguences to the students. Mr. Tsipras himself, first appeared in greek tv, to protest against the fact, that a student who decides to skip a class can't do it without the parent being notified. Mr. Tsipras called that "an insult to the student's personality".
To this day:
1) Nobody dares say that given the finances, maybe students should pay university fees or school books (all free).
2) Nobody dares say that given the finances, Greece can't maintain health centers in every 3000 people town.
These are "taboos", just like it was for 30 years to send the police inside the university in order to catch the hooded leftists that use the university as operative base to stockpile their molotov bombs to burn Athens' center.
So, as i said before, unfortunately, the Greeks MAY understand that there was actually something wrong with the economic model of the country, once they taste YET another left party, SYRIZA. Only when they will see their wallets get even thinner, they MAY examine the possibility that Greece, in a globalised economy, needs to liberalize its semi-soviet economy, instead of seeking a bigger state.
BTW, the greek pubblic sector is the most inefficient of EU already, but, as you see, this doesn't discourage SYRIZA from wanting to hire more people in it.
Oh, a last note on "Recreate Greece". It's the only party, that was formed during the crisis from simple citizens and contains NO politicians. All candidates had no previous involvement with politics. This is why i vote them. They have no connections to corruption, bribing, etc. And unlike many politicians,who have jumped into politics right after university, they have actually worked in their lives.
ReplyDeleteI don't know if it will last, but i know one thing. There is no hope in the populist parties that have been around for years and their corrupt politicians. Tsipras claims to be the new, but i am ashamed for being Greek, just by hearing how many false promices he makes to the people. I am really ashamed. Samaras isn't better either. He is power-hungry, old style politician, thinks of political gain. But at least he gave less false promices. But he and his party have also way too many "ties" with the past, to be the answer for the future.
Ι ask for your forgiveness for bombarding you with this series of posts, but, since you are so interested in Greece, i thought to try to explain a very complicated country a bit.
ReplyDeleteIf you have time, you will understand much better how Mr. Tsipras now thrives and how come in Greece, PASOK managed to rule 1981-1989 and 1993-2004, which is a remarkable feat for any party anywhere in the world. And ask yourself, what does such a policy do to the mentality of a population and how easily spoils it and clouds its judgement.
You may google translate this. It's an interview by ex minister of finance (1982) Mr. Koulourianos, who eventually resigned, because he couldn't accept the "socialist rampage" of Andreas Papandreou.
http://www.tovima.gr/finance/article/?aid=424199
Some prominent points:
"I was telling them: Guys, we can't have socialism on the 18th -18th October 1981, is the PASOK electoral win- you can't pass so quickly from a western,capitalistic system, to another".
"Andreas was never saying no. When you were speaking to him about economics, he was getting ill. People ask me often. Didn't Andreas know about economics? He knew all too well, that's why he didn't want to speak about it! Because he knew that there, only the science of economic analysis was ruling".
"It was created a mentality, a mindset, that dissociated the compensation from the effort. Even in sectors with too many employees already, like the state tv, the director would come to me and ask to hire 1200 more. I was saying "we can't". He was replying "no we ll hire our people".But the money wasn't there. At that point i told them that the debt was getting the dimensions of an avalanche".
"The original sin of the greek debt was created in the 80s".
Mr. Tsipras today, is trying to imitate Andreas Papandreou. The sad difference is, that in 1981, the New Democracy (and the junta before it and the Union of Center even earlier), had left the debt at 23%, so that Papandreou could take it to 80%+. Today, for Mr. Tsipras, there is no room for borrowing. That's why he is a sad liar who deceives people.
The pre-election campaigns from all parties was exceptionally shallow. I felt embarrassed to be Greek. No real ideas, no real public debate, no solutions.. just populism
ReplyDeleteThe only party that tries to suggest real solutions and have a pragmatic view of the problems is "Recreate Greece" (Δημιουργία Ξανά).
Inefficiency, yes. Size, no. I wonder how many times and how loud one has to point out a reality that doesn't serve the all-prevailing myth. The percentage of the public sector workers among the population for Greece is close, yet below, the EU average. Politicians screamed about the one million public servants. The census proved they are less than 700000, including the rising number of law-well-order enforcement and... priests! Still, everybody is pretending they 're still one million, and nobody suggested laying off priests.
ReplyDeleteSyriza's program supports a public spending of 43% of GDP, against an Eurozone average of 45% and a memorandum goal of 34%, good enough for the banana republics mentioned in the article.
A lot of those supportive of the EU cause (and not just EZ funding) in the last 2 years have time and again been deprived of their arguments by actions (or non-action) on the part of the Eurozone powers.
And, please, dear writer, don't use phrases like "Former President Nicolas Sarkozy, a friend of Greece’s", we are neither kids, nor friends out for ouzo. This is politics we are talking about. This is insulting to any even basically educated person's intelligence.
1) The problem with the 768.000 pubblic servants, is that 470.000 of them are above 40 years old (actually 220.000 are over 50 years).
Deletehttp://www.capital.gr/news.asp?id=1021211
These are close to impossible to re-train, to make them learn how to use computers and more important, to abbandon the mentality that they have been working with in 30 years of PASOKism.
At the same time, they don't produce results:
http://imageshack.us/photo/my-images/577/57626691.png/
Basically, you pour money to them and they make it vanish. It's so simple. And in an economy that is like the greek, this is a LUXURY that we can't afford. Do you realise that we 've cut the pubblic investment program, which used to be 9bln, down to 0, just because nobody wanted to touch the pubblic servants or the social state? And then, we have deeper recession! No kidding! I wonder why!
2) SYRIZA may want this and that, but the sad truth is, that, to quote Prof. Varoufakis, their economical program isn't worth the paper it's written on. Τhey want to have pubblic spending at 43% of GDP, to maintain a clearly inefficient working force and a social state that provides services that much more rich states don't. They also want to restore minimum wages, pensions, abolish the property tax, restore the unemployment subsidy and God knows what more. Well, unfortunately, mathematics isn't an opinion, it's a science. The rest is called populism. "There is money!" as George Papandreou was saying. Oddly enough, Greeks haven't learnt anything from Papandreou's lies. I DO hope that SYRIZA wins, because i am curious to see, WHAT his fanatic followers (most of which are ex Papandreou fanatic followers), will find to say as an excuse, when they will discover, that once again, there is NO money and the fairy tales of SYRIZA that they will take the money from the hundred of thousands of Greeks that have income above 50.000, are... fairytales, because that number of Greeks is very low and the only way to find more is to sack all tax controllers, who, being corrupt, won't even find the trully rich tax evaders.
We are now waiting for Professor Varoufakis response... It will be very interesting, at least...
ReplyDeleteHis tweet: “Dear Klaus, you are right. I am intentionally ignoring all treatises how to fix Greece. As long as it is the first carriage on the train derailment that is the eurosystem, Greece cannot be reformed. It is like asking Ohio in 1930 how it could escape the Great Depression by its own means. It could not. Period. As for hubris, it appears to us the audacity with which some Europeans keep blaming the canary for the methane leak and explosion”.
DeleteMy response: “An honest self-appraisal. Hats off. Wouldn’t play well in Ohio, though”.
This is one of the points (amongst others) where i disagree with Prof. Varoufakis. Even if we assume that he is right about Greece not defining the future of the eurozone, there are SO many things in Greece that need to be fixed at all costs in order for the country to reboot at some point in the future, that waiting for the EU to do something about the euro, is simply wasted time. Many people in Greece, including SYRIZA MPs, insist that the problem isn't greek, but european. I disagree! There is a european problem and there is also a big indigenoys, greek problem. The left tries to ignore it and hide it behind the "it's the EU's fault", but negation is just a psychological mechanism of defence, nothing more and won't make go away the real problems of the greek economy, society and political elite.
DeleteBandolero
(i thought to adopt a nickname in order to stop bombarding you "anonymously").
Dear Klaus,
ReplyDeletecongratulations. You just put everything into perspective. There are some Greeks that find themselves captives in their own country. Nobody talks about reform in Greece, except maybe the small party Recreate Greece (Dimiourgia Xana).
I dont think that is enough though.
We have reached the point where Greeks have actually to FEEL the need to change everything in their skin, before they take the painful necessary steps.
What conclusions should people in the rest of Europe draw from all this?
ReplyDeleteThree points come to my mind:
1.Stop negotiating and renegotiating with Greek politicians. Whatever the result of negotiations, sooner or later Greece will come back and want a better deal. The past two or three years have shown that Greece is not a reliable partner: The country has cheated its way into the monetary union with false statistics and empty promises. It has consistently failed to stick to agreements and did not follow the rules. How can the rest of Europe expect that the country will stick to future agreements and respect common rules from now on? What I read about Syriza does not look very promising in this respect. Greece has little credibility now, but the European institutions will also loose their credibility if they continue to allow common rules to be ignored and agreements not to be kept.
2. Other ways to help than ever-expanding "umbrellas" and stability mechanisms should be found. Solidarity in Europe is desirable, but it should take the form of direct help to poor people (through humanitarian organizations, for example, as long as Greek government agencies cannot be trusted).
3. All this must very be frustrating for the many decent and honest people who live in Greece. Sadly they don't seem to be able to form anything close to a political majority. But the necessary reforms in Greece must be decided and implemented by the Greeks themselves; the rest of Europe cannot do it for them, and should not try.
1. Why do you think that they EU hasn't stopped the loans or negotiations so far? Because they love Greeks? Because they are charitable people and they don't find their own citizens worthy enough of charity and prefer to give it to Greeks? Or because it would bring damage to the their own interests and offer the next "victim" to the markets? Greece has been the perfect "punching bad" so that nobody would notice the elephants in the room, like Italy or Spain. The EU will eventually cut off the loans to Greece, once and if is sure that it won't cause the domino. That's it.
DeleteAbout the usual "the country has cheated its way in the euro", read some facts instead of the usual media cosy story:
http://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004
The problem isn't that Greece with the revised system the ND chose to calculate the defense expenditure exceeded the deficit limit by 0.38%. The problem was the stucturally Greece wasn't ready to get into the EU because of her economy, being the euro a strong currency (the DM in disguise). And the euro rising much over the $ only made things worse. No wonder all the periphery that used to have weak currencies is now in trouble. And you know why Germany allowed such countries in back then? Exactly, to keep the euro lower (the euro is depreciated for Germany today, thanks to the troubled countries) and because german companies had corrupted goverments like the greek and cheap loans to the south countries would mean business for the north. It was a short sighted policy for all parts.
The thing is, if you think that the Merkelian policy of "austerity as i command" is going to work with the rest of the europeriphery for long, you are mistaken. You should drop by an italian or spanish newspaper discussion and you will see that there is a growing sentiment against Germany and nostalgia for national currencies. I mean, Greece will probably be forced out of the euro at some point, but if you think that after that, following the same policy, it will all be like a happy family, you 're mistaken.
2) You think that what has happened so far is "solidarity"? I thought it was about saving the EU banks from a chain collapse.
3) The problem is that most Greeks are divised in a polarised election, once more trying to fight the lesser evil.
Bandolero.
On the quality of Greek government statistics, cf. the following Eurostat report:
Delete"REPORT BY EUROSTAT ON THE REVISION OF THE GREEK GOVERNMENT DEFICIT AND DEBT FIGURES" (PDF). 22 November 2004. (This article is among the references in the Wikipedia article that you quote.
It is sufficient to read the introduction. Despite the diplomatic language, the message is clear.
Dear sir 12:32 AM
DeleteThe wikipedia article is i think explain things enough, but since you prefer reading introduction only, i will try to break it down in a more easy to perceive way for you.
- Greece entered the euro according to her 1999 data. Deficit had to be 3%.
- Up to 2004, PASOK goverments were admittedly hiding deficits under the carpet. However, for 1999 they were under 3%, thus meeting the deficit criteria, if one looks at the SUBSTANCE of the matter and not on the bureaucratic/logistic side of it.
The EU up to 2006, was allowing each european goverment, to record military expenditure on the year of actual payments or in the year of delivery of the weapons system. PASOK (like many other goverments) had chosen the delivery system. So, even if you actually PAY for a weapons system in say 1999, but it is to be delivered in 2002, for ACCOUNTING purposes, the expediture will be written in 2002.
- In 2004 the New Democracy goverment took power. Immediately decided to make review of the economy and self-denounced itself to Eurostat, for hidden deficits. One of the actions taken by the goverment, was also to CHANGE the accounting method for the military expenditure (arbitrarily, since the EU was allowing each country to choose) in the registration of the expenditure in the year of actual payment.
Now, please stay with me because this isn't in the introduction. The revised greek deficit for 1999 was 3.44. Out of which 0.86 was the revised military expenditure due to the fact that the goverment changed registration method.
http://imageshack.us/photo/my-images/338/64295378.png/
Again, here in detail, you can see how the military expenditure was revised in order to add to 1999 the effective cash paid instead of registration on deliveries:
http://imageshack.us/photo/my-images/59/43444776.png/
3,44-0,86= 2,58 (the real deficit for 1999 and within the 3% limit of the euro).
(to continue)
(continues)
DeleteIn 2006, Eurostat decided to stop this "pick whatever method you like for military expenditure" and decided that all countries should register their expenditure according to the year of DELIVERY of the weapons system and not of the actual payment. In substance, with the method PASOK was following... As such, the greek deficit for 1999 was 2,58.
Here's the decision:
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/DEFICIT_DEBT_2006/EN/DEFICIT_DEBT_2006-EN.PDF
Of course, in the meantime, "Greece has cheated her way in the euro", while had not New Democracy changed that method arbitrarily, retroactively putting "weight" on previous years (so that they can accuse PASOK and gain political gains and make their own budgets "ligther"), Greece actually had lower deficit than France, Italy and many others:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/07947.EN8.htm
(The others entered the euro with their 1997 deficits).
But, that's why mass media exist. People like simple stories, a clear villain and angels. One greek journalist once asked the Eurostat bureaucrat about the change in military expenditure on tv, and she replied "well, it's what your goverment decided, so we used the data that you gave us with that method"...
In case i wasn't clear enough, here is a journalistic article:
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_27/11/2011_416649
Also, if you think that Greece was the only country to cook books back then, you 're wrong. Eurostat has been asking for years more audit powers, but the proposal was rejected each time in the voting. And it wasn't Greece with so much voting power... Some others were. Do you wonder why they didn't give more powers? Swaps in order to postpone deficits were decided to be stopped at about 2006 or 2008. Before that it was common practice. Now everyone is shocked for the greek Goldman Sachs swap...
People like simple food. Mass media is their fast food... The problem is, that Greece wasn't structurally ready to join the eurozone. You want to stick to the New Democracy method for 1999? Fine, we were off by 0,4% deficit. It means the goverment would have cut some expenditure for 2000 and Greece would have joined a year later. Is that the solution? The problem with EU is that it treated the matter on a bureaucratic manner. The rest is lies, damn lies and statistics. The reality is, that at the time, there was much political decision going on. A characteristic article of the time:
http://www.economist.com/node/152332
Interesting how at the end the french deficit close to exactly 3%, wasn't it?
The bottom line is that Greece wasn't ready for the euro. Even if Greece would have 1% deficit, it wasn't ready as an economy to join. If it wasn't for New Democracy self-denouncing the country in 2004 and changing the expenditure, Greece "wouldn't have cheated in 1999" (and didn't).
Bandolero.
Dear Bandolero,
Deletethanks for taking so much trouble explaining details of Greek government statistics in the nineties. In addition to what you wrote and to some Eurostat publications, I have read again an older post in a blog by Nikos Psaphos, a Greek blogger whose articles I always find very well researched and convincingly written. (http://www.greekdefaultwatch.com/2010/10/lies-damn-lies-and-greek-statistics.html) He has looked into the matter of the historic deficit figures in much detail. While the matter seems indeed to be complex, the impression that I get is that something was systematically wrong with Greek statistics. Nikos Psaphos writes, e.g., "Still, the impression one gets from reading the Eurostat reports is that there has been systematic under-reporting by the Greek government for several years and that Greek governments had failed to systematically address the subject." Indeed, I doubt whether the question of the right timing of reporting military expenditure, that is whether to attribute the cost of a major acquisition of weaponry to year x or to year y, was the only problem (Nikos says it wasn't). If it were, one could not explain why expenditure was revised upwards in ALL years. Had it only been for a change in the method of reporting, an upward correction in one year would have had to be accompanied by a corresponding downward correction in an other year - unless that downward correction was only to take place somewhere in the future.
My impression that not all is well is also confirmed in one of the later Eurostat reports (REPORT ON GREEK GOVERNMENT DEFICIT AND DEBT STATISTiCS EUROPEAN COMMISSION JANUARY 2010), which says - commenting the revisions for 2008 and 2009 - "these most recent revisions are an indication of the lack of quality of the Greek fiscal statistics ..." On page 13 there is a table on the components of revisions, including military expenditure. (I admit that this case is not about entry into the euro area, but later in time.)
I hope that I am not disappointing you too much. I do fully agree with you when you say that Greece was not ready for entering the euro zone. Indeed, I suppose waiting for the time to be ripe would have avoided a lot of problems.
with kind regards
I, too, think that the Greek Default Watch blog is a very good one!
DeleteDear sir 10:07 PM,
DeleteI will tell you the truth. I haven't the patience to read all the analysis in that blog, because i am quite sick of reading at the time about the matter, from the official sources. I will tell you what MY understanding is:
- PASOK, was hiding deficits up to 2004. It hid deficit for 1999 too. Simply, the +0,4% over the 3% limit, was due to the retroactive calculation of the military expenditure. If you look at the 2006 Eurostat pdf, you will see that it actually expects such things to happen for the countries that will change methodology. In Greece this already happened when ND changed the methodology.
Now, the fact that Eurostat in 2010 says that there was still problem in the greek statistics for 2008 and 2009 is... natural. Because, New Democracy that denounced PASOK for hiding deficits, ended up doing the same. And it was on its turn denounced by PASOK in 2009... So what do you expect?
As far as i know, Eurostat revisions were made in order to be accurate at the time they happened. I mean, i don't believe a blog can do a better job than Eurostat by guessing, that's why i won't spend an hour reading all that. I sure am not in position to audit the greek finances better than Eurostat. One thing is for sure. Eurostat today, says that there is no reserve with the greek data as they have been last revised. So, if their current revision is correct, then the distribution of their previous revisions must be globally correct, otherwise there would still be problem, wouldn't there...
In case it wasn't clear, the greek goverments were in deed hiding deficits. And it's not that the exceeding deficits were all due to the weapons deliveries. Simply in 1999, the part of weapons deliveries, retroactively added to the year of payment, was the cause to surpass the 3%. Doesn't mean that the cause was the same for all years.
It is to be noted however, that the PASOK goverment after the 1996 crisis with Turkey, did go on a weapons purchase rampage, having defence budget to at least 4,5% of GDP per year or more i think. How these payments were exactly spread is hard to know, often there were delays in the deliveries, which is something that suited PASOK of course.
New Democracy, lost complete control of the deficit in 2008, as took the hit of the american crisis without being prepared. And this is when they hid the deficit the most.
You can see here combined debt and primary deficit (or suplus) chart. The blue line is the debt. As you can see, PASOK 1980-1990 did a remarkable job... The New Democracy 1990-1993, actually saved the economy from bankruptcy at the last moment, after the last "Papandreou rampage", who in order to win the 1989 elections, said the memorable order to his minister of finance "Tsovolas, give it all!". Mitsotakis, the ND PM of 1990, started urgent austerity program and managed to turn the primary deficits in primary surplus, pretty much saving at minus 1 the country from bankruptcy. Of course then lost to PASOK in 1993, because when you have PASOK for 10 years giving money and you, the evil "neoliberal", come and make 3 years of austerity, then you run back at PASOK...
Bandolero.
Mr. Kastner,
DeleteI don't follow that blog, so i can't speak about it specifically with facts. Just a word of caution in general. Greece is a country where political opinions and passions are deeply rooted. Personally i have yet to find an objective greek blog, since they let their political beliefs cloud their judgement. The usual problem is that even the most moderate ones, must really struggle to acknowledge certain truths, if they come from their ideological opponent. This as general word of caution. The blog in question may be an exception, i don't know.
Bandolero.
Dear Bandolero,
Deletethanks again for your reply. It seems we are less apart in our opinions. In any case, fully understanding the Greek crisis is not easy, especially for an outsider like me.
Kind regards
24hrs before Greek Elections: A coin toss…
ReplyDeleteA country split in half
All of those of you “like me” will not understand on Sunday night why the other half “not like us” ended up voting for charlatan extreme left and extreme right parties.
It is very easy to call them “irresponsible” but it is not enough of an explanation.
Ernest Hemingway wrote my favorite quote in the “Old Man and the Sea”.
“The man can be destroyed, but cannot be defeated”.
Unfortunately the pro-Europe, pro-reason parties here, are doing nothing (and probably cannot do anything) to paint a better future.
All they do is warning the people that the charlatans will bring destruction.
They sure will.
But the people feel defeated.
Most people will choose to be destroyed than be defeated.
It will not be a wise choice but wisdom was never a prerequisite.
Your blog is so comprehensive...Almost everything at one place...You have that real PASSION...!
ReplyDeleteThanks a ton..!!!