Photo: Wikimedia Commons
Greece is the victim of three irresponsible political dynasties that have created a system incapable of averting crises, says a Der Spiegel. It is a “feudal democracy” where the desire of elites to maintain power lead to out of control spending.The last few decades have seen an elite, with the Papandreou, Karamanlis and Mitsotakis families at its core, establish a system of economic patronage. They threw around billions the government didn’t actually have and showered friends and relatives with prosperity that was all based on credit. These leaders bloated their country’s administration so that everyone could have a piece, and created a bureaucratic monster in the process.
Der Spiegel minces no words- their article calls Greece “a poor country at the far edge of the EU that has olive trees, blue skies, beaches and not much else”- and points out that 1 in 4 employed citizens work for the government. And that’s just one of the systemic issues Greece must now deal with. On top of it is the high rate of tax evasion, the tendency of public officials to accept bribes, and the prevalence of under-the-counter work among the lower class.
According to the New Yorker, “the gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country’s budget deficit.” It is also estimated that 27.5% of the country’s GDP comes from businesses that arE legal, but off the books- what’s known as “the shadow economy.” In the United States that number is around 9%.
Greece spends more trying to collect taxes as well- 4 times more than the United States. Regardless, Greek officials are very easy to bribe with a fakelaki (a small envelope of cash). And if a tax evader does actually ever get caught, it can take courts up to 12 years to resolve a case.
So, with good reason, Greek’s simply don’t have faith that their fellow citizens are contributing and they don’t trust the system. This distrust is cultural, pervasive and has infected the entire economy- Transparency International recently rated Greece the most corrupt country in Europe (along with Bulgaria and Romania).
The current Prime Minister Georgios Papandreou must now change these habits, which have existed since the founding of his family’s political dynasty. The Papandeou clan got their start with Georgios grandfather, also called Georgios, and also a Prime Minister. After Gerogios Sr., his son Andreas Papandreou created the socialist party, PASOK. When he took power he started handing out favours that exploded the country’s debt.
Greek’s conservative party elites, the Karmanalis and Mitsotakis families, have done little better. In 2004 Konstantinos Karmanalis promised to reform the country, but the only thing he delivered was scandal. His administration falsified financial data sent to the EU, shifted money out of retirement funds, created tens of thousands of administrative posts for friends and relatives, and doubled the national deficit.
Papandreou’s current rival is Antonis Samaras, of the New Democracy party. Samaras comes from the same background as Papandreou, they even shared an apartment as students in the United States during the 1970s. Samaras approach to the current crises, however, differs from Papadreous. He wants to drive a harder bargain with the EU on austerity measures and lower taxes. That idea isn’t popular with EU leaders, but it is popular with the people- New Democracy is enjoying a 31% approval rating. PASOK’s approval rating has dipped to 27%.
Papandreou did reach out to his rival. In a call meant to remain secret, he offered to form a coalition with New Democracy. Samaras told the media about Papandreou’s offer and made it clear he wasn’t interested.
Greece has already adopted austerity measures, Athens alone cut its budget decifict from 15.4% of GDP to 10.6%, but economists say they isn’t enough. According to austerity measures passed last week, the government will have to sell assets including a “run-down Olympic stadiums and four aged Airbuses”. Not an easy task.
Meanwhile, 71% of Greeks polled say they don’t trust their government, 76% of them said they don’t trust the opposition. That’s understandable.