Why Greece won’t turn itself around
If you haven’t yet read Michael Lewis’s fantastic piece on Greece, you should really carve out some time to do so. It’s almost impossible to summarize, but suffice to say that it serves as an utterly convincing and highly entertaining 11,500-word rejoinder to the IMF’s bullish case that Greece can somehow avoid default.
Essentially, the only way that Greece can survive its current debt crisis without default and/or devaluation is by a concerted and nationwide pulling-together for the sake of the country as a whole, including an unprecedented willingness on the part of Greece’s citizens to pay their taxes. But that’s not going to happen.
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…
The only Greeks who paid their taxes were the ones who could not avoid doing so—the salaried employees of corporations, who had their taxes withheld from their paychecks. The vast economy of self-employed workers—everyone from doctors to the guys who ran the kiosks that sold the International Herald Tribune—cheated (one big reason why Greece has the highest percentage of self-employed workers of any European country). “It’s become a cultural trait,” he said. “The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It’s a cavalier offense—like a gentleman not opening a door for a lady.”
The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn’t the law—there was a law on the books that made it a jailable offense to cheat the government out of more than 150,000 euros—but its enforcement. “If the law was enforced,” the tax collector said, “every doctor in Greece would be in jail.” I laughed, and he gave me a stare. “I am completely serious.” …
In Athens, I several times had a feeling new to me as a journalist: a complete lack of interest in what was obviously shocking material. I’d sit down with someone who knew the inner workings of the Greek government: a big-time banker, a tax collector, a deputy finance minister, a former M.P. I’d take out my notepad and start writing down the stories that spilled out of them. Scandal after scandal poured forth. Twenty minutes into it I’d lose interest. There were simply too many: they could fill libraries, never mind a magazine article.
The Greek state was not just corrupt but also corrupting… No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible; the collapse of civic life only encourages more lying, cheating, and stealing.
I’m sure the squeals of outrage are already beginning to emanate from Greece and from Greeks around the world: Lewis loves exaggerating national stereotypes, as he showed in his Iceland piece, and he does that even more here. After reading his article, I’d say it’s almost Greek, the impunity with which he throws around generalizations that most other journalists would naturally hedge and tone down. Who’s going to prosecute or punish him?
On the other hand, it really is useful to look at national characteristics when it comes to things like sovereign debt: it’s a simple historical fact that countries like Greece and Ecuador are much more likely to default than countries like, say, Canada or the Netherlands. And Lewis, with his article, does a very good job of showing how much of a gulf still separates Greece from most of the rest of the EU. It’s a timely reminder.