Greece dealing with the consequences of years of fiscal mismanagement
by Ray Hartwell
Special to The Star
Apr 22, 2012 | 4084 views |  0 comments | 19 19 recommendations | email to a friend | print
Over the past decade, my wife and I have visited Greece annually. We saw the transition from drachmas to euros, and the chaos of preparation for the 2004 Olympics. We saw the damage caused by forest fires and winter ice storms, and we marveled at the stunning beauty of the islands and the rugged mainland terrain on which the ancient Greeks laid the very foundations of Western civilization.

On recent trips we observed first-hand the demonstrators camped out in Athens. We’ve spent weeks listening and looking at the lives of ordinary Greeks as their country is riven by political and economic crisis. It’s these latter folks whose stories matter most today. For their experiences — in my view — in various ways both mirror and foreshadow our own here in the United States.

Greece is a country whose government doubled down on unsustainable spending, complemented by cronyism, corruption and a pervasive sense of entitlement. Now the party is over. In Margaret Thatcher’s prophetic phrase, the Greek government has run out of other people’s money.

What have ordinary Greeks experienced during this process? Let me report what we have heard and seen.

Theoccupation of Athens

First, let’s reconnoiter Athens — home to about half of Greece’s 11 million people. Constitution Square, or Syntagma, the broad plaza in central Athens, is bordered by the Parliament and the Tomb of the Unknowns at its upper end and by three of the city’s classiest hotels along one side. At the foot of the square lies a chic quarter in which fine shopping and upscale offices abound. Nearby, tourists and locals stroll to the shops and tavernas of the Plaka, and to the foot of the Acropolis.

For more then two years now, Syntagma has been occupied by protestors claiming allegiance to a variety of unions and activist groups. They squat in a scruffy tent city, essentially demanding a continuation of unsustainable spending. Their conduct is marginal at the best of times, frequently flaring into vandalism and violence.

Spray paint is ubiquitous, besmirching the marble steps of the Parliament and store fronts in the surrounding streets. The odor of urine is an unwelcome companion on sidewalks near the Parliament and along the walk to Hadrian’s Arch. Windows have been broken, marble walls and columns smashed.

The shops that have been trashed are not just the chic brand names. The occupiers are equally destructive of small religious goods stores and assorted Mom and Pop establishments. They disrespect all businesses, small and large, in the same ugly fashion.

The police, union members after all, have done very little to prevent the violence and property destruction. We’re told their inaction has emboldened the protestors.

For ordinary Athenians the “occupation” has had a variety of unpleasant consequences. A young schoolteacher shops for her parents; they are afraid to leave their apartment. Union thugs frequently intimidate ordinary citizens, deliberately disrupting the public’s ability to carry on with daily life. People are told they should stay off the streets.

Strikes cause electricity and water service outages frequently. Often deliberately timed for late afternoon, these actions maximize difficulties for tourists checking into hotels, for restaurants preparing evening meals (try to cook and wash dishes without electricity or hot water), for merchants trying to make sales at the peak shopping time of day (cash registers and inventory systems go “down” when the power fails), and so on.

The tourism-based economy has experienced at least two consecutive years of double-digit declines in hotel bookings. After the most recent round of violence and destruction, cruise lines are eliminating stops in Athens. This year looks to be another bad year.

But, you might say, this is Athens, the epicenter of the protests. Surely things are more placid in smaller cities and towns. In a sense that’s true, for there is less in the way of brazen property destruction going on with police standing by and watching. Yet, all is not well in Greek “flyover” country. If anything, in the hinterlands one can more readily observe the pernicious effects of the government’s policies.

The View from Greek “Flyover Country”

Most of our time in Greece has been spent not in Athens but on an Aegean island that resembles the fictional isle in the film “Mamma Mia.”

Steeply mountainous and heavily forested, the island’s beautiful beaches are complemented by orchards and olive groves along its roads and on its many hillsides. There are modern conveniences, but inland one can find monasteries and churches that are centuries old, and terrain sufficiently challenging that it provided concealment for resistance fighters during the Nazi occupation. It is not uncommon to see country roads blocked by herds of goats.

With a permanent population of around 5,000, the island is really a small town that happens to be in the middle of the Aegean. We know many residents, spanning the generations and socioeconomic strata. We’ve talked about the situation in Greece with a diverse group that includes a retired (very successful) businessman, several small business proprietors and an assortment of locals who work in various restaurants, hotels and other enterprises.

On the island we’re far from the tear gas and spray paint of the nation’s capital. Yet, we hear echoed some of the same themes sounded by friends in Athens. Chief among them, often stated with exasperation, is the complaint that “nobody wants to work.” The young adults, it is said, have ambition only for “public function” jobs, which offer (at least before this year!) great benefits and are not so demanding as to interfere with going to the clubs at night.

One couple tells us they are unable to hire young Greeks to harvest their olives. So, the jobs and the pay go to Albanian immigrants. These are not illegal immigrants (that’s another story and a serious one for Greece), but rather “legals” generally already working at other jobs the local Greeks have spurned.

Similarly, many servers and other employees at the local hotels and restaurants are not Greek, but come from less-affluent Balkan countries. A friend who supervises the wait staff at a fine local restaurant tells us she cannot find Greeks who want the work, especially with the lure of “public” jobs and government benefits.

Some other friends own a taverna at one of the island’s beautiful beaches. They tell us the Greek economy is stagnant in part because of overwhelming uncertainty — about new regulations, new taxes and fees as the result of austerity measures. No one can predict the cost of taking on new employees. As a result, for those who want to work, “there is no work.”

A very successful businessman, recently retired to the island, says frankly that for much of his adult life he was “on the left” and “very anti-American.” Now, however, he confides that if he and others had learned from America in the ’80s and ’90s, Greece would be in a different and better place. Then he smiles and chides us that nowadays, we Americans seem not to be learning enough from Greece.

A woman who manages one of the island’s nicest hotels has seen the tourist business up close for almost two decades. These past two years, she says, business has trended downward steadily. Unlike high-end resorts such as Mykonos, the island is a destination for middle-income families and tourists of relatively modest means — people more likely to forego a vacation because of economic pressures.

When strikes shut down electricity and water in Athens, they have the same effect on the island. Worse yet, ferry service is disrupted frequently, snarling schedules and causing cancellations.

Of course, the strikes that damage the island’s economy can be traced back to the protestors and politicians in Athens. And the working Greeks, in either place, say candidly, “We brought this on ourselves. We voted for government programs we could not afford, and now it has caught up with us.”

The Fruits of Folly

Most Greeks recognize that the road back from fiscal ruin will be long and rugged. It’s almost understandable that many would prefer simply to avert their eyes and somehow keep the good times rolling. But the majority knows the reckoning has now arrived.

The power of unions and the disproportionate number of people on the public payrolls are major challenges. For years, Greece has suffered massive private-sector job losses. Until the current austerity measures, however, there were no layoffs of civil servants. The public sector grew even as the private sector, which paid the bills, was shrinking. Now public-sector wages and benefits will be slashed, and the public-sector work force will be reduced significantly.

Another daunting challenge for Greece is the country’s pervasive culture of corruption. In Greece, corruption and cronyism clear away obstacles for the politically connected, while ordinary businesses are stifled by onerous red tape and regulation. From payments for medical office visits and surgery in hospitals, to bribes to tax officials and town-planning clerks for building permits, the corrupt “cash” economy has sunk its roots deep.

This has had lasting and negative ramifications, including abiding cynicism and massive tax evasion. This did not happen overnight, and changing it will be difficult.

One hopes the austerity measures will succeed, that Greece will claw its way back economically and cure its culture of chronic corruption. To get from here to there, Greece will have to counter the clout of the unions, replace cronyism with competition, and adopt a simple, compliance-friendly tax system (perhaps a flat tax of the sort enacted by a number of its Balkan neighbors).

These are tall orders. We wish them well.

Calhoun County native (and future resident) Ray Hartwell is a Navy veteran and a Washington lawyer. He can be reached at
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