The Greek and the German government have been both complaining about a propaganda war that is obstructing the truth and makes the successful conclusion of negotiations difficult. Talking to a German friend today, I realised that what is considered obvious on the one side, is far from clear to the other. I thought therefore of laying out my personal take on Greece’s recent history, in the hope that this will give the German public a different narrative from the often hostile rhetoric of Greek media and (many) politicians.
The Greece I grew up in was a very different place form the one you see today. I will not bore you with statistics that you can easily see elsewhere, but I can tell you this: It did not feel like Northern Europe. Things were basic, but progressing steadily during the 1980s, and despite the occasional hiccup, people got progressively richer and life was gradually becoming easier.
Still, the best thing you could wish for your kids, was a job with the state. Why? Because in a sluggish economy the steady salary, permanent employment offered by the state was the best insurance against poverty. Were Greeks opting for state jobs because they were lazy? No, they were opting for state jobs because permanence made up for boring bureaucracy and modest salaries. This is a pattern explained by historical factors in states with weak institutions making the transition from agrarian to city economies.
The political system both exploited and bred the desire for state jobs. Nepotism and clientist politics were the norm. There is nothing surprising about this, as a wide literature on emerging economies suggests. Local politicians made careers by finding jobs for their supporters and the state mechanism was closely connected with the party political machine. While things were not exactly ‘soviet’, there was no such thing as an independent civil service.
The 1990s brought with it some maturing of the political system, but also a deepening of corrupt relationships and backslapping cozy deals. Kostas Simitis embarked on a project of modernisation and Europeanisation of the country aiming to make Greece part of the ‘core’ European states, with the ultimate aim to join the planned Eurozone. Of course modernisation in this context in the mid-1990s meant a particular type of oligarchic neoliberalism that imported some semblance of modernity, yet entrenched elites and a deeply corrupt political establishment.
This brings us to Germany and her role in all of this. This is all well documented, but the Euro created the following situation. The South of Europe (Greece in this case) by joining the Euro was able to borrow at a much cheaper rate than was previously possible. Who lent them and what did they do with the money? Northern European Banks (many of them German) were happy to lend money to the new markets in the South. What did the Greeks do with the money? They spent it on goods produced in the North, primarily German goods. Indebtedness in the European Periphery is the mirror image of industrial success and growth in the North. This is what people mean when they say that Germany benefited from the distortions of the Euro area, both when its banks raked in profits, and when its industrial production found willing buyers close by.
The Greek state for its part, masked the lack of real economic growth, modernisation and progress by borrowing cheaply and allowing tax evasion to mask stagnant real wages. Who would complain about their salary not being enough to buy that Volkswagen, when they could subsidise their teacher’s salary with the undeclared income of a few rent-a-rooms by the sea?
Would this go wrong? Of course it would and we knew at the time of the Athens Olympics that something was up. Sudden wealth spread across the country, large infrastructure projects were being built everywhere, there was a consumer boom and a lot of conspicuous consumption. How could all these young men drink coffees at 7 Euros a cup in the middle of the day, apparently not working? And it did go wrong, it went badly wrong. It took a worldwide financial collapse to expose the rotten core of the Greek economy, but the party came finally to an end.
The question is what to do now? The Greeks are not lazy scroungers any more than the Germans are cold-hearted capitalists. Germany benefited in the same way as Greece during the boom years and now there is trouble for both, albeit Greece is ahead on this one with a depression more pronounced than the Great Depression that has fundamentally changed many lives already.
It is worth thanking Germany for their support and the German taxpayers for funding that support (for two bailouts already). We all need to realise however that at a time when the ECB is creating billions and pouring them into the European economy to fight deflation, it is a morally repugnant thing to ask Greek pensioners and workers to suffer more cuts in their incomes. This problem is not a problem for faceless markets, it is a problem for real people. How would you feel if your salary went down 10% or 20% or 40%? How would you live? How would you explain to your kids the change in lifestyle? Would you say it is the fault of ‘governments’ so its ok that YOU pay? Can the German taxpayer really say that Greek families need to pay for the faults in the design of the Euro, the manipulations of Goldman Sachs, the actions of predatory elites foreign and domestic?
There are many things wrong with Greece, and many things wrong with the Greek leadership at the moment. Yet, in a rotten system, rotten policies like the deflationary, recessionary austerity that the German government is insisting on are not pointing to a path of prosperity and peace for Europe. Blame not the Greeks for the current troubles and allow some of the money printed out-of-thin-air by the ECB to actually invest in the real economy, as opposed to making profits for financials. Greece needs a change, but families do not deserve to suffer for historical and institutional failures. Why are the workers of Europe blaming each-other instead of the machinations of elites?
Thank you for keeping an open mind.