From Inside(ish) the Greek Disaster
June 21, 2011 § 13 Comments
Pardon my blog silence: been unpacking.
Enough about beaches and thingapitas. A word about the disaster here.
When lefties in America wake up screaming in cold sweat, maybe they’ve been dreaming of Greece: here the middle class works and pays taxes to support a nation that gives the rich all the advantage and fails to get them to pay their share. Greece certainly needs to jail a few millionaires for tax evasion, pour encourager les autres.
Yet the same goes for insomniac American conservatives: this place is the fulfillment of their nightmares too. It is bogged down by a massive public sector, thuggish unions, enormous taxes and inefficient, obstructive, corrupt bureaucracy that seems intentionally designed to stymie growth and prevent investment. I wonder often, What Would Margaret Thatcher Do?
In part, Greece is what happens when the special interests of the right and left both get what they want. Beware.
This economy simply does not work.
Nearly a quarter of the employed population works for the state. Though they’ve suffered cuts in pay, their jobs are constitutionally protected.
A third of the population is self-employed. This includes the wealthy: doctors, lawyers, plumbers, anyone who cuts his own check. They operate on a cash economy, get paid under the table and declare as little as legally possible. That’s right: doctors in Greece have been paying tax like babysitters. Their wages are untouched by austerity (though business must be slowing) and higher tax rates mean little if you’re not paying taxes. It’s estimated that, should Greece ever manage actually to collect these taxes, half the deficit could disappear. “The black economy is thought to amount to around 20 to 30 percent of the gross domestic product.”
The rest lucky enough to work work for private companies, which are screwed.
As a member of the European Economic Area, Greece should have been attracting serious investment and business for its goods and services throughout the euro-zone. But here, in one of the easternmost parts of Europe that never fell behind the Iron Curtain, business is still carried out in a style peculiarly Soviet.
Each official interaction in Greece is a seemingly interminable shaggy dog story of paperwork, of signatures and countersignatures, stamps and forms and small dusty offices open to the public only a few hours a week, culminating perhaps in the issue of the wrong permission or an erroneous document, meaning you start all over again.
Comedy and tragedy intermingle on the expat board I’ve been lurking on, as Brits and Yanks and various try gamely to make a go of it in a country that seems positively to discourage foreigners from living here, spending money here or investing in anything at all.
Even if you want to be honest and pay all your taxes, they screw you. For example, if I understand correctly, people must save all their sales receipts through the year to show they’ve spent enough to merit what in the US we’d call the standard deduction. There is a cheerful little website called TaxFriend.gr that offers to help us by letting us record all our receipts online; that means for every bottle of wine you buy from the corner store, you get to type in five different bits of data from your receipt. Or you could just save every receipt from the year, mail it all to the tax office and trust them to add it up right for you. (Can you imagine the size of the tax office that could accomplish such a thing accurately?) If you fail to show enough receipts, there’s a 10% additional tax penalty. Perhaps the state is hoping that Greeks will be so busy with data entry and bookkeeping that they won’t have time to make it to Syntagma Square to tell the government to shove it. I bet some delusional bureaucrat proposed this thinking it would encourage consumption.
In further discouragement, if you are a foreigner resident in Greece and you have money outside Greece—say, your retirement nest egg, or money you’ve otherwise saved to come here and set up in the sunshine—if you buy a home or a vehicle, you are screwed unless you first transfer the money to a Greek bank and pay from that, and get what’s called a pink or white slip, which by the way if you lose you cannot get replaced. No Greek will tell you this because they have no idea. Therefore a well-meaning Greek will happily sell you a car or an apartment without ever mentioning the tax consequences. So what happens if you don’t get this pink or white slip from the Greek bank in time? (And by in time, I mean, before your transaction.) Well, that amount is taxed as income.
That means the cheap, efficient little 9000€ vehicle you buy to drive yourself from little dusty office to little dusty office getting the stamps and signatures you need to get the electricity and phone turned on in your ant-infested home with no appliances is counted as income and you might have to pay, for example, 40% on it, meaning your 9000€ vehicle could end up costing 12600€. Don’t you wish you’d taken that 3600€, had a nice holiday in Naples, bought your car there and driven it over? Welcome to Greece, stranger.
By the way, you can’t really get a Greek bank account unless you have proof of residence. Kind of a pain if you need a Greek bank account to buy an apartment.
Business becomes no more comprehensible if you speak Greek, since even the Greeks can’t figure out how anything works. Example: need to access your bank account online with the national bank of Greece? You need to call an automated phone number. If you press the button for English, you get Greek. If you ask a Greek to navigate it, they press the buttons and nothing comprehensible happens. If you go to the Greek national bank branch near you to ask them how to manage it, you explain your problem to a young female bank employee wearing a semi-transparent dress through which her thong is clearly visible, and she cannot make it work. She calls her supervisor, who also fails to figure it out and must call up a distant superior being, with whom she has a long, cooing, coaxing conversation, and who finally achieves the goal of letting you see your bank balance on the Internet.
And this is how Greece takes advantage of the fantastic efficiency available through the Internet revolution.
Now that the crisis is on, you’d think at least things would be getting cheaper. But no, it’s just as expensive as anywhere else in Europe. No wonder everyone is turning to Turkey and Croatia for their holidays (not to mention much of the place is a bleeding eyesore).
Forty percent of young Greeks are unemployed, by the way.
They also have the right to move freely within the EU, and many have family in Australia or the US and could make their way there. Why would any young person stay who had the means to leave? And then who will pay the bill in years to come?
Unless the useless leadership here is soon miraculously possessed by demons of competence, I foresee a Greece abandoned by every promising young Greek who could have made a difference, left only with unskilled workers, the wretched and the poor, the pharmacists union, civil servants waiting patiently at counters to stamp or sign or tell you you’re in the wrong line, vitriolic pensioners, the patient Bangladeshi guys selling packets of facial tissue at traffic lights, and wealthy yacht club members on islands, having a great time, behind much-needed barbed wire.
The Greeks are right to bitch about austerity. Cutting spending and raising taxes is exactly the wrong response to economic disaster. But they are wrong to bitch about the reforms proposed by Europe and wrong to bitch about the sale of national assets to private foreign investors. There is opportunity here, in these desperate days, to remake the country properly this time, to get money not simply as a loan today but as a partner tomorrow. The grand days of the Athenian empire of which Greece is so proud were made possible (1) by the vast silver mines of Lavrio and (2) trade, also known as selling things to foreigners. And the silver is gone.