I have a number of friends with Hellenic backgrounds and we often talk about the situation in Greece. One of these friends is in Crete at the moment visiting her family and checking out the on-going economic crisis. I’ll be curious what she has to report this time.
In years past she’d return with stories of how Greece’s tourist trade had suffered with the introduction of the Euro vs. the old drachma. Greece used to have a weaker currency than nearby countries to the north so Greece offered good value to foreigners looking for sun. Greece lost some of that comparative advantage with the common currency. Cheap flights to Thailand and the Caribbean didn’t help either.
At other times she noticed how inexpensive pork from eastern Europe flooded the markets in Greece. It was just one of the more tangible aspects of the changes that came with economic integration since it was right there in front of you at the dinner table. Greeks are normally lamb and fish people. But when local lamb is expensive and imported pork is cheap…
And now there’s all the talk of the evil Germans imposing austerity on the bedraggled Greeks. Northerners tend to be fairly unsympathetic towards the Greeks. They are the “Welfare Queens” of Europe, often regarded as lazy and corrupt. Like children they need to be disciplined and instructed on proper behavior by responsible adults. But the Greeks see it differently. The German economy is the German economy. The Greek economy is the Greek economy. Apples and oranges.
There’s more than one perfectly good way to run a local economy. The Germans have a strict by-the-book system of taxation and government accountability that works really well within the German context. Order, transparency, and efficiency are all highly prized by northerners and they’re willing to pay for it.
Greeks, Turks, Lebanese, etc. have a different system. They pretend to pay tax and the government pretends to deliver services. Folks sitting at a cafe table might complain casually about the inefficiency of government, but they also understand they aren’t really paying much either compared to Swedes or Danes.
Southerners have their own system of baksheesh: tips, gratuities, bribes… the ubiquitous lubricant that allows things to get done indirectly. When someone in Greece is in need of a government service they seek out the appropriate official and arrive with cash in hand. It’s an a la carte system that also works well in its own way. It’s casual. Why rush? Sit down and we’ll have some mint tea and cigarettes.
The trouble comes when you try and mix the two systems. Northern banks lent using the German system and southerners borrowed using the Mediterranean system. It was destined to end in tears. Now the northerners want their money back and it simply isn’t there. Not only has the cash evaporated, but the Greeks don’t have enough of a functioning economy to earn their way out of debt. So physical assets are now inching their way towards the auction block. Germany occupied Greek territory twice in the 20th century. It looks like they’re at it again, but this time they’re using bankers and lawyers instead of troops.