Monday, January 17, 2011

A Greek Tragedy

In a recent episode of 'Al Tsandiri News' the incomparable comedian/actor Lakis Lazopoulos mentioned: 'Τα παιδεία παιζει' - per an Ancient Attica dialect, and 'οι γέροι πεινάει'- per a modern IKA dialect - IKA is the employees' national social security organization that pays pensions, healthcare and unemployment benefits. A bitter truth about a country that, having recovered civil liberties in the aftermath of the fall of the colonels' regime in 1974, went on to create a modern socio-economic and political 'system' comparable only to third world Republics, where corruption is the rule rather than the exception. A rather heavy verdict? I didn't think so...

On January 2nd, 2011 the Belgian Canvas TV channel in it's Panorama episode showed a report about the Greek reality that to me was a simple confirmation of what I feared was happening from hearsay of friends' descriptions during recent conversations. This 'reality' came to being during the course of the last 35 years, right after the fall of the colonel junta. And the architect of this monumental clusterf@ck: Andreas Papandreou, still a semi-God to many compatriots. Along with his ruling party, PASOK.

One can blame many macro factors leading to the Greek disaster. For instance, Rolf Krause, a German TV journalist, interviewed in the Panorama episode, mentioned that nobody ever imagined during the Maastricht summit that countries like Greece would have ever been allowed to participate in the Eurozone. Differences in its national economy and culture with the rest of the core Eurozone countries were so humongous that you could just predict disaster if Greece was ever allowed to participate.

But, what kind of modern day aphorism is this? Greek Economy and Culture can not sustain Euro participation along France, Germany and the Benelux! Why not? Where is the problem? Do average Greeks have 'lesser' intellectual capabilities and are unable to develop a welfare state like those in Central and Western Europe? Are Greeks kinda stupid then? Double digit IQs? Mentally disabled? Uneducated? Lazy? Morons?

Well it turns out that none of these epithets is true. Just like Ancient "Golden Age" Greeks, modern Greek minds excel in whatever they do and rank among the best on the planet. Pick-up any top class university in the world and you'll find many Greeks leading key disciplines as faculty members, undergrads and postgrads. Same for Research Institutes in both Europe and the US. In some of the greatest schools known to man Greek faculty and student communities flourish (MIT, Harvard, Stanford, Sorbonne...). In business internationally one finds Greeks in leading positions almost everywhere. There's nothing wrong with the Greek mind and mental capabilities. No sir! It's as bright as anyone else's! How about the Arts then? Same thing! From literature to visual arts to music to anything your heart desires. The problem is not there. Not in the Greek neurons and their synapsing and brainy networking. The problem is in their 'mentality', ego-centrism and sheer arrogance that seem to flourish especially when back in the fatherland, under the Greek blue sky and the azure of the Aegean waters!

Kostas Karkagiannis
"Both the deficit and national debt are problems that were gradually created through the years as result of a social contract between the Government and its citizens", mentions Kostas Karkagiannis, a Brussels based Greek journalist. This is where Governing Parties (mostly PASOK in the last 35 years) created hundreds of thousands of new civil servant jobs in exchange for future election votes. Masses of people were hired into government positions based upon their political affiliation and promise for future votes rather than on merit and skills. Concrete examples I heard about this specific point, mentioned to me by trustworthy friends, touch the notion of absurd. You just don't wanna know how bad it is. "In 1984 we suddenly got an increase in government jobs by 400.000 new positions", mentions Prof. Karkatsoulis, Administrative Law. "More than 50 percent of those positions were fulfilled based purely on political maneuvering", he added.

"In the last 6 - 7 years", mentions Prof. Stournaras, an Economist, "more than 150 new government departments and directorates were created to accomodate political favors.". As absurd as it may sound, representatives of workers unions claim that there "are not enough civil servants yet", at least not in some departments. ADEDY's Despina Kutsumba claims that not enough tax collectors are available to collect taxes. Also more people are needed for schools and hospitals. Amidst the current crisis indeed, union reps still believe that there are not enough Civil Servant jobs available yet! Ronald Reagan's remains must turn upside down in his grave. His famous aphorism "we are from government and we are here to help you" seems to be a welcome concept in Greece. However, in a counter argument to the so claimed 'lack' of sufficient Public Services jobs, Karakatsoulis mentioned that 180 thousand servants are employed in the Greek Education sector. Only problem, you can't find many of them in the classrooms. They are 'lost' in the system. They get paid but don't have to be in an office or elsewhere. By Western standards: Sheer theft of the State that only deserves sufficient and effective prison sentence without parole.

Yannis Ragkousis
Interior Minister - Current Cabinet
Interior Minister Rangousis admits this is the fault of the Politicians. "They used to hire and put in positions whoever they wanted, where they wanted and as many as they wanted", he admits. "But hiring didn't stop there", he continues. Politicians also helped promote those same hires to higher levels in the management hierarchy without further consideration of skills or merits. The result of this was to arrive at a structure where departments existed (or still exist), with the necessary positions of department heads but with no actual subordinate employees working in the 'department'. Directorates General were equally created without departments belonging to them, just plain empty. "All this because of a promise made to someone by a Politician for a Director General position!" Ragkousis admits. "Baptise someone into a Director General!" he says (sic). A position that was naturally accompanied by a more than generous pay package... goes without saying! I gotta say, quite brave of Mr. Ragkousis to admit that much while serving as the Interior Minister in a government whose ruling party (being his own as well) are largely responsible for this mess! And him as well. He seems to visibly ignore that he too is part of the problem, and not of the solution.

"If PM Papandreou decided to eliminate the wrongdoings and got rid of those catapulted into Public Service positions (via windows and backdoors, in Prof. Stournaras words)", Karkagiannis claims, "he'd risk his political future, whereas, if he does nothing, the nation will risk bankruptcy". My guess is, he'll ask every single servant to contribute via package cuts to avoid firing the powerful 'nephews of uncle Nepos' and lose votes, so that everyone stays put and each and everyone pays for the wrongdoings of the few. Compromise à la Greque! Well done Georgie boy!

Not earlier than last month has the Greek government for the first time almost managed to count (via focused census) the total number of civil servants active in the country. To their credit, I heard they used various smart tricks to achieve that. Eventually, census results indicated that about one quarter of the active working population works in Public Service. 'This may still look like a reasonable ratio compared to various Scandinavian countries and Germany" Prof. Stournaras adds, "however, in those countries you really have efficient Public Services, which is not the case in Greece at all!" "Many Civil Servants are good", he says, "but far too many are either incompetent, not well trained and not adding value to the system. That's due to the lack of sufficient controls, lack of merit based career progression and lack of compensation progression based on performance record". "Ten years ago", adds Prof Karkatsoulis, "the government launched a special bonus for productivity improvement. Before long every single civil servant claimed that bonus which was eventually paid to everyone. " Cool! This is what my Greek compatriots think of as motivational bonuses for productivity increases. Smart-asses.

Most civil servants are permanent employees, meaning, they can't be laid-off. Problem is their comp is often multiples of what gets paid in the private sector. As an example, a locomotive driver earns on average the best part of 5K euro monthly. Compared to that, a college professor only earns 3K euro basic salary. Let's all go drive trains in Greece then. I didn't even know there were any... Such an appalling network and service they operate. Don't mistake them to Swiss Railways for sure... Salaries paid in state controlled banks are triple the amount paid for equivalent jobs in the private sector. If a new Public Service job gets posted for fulfillment nowadays, even with a 30% comp reduction in the last 12 months, candidates would still kill-for and flock to the opportunity. Why not? It's Greek style El Dorado, innit? "Who wants to become an entrepreneur if one could secure a salary and career like this", Stournaras admits. I don't blame him.

Union activist Despina Kutsumba.
In the WANTED poster it is written "... the jerk who stopped
the PM and told him that he was ready to offer a full month
salary to save the country. Reward 5M Euros"
To stimulate entrepreneurship you need regulatory administrative processes that are straightforward and a system that runs efficiently. In the country I live (Belgium), it only takes a few days to create a new company. The rules are minimal, controls are focused and efficient, and the system simply works. Paperwork is subminimal: A 3-year business plan, plus education certificates to make sure the entrepreneur can add and subtract numbers (sic), and understands the difference between profit and loss (no kiddin') and a balance sheet. In Greece it may take you up to several years to work thru the system and start a new business. You need to involve 7 to 10 different agencies and get thru their approval machinery only to start something real small. The bureaucracy is made extremely complex: "100.000 additional ministerial decisions in recent years and related procedural amendments to regulate issues that are already being regulated by 3500 laws in existence", adds Prof. Karkatsoulis. The problem is 'political', says Kostas Karkagiannis, because in order to 'work' the system you need a bureaucrat who knows authorized apparatchiks and the rules of the workflow, and how to cut through, for an undisclosed and unregulated 'fee' of course, goes without saying. That's where the eternal Greek concept of φακελλακια comes to fruition. The word means 'small sized envelopes' (but capable of hiding a hefty amount of Euro banknotes, preferably of large nominal values). Call it bribe, or kickback, or discretionary marketing... Greeks call it the 'fakellakia'. And fakellakia help Greeks not only through government agencies, but also hospitals (especially hospitals and doctors) and educational institutions (for obtaining degrees and/or getting accepted in faculty). As for the doctors, only one third is considered 'clean' and acting per their Epocrates oath. For the other two thirds, money talks (and bullshit walks). The size of the fakellakia economy, the color of gray or black, and certainly falling outside the radar screen of fiscal authorities represents a humongous percentage of the total GDP. It's here where Greeks have indiscriminately turned into a rule what others in the Western World do on an extremely exceptional basis. The saying goes, if you don't pay a doctor a reasonable bribe he/she will let you suffer in pain and risk your life. Epocrates and his oath are turning in their grave. Who could have ever imagined. Well done folks! Here's to you! Proud to be born Greek...

Union activist Kutsumba claims corruption in Greece is like an inverted pyramid. Meaning, lowest rank servants receive small amounts whereby people at the top receive bigass chunks, tens of thousands of euros to hundreds of thousands. Ask Siemens for details. Kutsumba also adds an interesting factoid. Because 'bribing' is 'illegal' (sic) you need to be 'protected' internally by the dude or gal above you up the hierarchy scale. So the system is endemically and permanently rotten. Well done dear PASOK and Andrea Megale! You cracked it right on this time! What does PASOK stand for, again? 'SO' for Socialist you said? Cool!

All being said, how does our beloved fatherland rank among others in corruption terms? Transparency International ranks us (with 3.5 points) at the bottom of EU below Romania and Bulgaria, and on equal foot as (Mendellin Cartel) Colombia. Danemark scores 9.3 and is considered the least corrupt country in Europe. Here's to you Harald Blåtand. In conclusion, can we just say that Greece is 3 times more corrupt than Danemark unless the TI scale... gets logarithmic, in which case... OMG! What's extremely hilarious, as well as arrogant, is that average Greeks don't consider bribing an abnormal activity. They blame Ottoman cultural reasons inherited during the occupation by the Turks, where bribes was part of everyday life in all the geographic regions where they ruled. Sweet excuse, innit? Blame the Turks! Or ...Canada, for that matter (I stole this from South Park).

In the words of Karkagiannis, Greece has turned into an economy of few heroes and many villains, where only villains get rewarded.

Where will this all come to, I wonder. The IMF and the ECB along with other European leaders naively believe the problem can be fixed by some draconian cost cutting measures that they asked the Greek Cabinet to 'reluctantly' implement. What most seem to forget is that Greece is a country with very few valuable natural resources, a non-existent (say pathetic) industry (Greeks never managed to get one for millions of reasons), barely acceptable transport infrastructure, average level agriculture that is also extremely hard to maintain (in the meantime agricultural capacity has also literally 'perished' with the good 'help' of EU subsidies linked to output quotas and controls), and last but not least, tourism. Tourism had also been severely handicapped in recent years due to the rising cost of living relative to anywhere in the rest of the world due to the local use of the Euro. A coffee in Athens will cost you four to five Euros on average... I can buy three of those cups of coffee in a far better coffee bar with chocolates and cookies, in the shadow of a magnificent medieval building at the central square of the town I live here in Belgium. Go figure! In other words, there are not many income sources available for the government to tax and raise funds to pay back debt. 'There's sufficient money available' says PM Papandreou! Dream on, dude.

In the meantime, feedback I get from local Greek friends is more like, outside the obvious, not much is really happening or felt by average citizens, even many months after last spring's events. The riches or 'nouveau riches' still show off by buying expensive clothes and jewelry, and driving big ass German cars. Bribes and fakellakia continue to be on a daily order and (Greek) life is good! The sun still shines like never before... The same villains continue to rule the country (joined by new ones believe it or not) and continue to enrich themselves (in the name of PASOK and the fatherland), whereas scarce heroes become even more hard to find, they either give up their values altogether and join the flow of the villains (c'm on are we the ones to change the world?) or leave the country permanently seeking a better fortune abroad... to never look back.

How can a country that is used to this mode of operation for so long will ever give up their lifestyle and forget their old tricks? Some promising remedies I see: get them off the Euro for good, tax exceptionally the high net worth individuals to pay back a large chunk of the debt, let them devalue their new drachma and bring it at the right levels that will at least render tourism again and some agricultural output at competitive prices, and start from a bare ethical educational basis all over again. Education, education, education. Only with proper education and raising inside robust family values (preferably of the past) will the Modern Greeks ever learn again to respect law and order, as well as each other, rather than alone themselves.

UPDATE: Nikos A. pointed me to this lecture by Prof. Richard Wolff who taught economics classes many years ago to the current PM George Papandreou. A bitter and hilarious experience. Watch and have fun.

No comments: