Some further comments on my article in The Washington Post

What has been happening with Greece over the past several months is not of significance to Greeks only.Greece is the canary in the mine; the metaphorical mine being in this case the European Union. Greece is dying because the European, social-democratic welfare state is falling apart.Greece is the first victim because it is an economically weak country where the welfare state has been elevated, and abused, to the nth degree.

In my article I attempted to explore the cultural reasons that could have caused such an abuse of the welfare state in Greece. The main question that I’m trying to answer is this: is there something in the culture of Greeks that makes them adopt, without really questioning, the idea of a welfare state? This question is crucial to understanding why the Greek Left has been driving the political agenda of the country since the 1980s, and whether there can be any hope whatsoever that Greece may liberalize its markets, reduce its deficits, tap in the creativity of its business people and innovators, and move on and away from its perennial misery.

To provide a conclusive answer the my question one must first try to understand Greek culture. Here the problem, not unlike a case of national schizophrenia, is that “Greek culture” has two personalities. One is the “official” personality taught at Greek schools, projected in touristic billboards and widely accepted internationally: that modern Greeks are, somehow, descendents of ancient Greeks. My article in The Washington Post focused on that, in an attempt to bust the myth.

The “other” personality of Greek culture – the real one, in my opinion – is more complex; one must pick up the story not in the times of classical Greece but in the late Middle Ages, in late Byzantium. For interested readers I shall return in a future post with more detail on that.

So, in summary,Greece is a country inhabited by a people whose values are very different from the mainly protestant values and ethics that have shaped, and defined, western institutions of democratic government. When Greece became an independent state in 1830 those institutions were readily introduced in the assumption that Greece was just another European country. It was not. The result of this cultural misunderstanding (the one I am focusing in my Washington Post article), is that Greeks have been systematically undermining their governments since then.

Because of this, Greece has never been truly independent but always relied on foreign capital and protection. As long as money flowed in Greece from abroad Greece was kept afloat. Whenever the money supply was  interrupted Greece defaulted.

So what happened to the money? I guess everyone in the world knows the answer to this question nowadays. It was used by the political class to bloat the public sector, a quid pro quo exchange between voters and politicians.

Greece will remain forever in this trap, unless it finds a cure for its cultural schizophrenia. Greeks must reject the imagined culture imposed upon them by European romantics and several of their own intellectuals, and embrace their real cultural identity. When they do so they must then redesign their political institutions in order to reflect their true social and cultural values.

The link to my article in The Washington Post is: http://www.washingtonpost.com/opinions/modern-greeces-real-problem-ancient-greece/2011/11/01/gIQACSq9mM_story.html

Reflections on a dead referendum

Referenda are a terrible way to take political decisions, particularly complex ones. A simplified “yes” or “no” rarely qualify as valid answer. Real politics is all about the gray areas in between. Furthermore in matters of importance for a society it is imperative to reach consensus, a requirement that cannot be met in a referendum. If anything, referenda introduce the dictatorship of the majority and are therefore the cause of divisions within a society. In the ancient democratic cities of Greece such divisions caused defeated minorities to leave the cities altogether and establish other cities elsewhere – the colonies. The right to abandon your city if you disagree with it goes hand-in-hand with direct democracy, otherwise direct democracy may cause civil war or strife. However, in our modern world of nation-states there is no room left on this earth for dissenters to colonize and start anew. Finally, referenda catch the “moods” rather than the “thought” of a people; they thus offer fertile ground for demagogues. Direct democracy, although noble and aspiring as a concept, bears within it the seeds of its own self-destruction.

Nevertheless, ideological orthodoxy must not blind us to the exceptions that history throws upon us. And Greece, today, is precisely such an exception. A disunity of wants runs deeply within Greek society. Voiced in the streets and reflected on polls are two apparently opposing and mutually exclusive things: (a) to remain in the eurozone and (b) not to submit to the terms of their bail-out. This disunity is tearing Greek society apart. There is no magic formula to resolve this. But a referendum could have make citizens reflect upon their positions on the matter. More importantly, it would have made Greek citizens realize that decision-making is all about choosing what to sacrifice. This, in itself, would have been important for a people to gain a much-needed degree of political maturity.

The Greek referendum is not going to happen. The political elites have won the day. The Greek people will only be allowed to elect a new government in a few days. Much of this development owes to the potential disaster that such a referendum (on Greece staying or leaving the eurozone, as it was going to be framed) would cause on markets, as well as the Greek economy – whatever little is left of it. Nevertheless I find the angry reaction to the Greek referendum from the Franco-German axis and the bureaucrats of the EU and the IMF far more telling. Their vision of Europe is unmistakably one of bureaucratic elites running government and the people following. It is also a vision where some countries command and others obey. It is the wrong vision. It inspires little fidelity to a common European dream. It creates deep divisions within the Union, of the eurozone and the rest, and now within the eurozone as well. How long is this going to hold before the European project unravels?

And to be clear on something that is often flying around in the German press, or the German voters’ minds. German insistence to punish Greece for its so-called profligacy is hypocritical. Greece did not steal money from anyone, it received it from lenders in a market who at the time were happy to lend her, obviously because they were making profit out of the transaction. They obviously calculated the risk of lending to Greece wrongly. They should pay for that. That’s how free markets ought to work. End of story.

Besides, there were supposed to be mechanisms and agreements to control debt in the eurozone, monitored by the European Commission and the European Central Bank. What happened with that part of the story? How comes it is only Greece and Greeks that have been deemed responsible for “bending the rules” – and therefore justly liable to years of austerity and poverty?

Without condoning what the Greek governments did with the money they borrowed on the back of the euro, I argue that blaming the Greeks for spending it is idiotic, and immoral. It is like accusing the drug addict for his addiction, punishing him, and letting his pusher scot free with an extra bonus. So, Ms Merkel, there is no “moral hazard” in bailing  Greece  out without having to reduce Greek society to ruble.

Greeks were reigned in today and told to step back in line. They will. But how much of this is a solution to the real problems on the ground, in the streets and the economy? How much of Greek adherence to terms and conditions will save the future of Europe and of the Eurozone?  The real issue is not Greece, or the stillborn Greek referendum, but whether the agreement of October 27th is right or wrong. I would argue it is completely wrong, for it does nothing to safeguard a sustainable economic future for Europe. Analysts more adept and knowledgable than me agree too. Worse than that, the idiotic persistence of Ms Merkel and Mr Sarkozy to blackmail Greeks into accepting it is despicable, immoral and undemocratic – and must stop.