No “Shared Sacrifice” for Greek Socialists

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Tax evasion is indeed widespread in the country.  Several studies estimate that Greece may be losing as much as $30 billion per year, and despite offering several amnesties — including one last September in which the government offered tax cheats the opportunity to completely settle their bill for fifty-five cents on the dollar — evasion remains an endemic problem. Further complicating the problem is Greece’s legal system.  Greeks who appeal tax bills wait an average of 8 to 10 years before their cases are settled, and there are more than 300,000 cases backlogged in the system.  According to the Wall Street Journal, unreported income was “25.1% of gross domestic product in 2007, according to Friedrich Schneider, a professor at Johannes Kepler University in Linz, Austria, and corruption among tax payers–and tax collectors–is rampant.”

Dionysis Gousetis, a columnist writing for the newspaper Kathimerini, is contemptuous of the I Won’t Pay movement.  “Now, with the crisis as an alibi … the freeloaders don’t hide. They appear publicly and proudly and act like heroes of civil disobedience. Something like Rosa Parks or Mahatma Gandhi. They’re not satisfied with not paying themselves. They are forcing others to follow them,” he wrote.  Prime Minister Papandreou was of like mind. “You think that lawlessness is something revolutionary, which helps the Greek people,” he said in a parliamentary rebuke of Coalition of the Left party leader Alexis Tsipras. “It is the lawlessness which we have in our country that the Greek people are paying for today.” Political analyst Takis Michas also concurred: “There is clearly a breakdown of the rule of law, and without the rule of law there can be no economic development. It is organised lawlessness spearheaded by the hard left,” he said.

The I Won’t Pay tactic has proven momentarily successful.  On Monday, the socialist government will announce reductions of up to 50 percent in road toll fees hoping to appease the protesters and restore a measure of lawfulness to the country.  Yet such concessions do nothing to alter reality.  Despite last May’s bailout, Greece remains mired in a recession which has exceeded the most dire predictions of the IMF and the EU, and further austerity measures are likely to enrage a population which sees them as unnecessarily stringent at best, and utterly futile at worst.  And despite Prime Minister Papandreou’s vehement insistence that Greece will continue meeting its obligations, counseling a default as “catastrophic for the country,” other government officials are less optimistic.  “It’s better to have a restructuring now … since the situation is going nowhere,” said Vasso Papandreou, head of the Greek parliament’s economic affairs committee.

Greece is faced with three possible solutions.  One, continue to muddle through in the hopes that economic conditions improve and protesters can be kept in check, even as more stringent austerity measures are enacted. This option is the most daunting, and as the I Won’t Pay movement and upcoming union strikes indicate, it is also the most explosive. Two, work out some sort of debt-restructuring settlement between Athens and its creditors in which the owners of Greek bonds accept that they won’t get all their money back. This is a somewhat illusory fix, since it would substantially raise future borrowing costs for the nation, as bondholders would demand higher returns for greater risk.  This in turn would lead to a far longer period of only marginally less austerity. Third, abandon the euro as their national currency, return to the drachma, and devalue the currency to attract outside investment into the country.

Number two would cause large losses for German and French banks and other European nations struggling with debt, as Ireland and Portugal would be tempted to follow suit, leading to an even wider Continental crisis.  Number three?  The end of the European Union as it is currently constructed.

If world renowned economist Nouriel Rubini is correct, option one is already off the table. He believes default is no longer a mater of “if,” but a matter of “when,” due in large part to government debt projected to reach 159% of GDP by next year. Yet it is also obvious that ordinary Greeks are exacerbating the problem, even as they are quick to blame a combination of government corruption and cronyism for undermining their future. The I Won’t Pay movement is a testament to the general economic illiteracy of a public desiring to starve the same socialist government beast that they have long relied upon to underwrite their profligate lifestyles.  Many Greeks believe they are entitled to go on living off “other people’s money” absent any realistic restraint — or any more money.  And as evidenced by record levels of interest required to finance more debt, ongoing austerity, or default and debt restructuring, “other people” markedly disagree. Greeks will be brought, perhaps kicking and screaming all the way, to reality. Or they will divorce themselves from the European Union.

Divorce might not be the worst option, the reason for which was illuminated long before the current crisis began.  As it was bluntly stated more than a year ago, one can only wonder how long Germans who retire at 67 will go on underwriting Greeks who retire at 53.

Arnold Ahlert is a contributing columnist to the conservative website

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  • Papanikos

    Stupid, no greek except for the politicians and businesspeople has been living profligate. Stop to repeat conservative slogans that may be useful in North America but not in Greece. Read something!.

    • kafir4life

      Everything in Greece must be free. Everyone in Greece must have a full, early retirement paid for by the government, FREE health care!! FREE transporation!!. FREE food!!! FREE!!! FREE!!!! FREEE!!!!!! and if it's not FREE, it's riot time!! FREE!!! FREE GREECE!! Nobody pays!! We must have raises!! Give us more!!! For FREE!!!!

      • Roula

        What kind of an idiot says such things? Nothing is FREE. Somebody has to pay. You want a raise? Where is the money suppose to come from for your raise? Greeks have to stop being tax evaders.

    • GKC

      ohpah to you Zorba, or is it Vinny?

  • welldoneson

    papanikos, generations of tax evasion and utterly stupid levels of gov't subsidy are
    bankrupting your country and you blame "politicians and business people?"
    The problem is obvious. You're a bunch of dumb a$$holes.

  • PhillipGaley

    "Greece is faced with three possible solutions. One, . . ."—ACTUALLY, MY FINE FEATHERED FRIEND, YOU LEFT OUT THE TWO PRIMARY THINGS: 1) even as our fine governor of Puerto Rico has done, Greece can lay-off 25% of the civil employees; and 2) Greece can issue non-inflationary coin / currency without corruption, making / allowing the individual to control his own destiny, hence the nation's future, . . .

    But in all, I would marvel to know just why you have gone to the effort of writing an article which would see things through the lens of the internat'l moneyed force, only, . . . and secondly, why style these people as "thugs" when and if, they're not stealing from "the man on the street'?

    While the administrator says that, Greece's problem is that people won't pay taxes, the people are saying that, taxes are the problem—sounds kind of Reaganesque?

    The ultimate goal of the administrators is, of course—as a funnel of provender—to point all means of production and human resources to the mouth of administrative government—an effort as old as Hammurabi; and, the people resist; so, . . .

  • pd restoration

    This is pretty messed up when you think about, its such a shame to think that other human beings do this to other human beings but I wonder if they know about

    paul davis restoration

  • Margaret

    Actually, it seems more like the Greek government created agency after agency demanded by the people. They, like the US Congress, continued to spend money they didn't have. Close down government agencies until Greece gets to a point where it's tax revenue equals its expense: a balanced budget. Then, if there is anything left to tax in Greece, bank the revenue until people get used to paying the tax to create the service. If revenue drops, close down the service. Now, about the US Congress and Obama….

  • Demetri

    I find the thought that the Greek people are living large at the expense of the EU, or other creditors laughable and displaying of considerable ignorance. Things were never even good to begin with there, even when the global economy was booming. The Greeks are a hard working people struggling to survive in a system that is engineered to stifle any type of innovation, and ecnomic creativity. While I am not saying that the Greeks are blameless in creating the monstrosity which is the government beaureacratic complex they are now being asphyxiated by, it is not true to say that all Greeks have benefited enormously from this and are "living large" Yes there may be some people who are able to abuse the system and retire early. and yes there may be some people who are able to abuse the system to receive "super" pension but this is a very small minority and most Greeks pension is below subsitence level. Greeks need to get rid of the civil servant mentality, and look to creating their own industries and more businesses. The governement needs to simplyfy the tax system to make it easier for people to create and run a business. As it is now, only an idiot would want to register a company in Greece as the amount of red tape involved is insane. The bottom line is that while they are in a mess, they have not been living large by any means. Indeed, Greece is the home of the 700 Generation. A whole generation from 25-35 years old who are unable to find work paying more than 700 EUR per month. So any talk of increasing highway tolls, and transit fares can bring no other response than the " I wont pay " movement. It is easy to look at the number as think that they are a bunch of freeloaders. Just looking a retirement age difference give no useful information without having visited the country, and getting to know the people. And as for tax evasion. Well lets put it this way, if you are working hard to build a business for years, and the government keeps saddling you with more and more red tape, and more and more taxes. Would you have a bad reaction? If you also saw the immense waste of the tax money due to government corruption wouldnt you snap? In this environment would not the sane course of action be to find a way hide as much of your profit from the tax man? Americans should think on that when paying their taxes. When you are sending in your tax return, think about the Loans that the Fed gave to a company owned by the wife of JP Morgan CEO for the purpose of making a bond investment, and that in the event of investment losses this loan would be completely forgiven. Still feel good about paying your taxes?

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