Here is a link to Roger Cohen’s op-ed in Tuesday’s NY Times on European Solidarity or lack thereof.
Here are a few remarks:
I think that while reading the complaints about Greece’s overly generous welfare state that currently abound in the Anglophone and German media (though I am not saying that this is all there is to Cohen’s piece, or the coverage in general), there are some important things to also take into consideration. Greece, and Athens in particular, has become an expensive country in the past two decades. It has a large wealth gap relative to many of its European partners, with lower GDP per capita and median income. For many of the people currently protesting, life has gotten progressively more expensive in the past years, wage and pension cuts will make life in already very expensive Athens more difficult.
One of my favourite Greece anecdotes during this recent debacle was the swimming pool stat: just 324 households in Athens’ wealthy northern suburbs reported having swimming pools on their tax returns. When incredulous tax inspectors examined satellite photos they found 16, 974, this means that 98% of pool owners in Northern Athens were lying on their tax returns. But these are not the people protesting on Athens’s streets (they are enjoying their pools). Anecdotal evidence suggests that the pool owning classes in Athens are instead complaining about the civil servants on strike over salary and pension cuts while finding ever more interesting manners of justifying their own tax related malfeasance.
For those who are interested, here are some numbers on cost of living and income in Greece (and Athens) in relation to some of its European partners:
Athens (where about half of Greece lives) was ranked (in 2009) as the 28th most expensive city in the world by Mercer’s cost of living index. This index is compiled as a guide for expats and companies with employees abroad, so the basket of goods used may not be exactly the same as a normal inhabitant, but I think it can still be used as a loose guide. Mercer’s ranking puts Athens above Amsterdam (29), Brussels (41), Munich (47), Frankfurt (48), and Berlin (49), also above Chicago (50), for a non-European comparison. When we look at GDP at PPP (Purchasing Power Parity) per capita a somewhat different picture emerges. Greece ranks behind the Netherlands, Belgium, and Germany. We can also point to a wider gap between rich and poor in Greece (when compared to some other EU countries) to slightly nuance complaints about spoiled Greek civil servants protesting against cuts in social services, wages, and pensions. Greece has a higher Gini coefficient – standard measure of economic inequality - (33) than Germany (28), Belgium (28) or the Netherlands (30.9), as well as a larger gap (measured by income ratio) between richest 10% and poorest 10% of the population: Greece at 10.2, Netherlands at 9.2, Belgium at 8.2, Germany at 6.9. The UN HDI for 2009 – a slightly less crude and GDP-centric measure of well-being – put Greece at 25th in the world, again behind the Netherlands (6), Belgium (17), and Germany (22). Finally, a study of income disparity and inequality evolution in the EU during the 1990s put Greece in the worst performing group of EU member states alongside the United Kingdom, Portugal, Ireland and Spain, all countries with massive cuts in public infrastructure already having taken place or looming.
Admittedly, any interpretation of these figures is confused by Greece’s inclusion of some black market activities in its GDP projections. In 2006, Greece revised its GDP up by about 25% due to the inclusion of some black market activities. As Manolis Kontopyrakis, the head of the national statistics service, told Reuters in 2006: “The revised GDP will include some money from illegal activities, such as money from cigarette and drinks smuggling, prostitution and money laundering.” It is estimated that somewhere between 25 and 30% of the economy is ‘in the black’. The revised GDP figures were concocted to keep Greece within the 3% budget deficit limit imposed by the EU. However, Greek tax authorities – and hence social and public infrastructure – won’t see a penny of the estimated $60 billion flowing through Greece’s underground economy (well, the tax collectors probably saw a fair bit of it in Fakelaki – the little envelopes stuffed with cash that plague Greek society – but that is the extent of it) .
The question – with regard to the issue of solidarity – is twofold:
First, what kind of economic and civic solidarity is possible between northern European countries with functioning tax systems and countries like Greece were tax fraud – not creative accounting, but fraud – is not just rife, but has seemingly infected nearly every corner of economic activity. Let me put this in very crude terms: if paying your full tax bill is seen as a sucker’s game by vast swathes of the Greek population, most significantly by a large proportion of the middle class, can German, Belgian, and Dutch (to use the examples from above) taxpayers really be asked to bail Greece out. I think that regardless of what various causes lie at the root of the current economic crisis in Greece, i.e. to what extent a non-functioning tax system is to blame for the current problems (€23.6 billion of lost tax revenue per year would seem to be a pretty big problem), this question of the preconditions of pan-European economic and civic solidarity is a necessary one.
A second question follows naturally from the first: to what degree is pan-European economic and civic solidarity a precondition to the success of a European political project? And what kind of solidarity can be achieved at an institutional level – the solidarity we are talking about here seems to necessarily involve some wealth transfer – between national communities with widely varying shared ideas of intra-communal social responsibility and solidarity?
These are certainly not the only questions to ask regarding the current situation in Greece, its root causes and other member states’ roles/responsibilities in bailing Greece out in order to stabilize the €-zone, but I think that they are important ones, not just for the present situation, but for any further talk about the European project.
