I know "useless bankers" is general GFC shorthand, but Greece is one of the few countries where bankers don't deserve the tag.
Greek banks lent responsibly and didn't need bailouts - the Greek crisis is a sovereign debt one, where the government lied about its books in order to borrow money it couldn't pay back, so that it could keep paying out loads of money without charging any tax.
It's the opposite of Ireland, where the populace should indeed raze the banks to the ground and hang the bankers.
It’s a fair cop. Given the jaw-dropping scale of the Global Financial Crisis and the banks’ role in engineering the house of cards, it’s tempting to suggest that they’re solely responsible for every jot of economic misery in the western world. Easy, but I should be old enough to know that one-dimensional heroes and villains don’t exist outside Hollywood blockbusters and life’s never quite that simple.
Greek governments have been relying way too heavily on borrowing to finance social benefits such as pensions. Some of these benefits could have been funded out of taxation, but that would have depended on people actually paying their taxes. As it is, there seems to be a widespread attitude in Greece (as in Italy) that a tax is only payable if you’re not smart enough to avoid it, or find a loophole, or if don’t have the right contacts. This isn’t, by the way, intended as a slur on the national character – in countries where the state has been predatory, unrepresentative and corrupt within living memory, it’s scarcely surprising that there’s a tradition of dodging the taxman, especially where the taxman is still inefficient or corrupt. As an article in the Wall Street Journal explained last year:
Trying to explain the rampant tax evasion, Prof. Schneider says countries like Spain, Portugal and Greece have had continuous democracies only since the 1970s, and people aren't used to governments representing the public interest.
"In most of these countries, what matters is your family. … There is less of a sense of duty towards the state," says Alberto Alesina, a professor of political economy at Harvard. "Evading taxes is something you can freely talk about—and be proud of—at a dinner party in these countries."
The global financial crisis made Greece’s problems disastrously worse, but that doesn’t let Greek governments off the hook – if the financial crisis was the unavoidable multi-vehicle pile-up on the road ahead, the Greek government was the driver who shunted into the back of the wreck, doing twice the speed limit, without a seatbelt.
All the PIGS aren’t the same, but they all fit into a snappy journalistic acronym, so it’s easy to lump them together, as I did. They also look superficially similar. In the wake of the crisis, a lot of Ireland looks like a half-finished building site, with speculative building projects abandoned when the property bubble burst.
I seem to remember Fergal Keane on a Panorama programme dealing with the Irish crash, interviewing a guy involved in a project to build a luxury hotel on Achill Island at the height of the bubble, finance no problem. I went to Achill once, in the pre-credit crunch days. It ticks the holiday boxes for having unspoiled beaches and looking rugged and spectacular. But it’s also spectacularly bleak and windswept when a squall comes in from the Atlantic (as they regularly do), whipping the unspoiled sands into your face along with suds of sea foam and beating down on miles of rocky cliffs and treeless bog. It’s got a certain stark, unforgiving beauty, but as a holiday destination it’s pretty damn niche. The luxury hotel project, needless to say, didn’t survive the crash.
Greece, too, seems to be littered with unfinished building projects, but for a rather different reason. In Ireland, everyone who could was investing in property to take a punt on the seemingly one-way bet of rising property prices, fuelled by low interest rates, 100% loans, “liar” loans and so on. A lot of Greece has a half-built air about it, but a lot of this is has less to do with property speculation than with trying to beat the taxman. As The International Perspective blog explains:
When I last visited Greece I asked a local why all the houses had steel reinforcement wires poking out of the top. “Ah, that’s because there is a tax loophole, if your house is still under construction you don’t have to pay tax on it, so everybody builds with wires sticking up out of the top floor so they can pretend they have a never-ending development and an eternal tax exemption.”
Before Ireland’s spectacular crash, the PIGS acronym stood for Portugal, Italy, Greece and Spain. Occasionally people try to shoehorn the tax-averse Italians back into the mix, giving us PIIGS. Which almost reminds me of one of my favourite childish jokes:
Q: What do you call a pig with three eyes?
A: PIIIG!
0 comments:
Post a Comment