Greek myths

I've been doing a little more fact-checking on the Greek crisis, having wrongly conflated it with the bank-led crashes that floored so many other economies and I've at least been able to confirm that some other people's misconceptions are as wrong as mine.

It is a fact universally acknoledged that Greece has been running a massive deficit and covering it up. A lot of people seem to think that the Greeks were not just irresponsible for piling up debt like there was no tomorrow, but also irresponsible in the way they blew the money they didn't have on gold-plated public services and retiring early. When Greece first got into difficuties, the London Daily News accused the Greeks of running their country down with an 'over-bloated public sector' (as opposed, presumably, to a public sector that's just bloated enough) and letting their jammy workers retire at 38. I'd read refutations from angry leftists, angry Greeks and angry Greek leftists, but they would say that, wouldn't they, so I checked the sources behind the agitprop.

Sure enough, the OECD has figures:

Total public spending as a share of GDP      (2004-2007 average)

Low (Below 40%)	Medium (41-49%)	High (50% and above)
South Korea 27.3%	Luxembourg 40.0%	Hungary 50.2%
Ireland 34.2%	Norway 42.2%	Austria 50
U.S. 36.7	Poland 42.9%	Denmark 52.5
Slovak Republic 36.9%	Iceland** 43.1%	France 52.9
Japan 36.9%	OECD Avg. 43.6%	Sweden 54.4%
Spain 38.7%	Greece 43.6%
New Zealand 38.9%	U.K. 43.9%
Canada* 39.9%	Czech Republic 44.1%
	Netherlands 45.5%
	Germany 45.8%
	Portugal 46.5%
	Italy 48.1%
	Finland 49.1%
	Belgium 49.6%

*Canada: 2004 **Iceland: 2004-2006 average Source: OECD

There sits Greece, virtually slap bang in the middle of the field, spending a smaller proportion of GDP on public services than relatively stable North European countries like the UK, the Netherlands, Germany, Finland and Austria.

Having got this far, I came across a useful post on the Flip Chart Fairy Tales blog that has pulled together some more evidence, also showing that contrary to some stereotypes, the Greeks don't work particularly short hours, or retire excessively early.

Of course, having an average level of spending on public services doesn't make a country responsible if that country hasn't got any money to pay for even an average level of services. But these figures do narrow the problem down and suggest, as per my last post, that tax loopholes, tax evasion and general inefficiency /corruption within the tax system have played a large part in the Greeks' inability to manage their finances.

Which brings the post at Flip Chart Fairy Tales to an interesting conclusion. Being rubbish at collecting taxes helped to bring the Greek state to its knees. So the Greeks started to cut the numbers of public servants in a desperate attempt to save money - public servants including tax collectors. By this stage, the annual tax shortfall must be a drop in the ocean of debt, but skimping on tax officials still sounds like a step in precisely the wrong direction.