A collapsing house of cards

One of the unique characteristics of the Greek crisis vis-a-vis the other countries in the eurozone is that what went bankrupt in 2009 was not the banking system, but the state itself. The state borrowed way beyond its means in order to maintain levels of social spending and to pay its employees and pensioners, while at the same time feeding a large part of the private sector. When the state collapsed, so did the entire house of cards built upon it.

In the years since the onset of the crisis, while everything in Greek society has altered, the state remains the same, unchanged. Of course any potential change must first overcome fixed mentalities and this takes time, especially in Greece, where, for example, sacking underperforming civil servants or closing down defunct state agencies has proved an impossible undertaking over the past four years, and where the reviews of the country’s progress by troika inspectors are seen as a personal assault on workers.

In order to bring about the agreed changes, therefore, we invented things such as the mobility scheme, which was certain to fail from the start because the state is every Greek political party’s biggest fetish. The politicians of PASOK and New Democracy did not want to antagonize their voters, Democratic Left (when it was still in the coalition) insisted that not a single civil servant be sacked, and SYRIZA has been promising that everyone will be rehired if it comes to government.

And so we come to the present, the point of no return, and Greece must live up to the commitments it made back in 2010. The firings will proceed, though not with any semblance of order or reason.

Another serious issue that has remained unaddressed is that of tax evasion – an issue that is intrinsically linked to the quality of the state and how well it works – as the recent closure of a nightclub in Halkidiki illustrates. Even German Finance Minister Wolfgang Schaeuble, so maligned by many in Greece, said that the tax burden on Greeks is unequal and that more should be done to combat tax evasion in order to ensure a more equitable distribution. Not a single troika report appears without mention of the magnitude and implications of the problem.

Yet no one seems too bothered. Receipts are issued only by patsies, while the recent nightclub example showed us that the country’s nightlife enjoys immunity and impunity, as well as special privileges.

The thing is that the longer this is allowed to go on, the more horizontal cuts will have to be introduced as the only fiscal policy tool, until there is simply no more money anywhere.