A response to Mr. Ammerman's comments

Mr. Philip Ammerman had the good grace to respond to my article Modern Greece: Decadence Unbound in his blog http://www.philip-atticus.com/.

Below is my response to his comments:

Mr. Ammerman,

I would like to thank you for taking the time to read the article about Greece. Although we disagree that’s because we feel very strongly about a country we love.
I feel obliged to reply to some of the points you made.

You say:
In any case, what does Mr. Linardatos suggest? Eliminate the Metro? It’s doing far better by any standards – customer satisfaction, delivered trips, passenger traffic and income – than any equivalent metro in a private-sector heaven such as the UK, where the rail and Underground privatisations have become a model of how not to implement public-private partnerships, and where the concept of good service is a distant dream.

My response:
I am not against public works. The point I was trying to make is that all this huge public projects have always been seen as a substitute for the real work that is necessary to change Greece. You only have to watch news reels from the 50s to see the same old picture – some prime minister, cement, bricks and the false sense of progress.
Of course, no politician is willing to do the hard thing like liberalizing the markets, cut taxes and finally stop hiring any more people in government.

You say:
The Olympic Games have certainly contributed to a tourism revitalisation. The centre of Athens and other cities has been renovated and changed. New sports and administrative facilities exist which did not exist before, the majority of which have now been leased or tendered to the private sector, and are bringing in income. The Games have contributed to a new self-confidence on the part of many Greek people, and certainly among Greek companies. There’s been a significant increase in tourism arrivals, particularly from “new” markets such as Asia and America. Hotels in Athens, Thessaloniki and a number of other destinations have been renovated and have higher occupancy. The tourism industry is hardly ideal, but on the other hand it’s certainly doing better than that of many other countries.

My response:
Well, if you spend 11 billion euros you’ll eventually get something out of it. But you only have to see how other counties –for instance Australia - benefited from their Olympic Games to realize the poor job we did despite all the billions spent.

You say:
The article is also full of misleading exagerations. For instance, one sentence states that European assistance has been to Greece what oil has been to the Middle East; the lifeline of poor government, mischievous habits and exasperated hopes. At another point, the article states that in some years, EU assistance equalled up to 3.7% of GDP. Let’s set aside the fact that the energy sector in Saudi Arabia, for instance, is far higher than 3.7% of GDP: according to Wikipedia, the petroleum sector accounts for “75% of budget revenues, 45% of GDP, and 90% of export earnings.”

My response:

I didn’t say that we have the same degree of dependency as say Saudi Arabia with oil. But we are dependent on the European assistance for whatever growth occurs in the economy. The present administration when it was in opposition used to criticize the Simitis government for the reason that only a small fraction of growth came from the private sector and the rest of it – around 85% - was European assistance. The same sorry thing occurs now. It would be a wake-up call if tomorrow EU cut all assistance to Greece. Then with an annual GDP growth around 0.5% – 1% we would really have to do something about it. Now thanks to EU aid we think we can take a long holiday from history and harsh economic realities.

You say:
In fact, EU assistance has totally changed the way the Greek government works. When Greece joined the EU in 1981, it was an economy with a high reliance on low-value-adding sectors such as agriculture, tourism and natural resources, recovering from a disastrous military dictatorship. Its industry was inefficient and protected by tarriffs and opaque benefits, its educational attainment levels low, and its society still very traditional in outlook. EU assistance has helped transform the country, not least of which by requiring a strategic approach towards managing national investment priorities. Yes, of course there have been trade-offs, but EU support has been irreplaceable in helping Greek enterprises, individuals and government authorities adapt to the needs of the emerging global economy.

My response:
The Greek government has not changed the way it works since time immemorial. The dictatorship you mention in this paragraph did not differ in its view of the role of government in the economy from the present bunch of luminaries. They were firm believers in government intervention but they just did not have financial flexibility that we have now.
Although the Greeks complain day and night it’s very likely that things will get much worse in the future. Our economy has two pillars: global financial liquidity and EU aid. The Greek government will have borrowed from the September of 07 till the end of 08 around 40 billion euros. This kind of heavy borrowing – around 45% of public expenditures - is not sustainable and it’s entirely based on a very generous and perhaps naïve global financial market. If that market turns sour we are toast. By the way, all this borrowing its not to cover any kind of capital investments but mainly to cover public sector payroll, pensions payments etc.
Also EU aid will not go for ever. There are new members in the club who want a piece of the pie and also the German taxpayer won’t go on forever giving to the poorer relatives.
It will be really sad if one day we look back at today with nostalgia.

You say:
Since 2000, Greece has supported the Lisbon Agenda, with all the benchmarks and open policy planning this entails. Since joining the EMU, its budgetary process has become much more disciplined and transparent, particularly since the Karamanlis government took power in 2004. There is no comparison between the quality of fiscal reporting in 2008 and 1988 or 1998 – I invite Mr. Linardatos to examine any Ministry of Finance budget and prove the contrary.

My response:

I don’t have to do much work for that. Look at this story from today’s Kathimerini (March 2, 2008) about the 16 billion that the government doesn’t know where and how it’s spent. By the way that’s around 18% of the budget.

You say:
Again, I wonder where the logical implications of this article take us. Should Greece reject EU spending? Should we aspire to return to the era of the Periclean city state, when slavery was common, women were disenfranchised, and political power was held by a narrow, property-owning elite? Has Mr. Linardatos read Thucydides’ Peloponnesian War or Herodotus’ Histories in their entirety, or only Pericles’ Funeral Oration? Has he heard of the slaughters of Corfu, Naxos, Sepeia, Heracleia, Tyre, Gaza or any of the many other such incidents in our long and bloody history? Indeed, I am afraid that Mr. Linardatos may perhaps be spending too much time in the ivory tower of some Brussels think tank, excessively influenced by classical US conservatism, to see or understand what is happening in Greece today. Surely, things are not ideal, but as someone who has owned companies, lived and worked in the US, France, Germany and Greece, I am quite confident that the situation here is improving, and is in fact competitive in many more ways that we readily credit. We – as citizens and residents of this country – would do better to roll up our sleeves and see how we can contribute, rather than steep in a misplaced sense of bitter nostalgia and intellectual incoherence.

My response:
It would be entirely naïve of me to believe in any idealized version of any history. But in history there are moments that we can be proud of. There are also ideas that when we read them we are in agreement. The sad thing about Greece today is that if one wants to be inspired he has to always look in the past.
By the way, no ivory towers for me, just a working class fellow living in New York.

Cordially,
Napoleon Linardatos