Greece in the "omnipotent government" trap*

The so called negotiations between the Greek government and the rest are in the “dead zone”. What now hangs in the balance is either an agreement for the prolongation of the limbo situation, in order for further talks to take place in search of a real solution to the “Greek problem”, or a rupture.

The Greek government has made it clear that it is not willing to continue on the therapy that was enforced, since it has been proven to have made things worse, without solving the problem. The other side insists that what has not worked so far has to be continued and concluded before any other option is examined.

At this point it might be useful to look back to the problem that Greece faces, not on the fiscal or even structural level. The fiscal problems are of course connected to the structural inefficiencies. But even the admittedly severe structural failings are not the original source of trouble. It goes even deeper than that, into the actual institutional framework of the Greek state.

For 40 years following the fall of the US-backed military dictatorship, Greek politics has been based on the autocratic rule of all-potent prime ministers and their partisan system of clientelism that dominated all aspects of life. Governments have been able to not comply with laws but to change the rules at will, through the absolute hold on the Legislative. In the absence of a system for real control of the executive, laws were even ignored and the constitutional impunity of ministers has made corruption to be perceived as something normal. Situations not unique, since all countries in Europe and beyond have their share of corruption, tax evasion and underground economy, but maximized in Greece for the last 40 years.

All sorts of privileges have been granted or denied to various groups, by laws that have produced a highly dysfunctional economy and an inefficient, chaotic public administration. Insufficient political goods were provided: The Justice system has a backlog of hundreds of thousand cases that will never be judged in a sensible time frame. A private Health and Education market had flourished, since the public system was underfunded and/or mismanaged. Infrastructure was so unequally distributed (in order to maximize profits for contractors and bribes for decision makers) that nearly 70% of Greeks needed to move to the big cities, in order to secure a minimum of decent living standards.

With such a poor record on the public goods offered, it is no wonder that mismanagement, widespread tax evasion and massive underground business have derailed the Greek economy. It was to be expected that such a system would have no resilience, once a major crisis (like in the post-Lehman period) hit Greece. Sadly, the only solution that was ever offered after Greece went practically bankrupt in 2010 was to impose a program of austerity that crippled the national economy (25% drop of GDP), impoverished 40% of citizens and piled more debt on the already high mountain of public obligations.

Suppose that a compromise is achieved between Athens, the institutions and the partner member-countries of the EU/EZ, and a complete collapse is averted. Suppose that a solution is found for the public debt (by now even the IMF and the ECB admit it is not sustainable) and that there is agreement even on the course for the Greek GDP to start growing again. Without radical institutional reform that would ensure that rulers rule, legislators legislate and judges judge, it will only be a matter of time before another collapse, when Greece will be faced with the next crisis.

*First appeared in German translation by Hubertus Volmer at 

http://www.n-tv.de/politik/politik_kommentare/Griechenland-in-der-autokratischen-Falle-article15332956.html