Crippled by debt, propped up by European powers, handicapped by an ineffective administration: uncompromising diagnoses of Greece’s ills are not new. The text that follows, drafted by 19th century French writer Edmond About, has re-emerged in the European press.
Greece is the only known example of a country that has lived in bankruptcy since the day that it was born. If such a situation were to prevail in France or England for just one year, we would see terrible catastrophes. Greece has peaceably lived with bankruptcy for more than 20 years. All of the country’s budgets, from the very first to the one just out, have been in deficit.
In civilised countries, when the sum of revenues is not sufficient to cover the budget for expenditure, the difference is made up by an internal loan. However, the Greek government has never tried to obtain such a loan and any attempt to do so would have been in vain.
The powers that protect Greece have been obliged to guarantee the solvency of the Greek state so that it can negotiate with external lenders. But the loans thereby obtained have been squandered by the government without any benefit to the country: and now that this money has been spent, the guarantors have no other option but to have the good grace to pay the interest, which Greece cannot reimburse.
Wealthy property owners succeed in frustrating the state
Today, the country has given up all hope of paying off its debts. And if the three powers continue to pay indefinitely in its stead, Greece will not be much better off because its outgoings will always be greater than its income.
Greece is the only civilised state where income tax is paid in kind. Money is so rare in the countryside that there was no option but to adopt this method of collection. The government initially appointed tax collectors who courageously set about their task, but thereafter failed to fulfill their obligations to the state, which was powerless to constrain them. Now that the state itself has taken charge of the collection of tax, the costs have proved considerably greater while the income obtained has barely increased.
The taxpayers have followed the example of the tax collectors: they do not pay. Wealthy property owners, who wield significant influence, succeed in frustrating the state by bribing or intimidating its agents. The agents, who are poorly paid and may be dismissed at every change of minister, do not defend the interests of the state as they do in our country.
Their sole aim is to cultivate the rich and powerful and to line their pockets in the process. As for the small property owners, who are called on to pay for their wealthy neighbours, when they are not protected by their own poverty, they have powerful friends to ensure that their goods may not be seized.
In Greece, the law is not the intractable entity that we know. Tax collectors are careful to listen to the taxpayers, sure in the knowledge that when formality has been swept aside by brotherly feeling, it will be easy to reach agreement. The Greeks know each other very well and like each other a little. But they have virtually no acquaintance with the abstract being we call a state, which they do not like at all. Finally, tax collectors are prudent: they know they should avoid exasperating their countrymen, that there are bad stretches on the road home and that accidents can happen.
Loans are only granted to governments believed honest enough
Nomadic taxpayers (shepherds, woodcutters, coalmen and fishermen) have made it a point of honnor to avoid paying any tax. They believe, as they did in the time of the Turks, that their masters are their enemies and that a man’s most noble right is the right to hold on to his money. It is for this reason that until 1846, Greek ministers of finance produced two revenue budgets. One, the current fiscal year budget, indicated the sums the government ought to receive; the other, the administrative budget, indicated what it hoped to receive.
And as finance ministers are more prone to errors in favour of the state when calculating probable resources, they also had to produce a third budget detailing the sums that the government was sure to collect. For example, in 1845 for the produce of olive trees on public land, which is regularly collected from private taxpayers, the minister noted the sum of 441,800 drachma in the budget for the current fiscal year. He was hoping (that is to say in the administrative budget) that the state would in fact receive 61,500 drachma.
However, this hope was in itself presumptuous because in the preceding year, the revenue to the state generated by this item did not amount to 441,800 drachma, or even 61,500 drachma, but only 4,457 drachma and 31 lepta, that is to say approximately one percent of the amount due to the state. In 1846, the minister of finance decided not to draft an administrative budget and the custom fell into disuse.
Greece’s outgoings are as follows: the servicing of public debt (both internal and external), the civil list, funding for parliament and government ministries, collection and administration costs, and miscellaneous costs.
If I had to advise a government that had doubts about its own strength, its credit, the affection of its supporters and the prosperity of the country, I would say: “By all means take out a loan.”
Loans are only granted to governments that are well established. Loans are only granted to governments that are believed to honest enough to honour their commitments, and loans are only granted to governments that lenders want to maintain in office. Nowhere in the world does the opposition lend to the government. Finally, lenders can only grant loans when they have the necessary funds themselves.
A state ever absent
Well over a hundred and fifty years later, Die Zeit repeats the truths written by the French visitor to Greece Edmond About, who described the lack of communication in the Greek government and the abnormal number of employees in an obsolete state.
The Brussels authorities will do everything they can to save Greece, assures Die Zeit, but these reforms will be futile and ineffective, as Greece has not built a truly modern state structure.
The concept of “state-building” is familiar primarily in regions devastated by war. Now, though, the concept applies to a country inside the European Union. For the state that the Union wants to shield from the threat of bankruptcy does not exist.
I would retain two things:
– Greece has never been in a situation where a normal Country can borrow money but lenders still managed to give it a lot. That really questions the work and intelligence of the financial partners. Mistakes have been made..
– A real State framework is fundamental in an economy and the weakness of the Greek State is probably the most important element explaining today’s situation. I didn’t need to read this article to be convinced of that. But it’s pleasant to see a German newspaper emphasizing it, especially when the German government is one of the main supporters of giving the tax collection control (main State’s prerogative) to a European entity.