A Greek-American’s answer to Republican presidential candidate Mitt Romney who wants to save America from going “…down the path toward Greece.”
By Dean Argiris* – Far too often, it seems, when we see others who posses traits that we feel we lack, we have a tendency to mock those individuals. Yesterday, Governor Romney, without knowing the full facts, without knowing the history, decided to use Greece as a punching bag. This so called “road to Greece” has been played up by the Republicans as an inaccurate description of President Obama’s economic policies. The first thing Governor Romney should know about Greeks is that they don’t take to insult kindly.
We all know the stereotypes; sometimes we in the Diaspora community are guilty of perpetuating them. The infinite frappe break, the continuous days laying at the beach rather than being in the office. But the Greek is one of the hardest workers of all European countries. At 43.7 hours per week, he works more hours than a Britton (42.7 hours per week) and definitely more hours than the German (42 hours per week) that dictates austerity. If laziness was a Greek trait, than there wouldn’t be successful Greek Americans in Hollywood, Washington, on Wall Street, and in London.
This crisis has given Greece the unique opportunity to re-brand itself. To show the world that it embraces the “protestant work ethic” even better than the Protestants themselves. In the midst of the chaos and darkness there is only room to harmonize and shine.
When looking at the ten most prosperous countries, Norway, Denmark, Australia, New Zealand, Sweden, Canada, the Netherlands, Finland, Switzerland, and the United States, we find that Greece’s corporate tax rate is comparable. There are only three countries whose tax rates are noticeably more or less than Greece’s. Australia and New Zealand’s corporate tax rate is near 35%, almost 10% higher while Switzerland’s is almost 10% lower. Income taxes aren’t really a barrier for Greek economic recovery.
There definitely are some valid problems with Greece. Tax evasion has created a government that is underfunded and antiquated. Like the United States, the heaviest tax burdens in Greece fall on the small businessman. Typically, large corporations and more affluent professions in Greece have had the benefit of legislation which enables them to reduce their tax burdens. The pyramid, as a result, becomes inverted and collapses.
Greece also has run up large deficits in part due to the inverted tax pyramid but also due to a record 25% unemployment. No jobs means no revenue and no revenue means larger deficits.
Simple services including the administration of justice, in the courts, may take decades. The system, as it exists, creates too much risk for businesses to invest in Greece. Intellectual property theft, for example, could cost businesses millions and damages may be received twenty years down the road. Slow judicial systems also breed corruption and as a result businesses try to avoid entering into deals with the Greek government for fear of being overcharged on contracts.
Redundancies and the absence of an integrated computer system in governmental administration also create unnecessary, additional “red tape” for businesses. All of these, however, are being addressed by the austerity agreements between the IMF, European Central Bank, and the Hellenic Republic. They definitely have the potential to make investing in Greece much easier, in terms of paperwork.
Exports are another issue. The ability of a nation to manufacture or produce its own resources is a critical aspect of national security but it also is a key to economic prosperity. Greece is an old nation and as an old nation, many of its resources have been depleted. Once a large exporter of lumber, nearly all forests have been exhausted. Much of the remaining forests were ravaged by a series of fires in the 2000’s. In 2000, during the final year of the Clinton Administration, First Lady Hillary Clinton joined with A.H.E.P.A (American Hellenic Education Progressive Association) to kick off the “Plant Your Roots” program. This effort was geared toward reforesting Greece through encouraging Greeks throughout the world to donate a tree in memory of their loved ones.
The capitalist economy of Greece mainly produces olive oils, beverages and food. It does export some petroleum and chemicals but many of its trade partners are also struggling nations. China, the US, the UK, and Germany make up a small percentage of the total Greek exports. Raw materials, such as steel, aren’t produced in mass by Greece and since 2007 the overall production has decreased. In general the production of raw materials and mining for Greece’s abundant natural minerals constitutes only a small portion (15%) of it’s entire GDP, indicating a preference of Greece to be predominately service based. The Hellenic Republic, in the final analysis, is symbolic of when a developed nation becomes overdeveloped. To say that it’s because of a generous welfare state is overly simplifying the problems and actually is only a red herring.
The crux of the problem, and the real barrier to Greek prosperity, is the political system. In previous writings, I have discussed the correlation between economic performance and political stability; the less volatile the politics, the more prosperous the economy. While Greece may be the world’s oldest democracy, it is also one of the youngest states. When the empire that Alexander built waned, Greece became a Roman protectorate, a part of its empire. For 1,982 years, from 146 B.C. until 1832 A.D., Greece did not know sovereignty.
The independent Greek nation is only 180 years old but 22 of those years were spent divided in political feuds, often times bloody. Greece had a National Schism, a Civil War, and an oppressive military junta. These tumultuous periods of Greek history were fueled by a putrid vitriol between the political right and political left. Conditions like these, as the IMF has pointed out in a study on the economic impacts of political stability, cripple growth.
While this author resents Greece being used as a punching bag, especially by someone who has an elementary understanding of the issue, if we are going to use Greece as an example, then we need to point out the parallels between the proposed tax policies of the Romney/Ryan ticket and the tax policies of Greece, even those being imposed by austerity. We need to see the Tea Party for what it is, a coalition of extremists who possess a abhorrent disdain for not only Democrats but any Republican that express a belief in compromise. The volatility they created in Washington is similar to the schisms in Athens. It causes business to defer adding to their payrolls.
Greece is an important ally in America’s ongoing war against terror and they tend to have a long memory. Governor Romney’s foreign policy has consistently been one of burning bridges with allies. He did that again last night. He also possibly managed to incite the 3 million Americans of Greek heritage to rally against him. In attempting to score a cheap political point, Governor Romney failed to heed the lesson that so many from Xerxes to Hitler had to learn the hard way. You don’t mess with the Greeks. The Greeks have had a long history of turning no win situations into a fighting chance at survival and they remember every slight.
*Dean Argiris is the founder of Argiris Consulting Group, a political consulting firm. Dean has authored and published commentaries on the Greek financial crisis and advocating a third approach to resolving the debacle.