‘Throw Greece out of the Euro and make it use the drachma again…’

8th November 2011

 

"Throw Greece out of the Euro and make it use the drachma again."  If you had a pound for every respected economist or political commentator who made that very point over the past months, you would probably have enough to pay off the national debt of a small country – or at least your own credit card debt.

But how many have considered the practicalities? Or the effect on the twelve million  Greeks? Back in mid September, Mindful Money was the first to question the mechanics of how this could happen – leaving aside the question of its desirability.  Now this has been fleshed out further in The Financial Times  – more of this later.

Since our logistics article first appeared, however, a mini-industry has arisen, showing Greeks as lazy, corrupt, feckless, greedy – and any other derogatory adjective that comes to the commentator's mind.  Channel 4 is currently airing prime time series "Go Greek for a week" which, the publicity blurb suggests, seems to press every stereotype button. Here it is – in full.

Three British families try out the tax, pensions and work practices that caused Greece's economic crisis and brought on the austerity measures aimed at cutting the deficit and qualifying for EU bailouts.

A 54-year-old British hairdresser discovers the generosity of the Greek pensions system, which still allows hairdressers, pastry chefs, radio continuity announcers and people in almost 600 other jobs to retire aged 53 at 90% of their final salary because their jobs are defined as hazardous.

A bus driver reaps the rewards of the Greek approach to state-run services, where bus drivers could be paid up to almost double the national average salary and receive extra bonuses for arriving at work early and for checking bus tickets.

And a British surgeon is delighted to discover how paying income tax the Greek way will transform his disposable income.

The personal experiences of the three main characters are supported by expert interviews that establish the patterns of tax evasion, corruption and mismanagement that have helped to sink the Greek economy.

Now imagine what Greek TV could do with "Go Brit for a week."

It would feature dysfunctional families, teenage parents, pensions mis-selling including the myth of retiring at 50, police pensions paid at around 50, banks ripping off customers with dodgy products, bankers earning a hundred times more than the salaries of average people, insider trading, highly paid London tube drivers, government mismanagement and waste in big computer projects (NHS, National Identity), offshore tax dodging by huge corporates, and the special HMRC unit set up to catch tax-cheating doctors.

Every country has tax evasion, corruption, mismanagement and all sorts of other problems. They just don't all look the same.  So why pick on the Greeks?  In one word, the answer is Scapegoat, defined years ago "as a person or category of people typically with little power, whom people unfairly blame for their own troubles."

Scapegoat theory takes this further. 

The Greeks get especial attention because there are not many of them, they use a different alphabet and most have never seen a Greek person outside of a tourist resort.

Take a look at this blog on the Proactive Investor website. Unless the writer is displaying total irony, it is a good summation of the Greek stereotype. Now imagine what would happen if Jews or Lesbians were substituted for Greeks as the target. It simply would not happen – let alone that it would fall foul of hate laws.

The reality is that there are hard-working, badly paid Greeks and Brits; there are also lazy, overpaid Greeks and Brits. And Italians. And Germans. And Spaniards. And French. And Danes. And so on.

At least some readers of The Guardian have cottoned on to the scapegoating.

The next episode of the Channel 4 programme is due to screen on Friday 25, November at the not very prime time of 4am.

So what will happen if the desires of the economists are turned into flesh?

 One instance of "forward planning" is travel group TUI's renegotiating contracts  into drachmas.

Greece leaving the euro will result in  a veritable Pandora's Box, according to an article in Financial Times by Robert Jenkins, an external member of the interim financial policy committee at the Bank of England.

His scenario includes disputes over denomination of debts, contagion as the panic to get euro accounts out of the country spreads from Greece to Italy, Spain, Portugal and Ireland, confusion over debts, and the need for capital controls at border posts – difficult in the world of easy to cross borders in the Schengen zone.

Whatever the rights and wrongs of Greek entry into the euro in the first place, throwing the country out could prove to be a very European tragedy.

More on Mindful Money

The EU 'Rescue Fund' – Part of the problem not part of the solution

Eurozone breakup could help the UK economy

The aims and failures of the eurozone

To receive our free email newsletter sign up here.

Leave a Reply

Your email address will not be published. Required fields are marked *