Wednesday, July 15, 2015

The Greek Transportation Giveaway “Scandal”, or Why Germans Are Furious at Greeks

The public mood in Germany is one of outrage at Greece—their belief that Greeks think they have a permanent right to other people’s money, the dishonesty of the Greeks, the way they will promise anything in order to continue the same corrupt policies, their inability to follow the rules.  Schäuble speaks for most of his countrymen when he says that Greece has no business being in the euro zone, but if it has to stay it must be kept on the tightest possible leash and given no relief from its obligation to pay as much as possible.  Non-Germans may wonder where these attitudes come from.  Is there some deep problem with German culture, a Teutonic meanness kept hidden since 1945 but now back in full view?

No.  Most Germans are reasonable and are motivated by goodwill toward others, at least in the way that most people everywhere are.  But they live in an information bubble which spawns a further echo chamber of public commentary, so the mental world they live in is simply different from the one outside their borders.  (I don’t know first-hand, but there may be a similar bubble enveloping the Netherlands, Finland and a few other countries.)  Inside this bubble there is a steady stream of “news” whose common denominator is that slippery, corrupt Greeks are scheming to take advantage of Germans’ hard-earned wealth.  This is something that every German now “knows”, part of the conventional wisdom that forms the bedrock for political analysis.

To really understand how this works you would have to be there.  It’s not a matter of one or two biased news reports, but a steady stream of news, every day, in little snippets and major headlines, that reinforce the underlying message.  Here I’ll present a small example that, multiplied by a hundred, gives a sense of what’s going on.

So have you heard the latest?  In order to prop up his political support Tsipras has made public transportation free in Athens!  Can you believe it?  Here’s a country that’s bankrupt, that’s sucking in our money to stay afloat, that should be spending every spare penny on the poverty of its own citizens, and instead it’s the same old clientelism: hand out favors, buy a few votes.  That’s how he bought those “no” votes in the referendum.  We have to pay for transportation in Frankfurt and Hamburg!  Why should they demand our money so that their people can have something we don’t have?  Hasn’t it occurred to them that transportation and everything else has to be paid for, that people need to work and produce so that society can afford it?  But I guess that’s how it is with those Greeks.

Now tell me: have you heard anything at all about free transportation in Greece?  No?  It was a big story in Germany, written up in all the major papers and discussed on radio and TV.  Here, for instance, is Handelsblatt, the main business newspaper:
The state coffers are empty in Athens, hundreds of thousands of pensioners are waiting for their pensions, but Premier Alexis Tsipras wants to keep people happy before the referendum on Sunday.  After Tsipras on Tuesday introduced a zero tariff for public transport operators in Athens, on Wednesday the Greeks got a 50 percent discount on all tickets of the national railway company OTE. The discount is allegedly designed to facilitate people taking part in the referendum on Sunday.
(Handelsblatt, July 1)
In most of the world this was a non-story, unreported.  One brief notice appeared in Straits Times, the respected English-language newspaper published in Singapore:
The Greek government has declared public transport free in Athens this week to ease difficulties created by the closure of the banks and a rush on petrol stations.
Greece's transportation minister, Christos Spirtzis, has announced that buses, trams, trolley-buses, and the Athens metro will not require fares until next week.
The offer is set to last until July 7, when in principle the banks will re-open.
(Straits Times, July 1)
Outside of Germany, Greece was scrambling to keep the economy going in the teeth of an intense liquidity crisis set off when the ECB froze its support of the country’s banking system.  Germans however saw another shameful case of clientelism and corruption at the expense of hardworking taxpayers in the rest of Europe.  Now imagine this being repeated every day for months and you get some idea of the different mental world Germans inhabit.

(Incidentally, if I thought Tsipras was buying votes by giving Greeks benefits the country can’t afford, billing it to Europe, and then demanding that it all be wiped out in a future default, I’d be pretty angry too.)

If I’m sympathetic to the average German, it’s because, as an American, I’ve lived through the same thing.  Replace “Greece” with “Saddam”, Iran, “the terrorists”, and so on, and you have plenty of information bubbles of our own.  Remember the runup to the war in Iraq?  Americans knew lots of things about Iraq’s connections to Al-Qaeda and its imminent threat to US security that made an invasion seem like a plausible solution.  The fact that this looked like a collective mass hallucination from abroad had no effect on us.  And Americans, despite their widespread support for military actions that can only be described as criminal, are not, for the most part, bad people.  They want good things for themselves and others, and, given the information world they inhabited, their political views were not out of line.

Of course, information bubbles and the attitudes they lead to present a big problem.  Wars of aggression are not OK, and neither are debtors prisons that lock up whole countries.  To build a better world we will need to understand where the bubbles come from and how they can be perforated.  Demonizing entire populations, however, is the wrong way to go.


Sandwichman said...


Sandwichman said...

iGlinavos: I would like to thank the German people (a letter to Germany)

Mike Ball said...

Didn't you hear about the Obamaphones? In the US, Obama gave free cellphones to people to curry favor and encourage government dependency!

Sandwichman said...

"Obama gave free cellphones to people..."

Only to the 47% who are takers.

Les Baker said...

Propaganda propagated by political propagandists intent upon perverting the perceptions of the populace: that's where information bubbles come from.

How can they be perforated? I don't know. The point of propaganda is to persuade us to do something not in our best interests, and those who promulgate it gain much advantage. Perforating that will be a big task.

Jack said...

A short history of the use of propaganda and the occasional result of such a circumstance.

When, then, will the people be educated? When they have enough bread to eat, and when the rich and the government cease bribing treacherous pens and tongues to deceive them; when their interests are identified with those of the people. When will this be? Never. M. Robespierre, C.1790

And we all know what happened next. Some times in human history "the rich (and their representatives in the) government" as well as their pawns, the "treacherous pens and tongues" get their just desserts.

blissex said...

«So have you heard the latest? In order to prop up his political support Tsipras has made public transportation free in Athens! [ ... ] We have to pay for transportation in Frankfurt and Hamburg!»

What actually is being reported in more serious newspapers is that the Athene Olympic Metro, paid for by EU (french, german, uk, ...) funds has no ticket checks and relies on the "honor system" like those in many northern countries like Hamburg.
In Athens the effect that the metro is effectively free. This may be actually good transport policy to discourage using cards, but there it looks like just a "discount" to voters.

Also, a greek minister once pointed out that the greek railways charge so little for fares and the pay of their politically appointed employees is so high that it would be cheaper to pay taxi rides for all passengers.

Greek newspapers and magazines often report about many similar things, and ask your greek friends.
In this Greece is no different from other patronage and extended family based cultures, from southern Italy to most of India, all low-trust cultures.

Such cultures seems to arise in all locations that have been subject to extractive foreign-run regimes. Italy is a particularly good example for many reasons, and one historian has looked at maps of surveys about "civic values" (basic trust) in Italy and they seem to coincide even quite precisely with the map of which town was 500 years ago an independent free city vs. which area occupied by an extractive foreign dynasty.

blissex said...

«The public mood in Germany is one of outrage at Greece — their belief that Greeks think they have a permanent right to other people’s money, the dishonesty of the Greeks, the way they will promise anything in order to continue the same corrupt policies, their inability to follow the rules.»

This may be related to this graph of greek imports originally funded by never-to-be-repaid borrowing by the greek government from (french, mostly) banks:
2004: $13 billion (GDP €227 billion) 4% GDP
2005: $18 billion (GDP €229 billion) 6% GDP
2006: $30 billion (GDP €242 billion) 9% GDP
2007: $45 billion (GDP €251 billion) 13% GDP
2008: $51 billion (GDP €250 billion) 15% GDP
2009: $35 billion (GDP €240 billion) 11% GDP
2010: $27 billion (GDP €226 billion) 9% GDP
2011: $29 billion (GDP €206 billion) 10% GDP

That's a massive net import explosion fueled by foreign credit. It is $248 billions of imports in 8 years, almost entirely paid for by debts that the greek state took and then distributed to the patronage networks of politicians via equally enormous government deficits.

As to «Greeks think they have a permanent right to other people’s money» many "varoufakistas" commentators have pointed that that the only way for Greece to return to the "baseline" years of 2007-2008 quickly is to give the greek government permanent net transfers not of 2-3% of GNI like now, but of 15-20%, like it is done by the federal government for states like Lousiana and Missouri in the USA, and have argued loudly for this to happen.

But if the EU had a proper federal government with taxing and spending and redistributing powers, greek voters would be a minuscule percentage of voters, and economic policies would be set by the vast majority of voters in Germany, Poland, France, etc. and such huge transfers would most likely not have happened, and all the "structural" changes that the 18 EU governments want to happen in Greece would have been the law of the land. And greece would have a proper welfare system, instead of very little for the poor and massive spending on patronage fake jobs.

Can you imagine an EU federal government elected by german, french, polish, ... voters that lets Greece continue without a land register and with overt manipulation of statistics?

«a steady stream of “news” whose common denominator is that slippery, corrupt Greeks are scheming to take advantage of Germans’ hard-earned wealth.»

There is much the same steady stream within Greece (and similarly in Italy, Indian, etc) as to how the greek kleptocracy entwined with the greek upper and middle classes takes advantage of the greek state and the greek lower classes and immigrants. For example from a rather interesting interview with an unnamed (and mostly delusionary) greek negotiator:

«The part of the second programme of the agreement of 2012, after the haircut of the PSI [Private Sector Involvement], which was about 170 billion euros, 50 billion out of that was for the recapitalisation of the banks. Of course, there was another problem. From the PSI, the public funds suffered losses almost, if not more, in their own reserves. Why? Because they were forced under the law to save their cash reserves with the Bank of Greece, and the Bank of Greece had the right to use these funds to buy bonds on their behalf.
For me it was a big scandal because apparently what happened was a lot of politicians, bankers, a lot of people went and gave - they had bonds that they had bought 20% - they went and they gave it to the Greek Central Bank, Bank of Greece, 100%, they got their money and then the haircut comes to the public.»