Louis Proyect: The Unrepentant Marxist

July 5, 2015

Greece by the numbers

Filed under: Greece — louisproyect @ 6:19 pm

I am sure my readers have been following the referendum but just to make sure, “Oxi” means “no” to the German pig bankers and their regime thugs:

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Turning to another matter involving Greece and the numbers, there’s a book review in today’s NY Times of “The Full Catastrophe” by WSJ reporter James Evangelos about the Greek crisis. It was reviewed by Joshua Hammer, a one-time Newsweek bureau chief. You can probably figure out that the book and the reviewer were on the same page ideologically.

While Hammer refrains from the open hostility toward the Greek government that you’d expect from a Times contributor, there was one passage that struck my eye:

To understand what led Greece to such a predicament, Angelos visits Zakynthos, off the western coast of the Peloponnese, mockingly anointed the “Island of the Blind” after nearly 2 percent of the population — nine times the estimated rate for most European countries — was found to be receiving benefit payments for sightlessness. Angelos discovers a scheme to defraud the ministry of health that extends from the single public hospital’s sole ophthalmologist to the former prefect who signed off on the payments, one of many such social-welfare scams that cost the Greek government billions of euros.

On the island of Hydra, Angelos tells of an undercover raid on a portside taverna that drew national attention to a common Greek pastime, tax evasion, and the halfhearted and inequitable attempts of the government in the post-bailout era to crack down on cheats. “The pervasiveness of the habit, and the government’s enduring unwillingness to do anything about it, was more than any other factor the cause of Greece’s financial troubles,” Angelos observes, citing one European Commission study in which uncollected consumption taxes were estimated at 10 billion euros a year. Another study, by two American academics, estimated that self-employed workers failed to report about 28 billion euros in taxable income in 2009.

Well, of course there was and is tax evasion in Greece but why single out a study that claimed “self-employed workers” failed to report about 28 billion euros? Who are these waiters and waitresses that are largely responsible for the nation’s plight? When you read the relevant passage in Evangelos’s book, you can spot his bias immediately: “People in Germany, the Netherlands, Finland—eurozone countries that had, with great reservation, participated in Greece’s bailouts—read the stories about the swimming pools, or others about an apparently high per capita number of Porsche Cayennes in Greece…were perturbed.”

Evangelos did not really clarify what kind of  “self-employed workers” he was talking about and Hammer was all to happy to take him at his word that “workers” were bleeding the country dry. However, I invite you to read an article about the study that appeared on the website Keep Talking Greece that will put things into perspective. It states:

The chief offenders are professionals in medicine, engineering, education, accounting, financial services and law. Among the self-employed documented in the report are accountants, dentists, lawyers, doctors, personal tutors and independent financial advisers.

Odd that the professional classes can be described as “workers” unless you want to prejudice WSJ or NY Times readers against them. In fact, it is completely understandable why lawyers, doctors and accountants would want to avoid paying taxes. They are not part of the labor force but small proprietors who have the same class outlook as the rulers of society.

In terms of the authors of the paper, who clearly were anxious to represent all Greeks as tax cheats even if their words don’t exactly support Hammer’s description of them as “self-employed workers”, it is worth mentioning their affiliation. Adair Morse and Margarita Tsoutsoura are from the University of Chicago. The minute I saw U. of Chicago, alarm bells went off. It seems that Morse is a fellow at the Friedman-Becker Institute. I am sure you know that Friedman is none other than Milton Friedman, while Becker is Gary Becker, an economist who once described Friedman as “the greatest living teacher I have ever had”. Right. There’s not much information on Margarita Tsoutsoura that would shed light on her ideological leanings but I suspect that she found Morse’s views congenial.

The third author is Nikolaos Artavanis from Virginia Polytechnic Institute. a contributor to http://greekeconomistsforreform.com/, a group blog that urged a “yes” vote on today’s referendum. Enough said?

Now I am sure that the numbers the authors dredged up were fairly accurate but we can be sure that they would understand the political impact. The report was used mainly as a cudgel against the Greek nation to make the poor pay for the thievery of the bourgeoisie and the petty bourgeoisie. Here is just another example of how it served a political agenda:


How Greek tax evasion helped sink the global economy
By Brad Plumer July 9, 2012

The euro crisis first started roaring in late 2009, when auditors inside the newly elected Greek government discovered that the country had a much—much—bigger deficit than anyone realized. That, in turn, inflamed fears that Greece couldn’t wiggle its way out of its debt trap so long as it was tethered to the euro. It also exposed structural problems within Europe’s currency union. Worries soon spread to Ireland, Portugal, and eventually Italy and Spain. Now the entire global economy is on edge.

Nice place. Wonder what sort of property taxes they pay? (Petros Giannakouris / AP)

But why did Greece have such a massive budget deficit in the first place? One factor (among many) was rampant tax evasion, which had starved the Greek government of funds. As it turns out, this was a very big deal indeed. The Wall Street Journal’s Justin Lahart points to a new paper (pdf) by three economists who estimate that the size of Greek tax evasion accounted for roughly half the country’s budget shortfall in 2008 and one-third in 2009.

How is it even possible to estimate taxes that aren’t ever paid? The economists, Nikolaos Artavanis, Adair Morse and Margarita Tsoutsoura, cleverly exploit a discrepancy. Few people in Greece want to report their real income to the government, since that would mean paying more taxes. But Greek banks have very solid estimates for how much income people are actually raking in — the banks need this info to make loans or to issue mortgages.

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The phrase “”Lies, damned lies, and statistics” was first used by Mark Twain who attributed it to Benjamin Disraeli even though it is likely he never said it. Probably history will record that if Twain had lived as our contemporary thanks to some youth elixir, he would have used it as an epithet for mainstream reporting on the Greek economy.

4 Comments »

  1. Well done the Greek working classes for their No vote victory in Greece. I am elated, even though the real fight has just begun and we must be advised against being over-elated.

    This is a great victory, though; a first national negation of the concept of austerity. This is one proof that movements for reform do have the capability of precipitating conditions that are more prone to developing revolutionary solutions.

    In the case of the movement led by Syriza, the move is actually a *return* to reform — if we understand Keynesianism as a reformed capitalist formation that had to concede ground to the workers’ militancy.

    Of course all depends on how the left moves not only in Greece but now across Europe, with a renewed vigor. But, if the left moves in a principled and disciplined manner, at the same time keeping nimble and flexible, it can seriously rock the European boat to the utter discomfort of the finance capital’s executives in the state. That would put the neo-liberal agenda on a deeply defensive footing. Which in turn can create conditions even more conducive to pushing against capital’s myriad contradictions even more forcefully.

    Congrats to the Greeks and the left worldwide!

    Comment by Reza F. — July 5, 2015 @ 10:30 pm

  2. The German SDP is standing shoulder to shoulder with Merkel:

    “But the news has already been badly received in Germany. Vice-chancellor and social democratic leader, Sigmar Gabriel has warned it is hard to see how Greece can now negotiate a third bailout.”

    http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way–eu-euro-bailout-live#block-55998d26e4b00bdd27707dfa

    More from Gabriel:

    And he accused Alexis Tsipras of having “torn down the last bridges” which could have led to a compromise:

    I’ve taken the quotes from Reuters:

    “With the rejection of the rules of the euro zone …negotiations about a programme worth billions are barely conceivable,….

    Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness.”

    http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way–eu-euro-bailout-live#block-55998a3be4b032a39a3ba91a

    Comment by Richard Estes — July 5, 2015 @ 10:58 pm

  3. The SPD may actually be to the right of Merkel:

    “His fellow social democrat, Ingrid Arndt-Brauer, the chairwoman of the Bundestag’s finance committee, said she had been expecting her committee to be called upon on Tuesday to begin the process of negotiating a fresh bailout package. The no vote, she said, had meant that could not happen.

    “Nobody had a wish to torture the Greeks – we are not terrorists – but to help them,” Arndt-Brauer said. “A yes vote would have signalled a preparedness to cooperate – at least on some reforms – for fresh help. But, right now, I see no credible basis to help Greece, none at all.”

    http://www.theguardian.com/world/2015/jul/05/germany-greek-referendum-anger-solidarity

    Comment by Richard Estes — July 6, 2015 @ 12:28 am

  4. The more Syriza waffles the worse the consequences for them and Greece. It’s quite clear the EC is not going to give them a fair deal, and the Left in Europe and everywhere is very weak. When you having to go begging to Obama for intervention you have gotten seriously off track.

    Comment by purple — July 7, 2015 @ 11:25 pm


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