[Marxism] Greek Patience With Austerity Nears Its Limit

Louis Proyect lnp3 at panix.com
Tue Dec 30 06:24:49 MST 2014


NY Times, Dec. 30 2014
Greek Patience With Austerity Nears Its Limit
By SUZANNE DALEYD

NEA IONIA, Greece — Alexandra Nikolovieni, 55, lost her job escorting 
young children on a school bus four years ago and has not been able to 
find another one since. To help financially, her daughter and her 
son-in-law, who have two children, moved into her house. But now they 
have lost their jobs, too.

Ms. Nikolovieni, who volunteers at a food pantry in this suburb of 
Athens, says that every month she sees more and more people like her, 
qualifying for bundles of groceries and picking out used shoes for 
themselves or their children.

“Are things getting better?” she said. “I don’t think so.”

Nowhere have austerity policies been more aggressively tried — and 
generally failed to live up to results promised by advocates — than in 
Greece. After more than four years of belt tightening, patience is 
wearing thin, and tentative signs of improvement have not yet trickled 
down into the lives of average Greeks.

Now, after its Parliament failed to pick a president on Monday, forcing 
early elections, Greece faces a turning point in how to heal its 
devastated economy.

In the Jan. 25 general election, a majority center-right coalition 
government that has reluctantly stuck with austerity policies will face 
a charismatic left-wing challenger who says it is time for Greece to 
take its future into its own hands and do what it can to stimulate 
growth. Whichever path the country chooses, the outcome is likely to 
have broad implications for Greece and its place in the European Union.

In 2010, with Greece crippled by debt and threatening the survival of 
the euro, the European Union, the International Monetary Fund and the 
European Central Bank began imposing German-inspired austerity on the 
country. The aim was to slash the budget deficit and address fundamental 
problems like corruption and a failure to collect taxes. Such policies, 
they promised, would get Greece back on its feet, able to borrow again 
on financial markets.

Greeks grudgingly went along, assured that painful reform would return 
the country to growth by 2012. Instead, Greece lost 400,000 jobs that 
year and continued on a decline that would see a drop in the gross 
domestic product since 2008 not much different from the one experienced 
during the first five years of the United States’ Great Depression.

Greece’s unemployment rate was supposed to top out at 15 percent in 
2012, according to International Monetary Fund calculations. But it 
roared to 25 percent that year, reached 27 percent in 2013 and has 
ticked downward only slightly since.

Among international policy makers and economists, the debate over 
austerity remains as intense as ever. Chancellor Angela Merkel of 
Germany, the most high-profile advocate of the argument that only 
through fiscal prudence can nations achieve stability and prosperity, 
has given little ground even as larger and more influential countries 
like France and Italy have started balking at her demands.

But at the street level in Greece, there is little debate anymore, if 
there ever was. The images of suffering here have not been that 
different from the grainy black and white photos of the United States in 
the 1930s. Suicides have shot up. Cars sit abandoned in the streets. 
People sift garbage looking for food.

About 900,000 of the more than 1.3 million who are out of work have not 
had a paycheck in more than two years, experts say.

Kostas Polychronopoulos, who runs a volunteer soup kitchen in Athens and 
has been out of a job since 2009, said he had seen many shocking things 
in recent years, including an old woman in a fur coat who watched from a 
distance for a long time before finally approaching to accept food.

When he insisted on taking her home, he found she was living in an empty 
apartment. “She didn’t even have water,” he said.

Even supporters of Prime Minister Antonis Samaras say that he faces an 
uphill battle to persuade the electorate to stay the course after five 
years of austerity.

His principal opponent, Alexis Tsipras, is promising to defy Greece’s 
creditors, renegotiate the country’s enormous debt, cut some taxes and 
work to restore cut pensions.

It is unclear where such an act of defiance might lead, whether Greece’s 
creditors would be willing to change their approach or whether Greece 
even might find itself in the unprecedented position of facing expulsion 
from the eurozone, or even the European bloc altogether.

Yet for many Greeks who have lost everything, rebellion may be a choice 
they cannot resist, even if it is a scary one.

Michalis Mitsopoulos, an economist who has written two books on the 
crisis, says many of Mr. Tsipras’s ideas are unworkable. But, he adds, 
many Greeks are desperate, saying to themselves: “I have no job. I am 
going to lose my house. My children have no future. What more can happen 
to me?”

Even if more recent optimistic projections are to be believed, and a 
steady rate of growth can be expected, it would take Greece perhaps 15 
years to regain the jobs it has lost, said Panagiotis Liargovas, the 
director of the Greek Parliamentary Budget Office.

“The mix was not right,” Mr. Liargovas said of the austerity measures. 
“It was a cure that has almost killed the patient.”

The three international lenders — the International Monetary Fund, the 
European Commission and the European Central Bank — were initially seen 
in Greece as saviors, and the austerity program has had some notable 
successes. When Greece was forced to ask for help, its deficit was more 
than four times the 3 percent of gross domestic product allowed under 
European Union rules. The financial markets had lost confidence in the 
country. Greece desperately needed money to pay its bills, but the cost 
of borrowing on the financial markets had become prohibitive.

Now, Greece is no longer spending far more than it receives, when debt 
payments are excluded, its officials say. It has remained in the 
European Union, and can again borrow in the bond markets, though at 
interest rates that have been creeping up again, indicating investors’ 
concern about the nation’s path.

But the failures have been striking, leaving millions of Greeks baffled 
and angry as their lives disintegrated while the elite often escaped, 
untaxed and unbothered, experts say.

Lefteris Pantazopoulos, 60, used to own three hardware stores that 
employed six people. Today, only one store remains open in Nea Ionia, 
with Mr. Pantazopoulos behind the counter and hardly any profit.

He and his wife have not bought heating oil in three years. If Mr. 
Pantazopoulos were to win 1,000 euros in the lottery, he said, he would 
fill his house with groceries, “just to remember what that was like.”

In a wide-ranging review of the Greece program last year, the I.M.F. 
found that many of its predictions had failed. There was a sharp fall in 
imports, but little gain in exports. Public debt overshot original 
predictions. Predicted revenues from selling public assets were way off. 
The banking system, perceived as relatively sound at the beginning of 
the bailout, began having problems as the economy soured.

Looking back, the I.M.F. concluded that many errors had been made, 
including too much emphasis on raising taxes instead of cutting 
expenses. In addition, the monetary fund overestimated the ability of 
the government to deliver the changes it was demanding — because they 
were proving politically unpopular and because Greek institutions were 
far weaker that anyone understood.

Over the last four years, the three lenders have demanded more than 800 
actions a year, Greek officials say, requiring hundreds of new laws, 
sometimes changed and readopted within weeks or days.

Administering these changes would have been difficult in a country with 
sound institutions, but Greece’s were filled with poorly qualified 
political appointees and were undergoing hiring freezes and budget cuts 
even as they were supposed to be managing a huge overhaul: a large 
assortment of new taxes, the opening of closed professions and the sale 
of state-owned assets.

Experts say that even now the Greek tax collection system does not truly 
function. Investigations into the Greek elite and their secret foreign 
accounts have foundered even in the face of public exposure of the accounts.

And some new measures instituted to collect taxes — for instance, the 
ability to take the money from someone’s bank account, or to assume a 
level of income because of the size of a house or the sale of a property 
— have led to all sorts of Kafkaesque situations.

One economist said that almost his entire salary went to property taxes, 
though he could not sell his property without incurring an even larger 
tax bill. If he sells, he must pay tax on the assessed value as a result 
of a measure intended to keep people from taking cash under the table. 
But the property is no longer worth that much. On top of that, one of 
his properties has two ruined buildings on it, so selling it within the 
calendar year would lead the tax authorities to treat him as a real 
estate broker and demand taxes on a projected salary that he does not have.

The one bright spot in the economy has been tourism. But even on 
Greece’s most famous islands, such as Corfu, there is little sense of 
relief. Many tourists come on cut-rate or all-inclusive packages. The 
wages of hotel workers have been cut severely, and many are not paid for 
months, if at all, according to union officials and Corfu’s mayor, 
Kostas Nikolouzos.

Mr. Nikolouzos said he was worried that drastic budget cuts could affect 
the islands’ ability to attract tourists. The municipality once had a 
budget of 13 million euros a year for capital repairs. This year, it 
will be one million euros, though roads are buckling and some villagers 
can no longer drink their tap water.

Eleni Alexaki, 56, has worked as a hotel maid for more than 20 years. 
She was cleaning 20 rooms a day at the beginning of the crisis and now 
cleans 35, while her pay has gone from 1,600 euros a month to 985. She 
receives no holiday pay and fewer days off.

“And they terrorize us,” she said. “They say, ‘There, the door is there.’ ”

Pericles Mastoras, 59, a cook in a different hotel, needs an M.R.I. for 
a kidney problem, but he has not been paid since October. As he sat in 
his union office recently, his cellphone rang, but the conversation with 
his boss was brief.

“He said, ‘Call back tomorrow,’ ” Mr. Mastoras said. “That means I won’t 
get the money for months.”

Dimitris Bounias and Nikolas Leontopoulos contributed reporting from 
Athens, and Nikolia Apostolou from Corfu, Greece.




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