Wednesday, September 29, 2010

Truth Commission for Greece’s Finances?

More and more I wonder whether Greece needs a Truth Commission to study economic policy since 1974. Jacob Funk Kirkegaard at the Peterson Institute recommended this in April, and he lists several precedents. The obvious goal is to cleanse, to form a narrative on what happened. But there is more. Without such a commission, blame might be spread either too broadly or too narrowly.

Perhaps a useful starting point is the recent comment by Theodoros Pangalos (whom I generally find repulsive by the way); when asked about where all the money went, he said, “We ate it all together.” In some ways, he is very right. And in other ways he is very wrong.

He is very wrong for three reasons. The first is that not everyone cheated. Not everyone evaded taxes, not everyone built homes illegally or received generous benefits from the state. Not every businessman was a thief or politician a fraud. The second is that cheating is not binary - cheating is bad but more cheating is worse than less cheating. To say we all cheated equates the big cheats with the little ones. Third, to say that we all cheated is like saying no one cheated. We are all responsible, so no one is responsible.

And yet he is very right for two reasons. The first is that Greece's financial woes are not a story merely of stealing at the top. The rich stole but so did the poor, at least the formerly poor. They got jobs, were shielded from competition, were prevented from being fired. And that's the second reason he is right: much of what went wrong, many people would not classify as “bad.” Just look at the protesters. The truckers are saying, please do not take away our fat profits by boosting competition. Public sector employees say do not fire us. Professors say do not judge us. Yet they all were part of the problem.

So here is the problem. Too broad a responsibility lets everyone off the hook; but too narrow a blame risks those broader insanities that perpetuated Greece's economic demise. It is easy to be outraged by a million Euros bring paid in a bribe; but what about a million Euros paid to public sector employees who did nothing all day. Can society be outraged equally with both? Commission or no commission these are truths that Greece will have to confront.

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