The Great Neck News, Friday, May 22, 2015
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Offering Greece a financial lifeline Continued from Page 33 scribed, they are eerily familiar — and yes, we do not learn from history, even if we know history. It is also interesting that the way we know of “everyday life” in Greece wasn’t from the historians, but from the comedians, like Aristophanes who satirized the politicians and everyday life (think Jon Stewart, Steven Colbert, John Oliver, who have become a better source of news and commentary than The News Media). But whereas Socrates was condemned to death for both corrupting the minds of the youth of Athens and of impiety (“not believing in the gods of the state”), Aristophanes (who satirized Socrates in “the Clouds”), was able to be profane without retribution. This is what travel is supposed to be about - coming to new insights about ourselves and our times by expanding horizons, giving us new perspective and context. It brings home what the historians had sought to do: to help us learn from the past. All we are hearing about Greece, though, is about the economic crisis. Before I arrived in Greece, I had imagined it would be like Detroit —block after block of blight; boarded up buildings; people sleeping on the street; garbage collecting in great piles on dirty streets. I had envisioned what I had seen from Palm Beach to Long Island after our financial collapse - “for sale” signs, people lining up by the thousands hoping to land one of but a handful of jobs. Nothing could be further from the truth — which I attribute to the way Greece is cast in the media. However, I did come away with my own thoughts about how to resolve Greece’s economic woes, which strikes to the heart of our own debate here in the U.S. (as New York Times columnist Paul Krugman has noted often since 2008): the debate between focusing solely on reducing national debt through widening austerity measures (cutting pensions, raising retirement age), versus investment in infrastructure and sustainable development. I’ve come to the conclusion that Greece is yet another victim of the international bankers who crashed our economy along with the global economy, while the “remedies” served to bail out the bankers on the backs of the people.
Greece may have had its problems like Detroit for inept or corrupt governance that squandered investment (and apparently “rigged” the figures in order to qualify for admission into the European Union), but what really prompted the collapse was two essential sources: the imposition of the Euro and the freewheeling ability for moneymakers to evade taxes. First the Euro: the flaw in the argument for a single currency in Europe is the fact that countries have different living standards, different wage structures. Once the Euro came in, the cost of a single cup of coffee (which is one of the essential bulwarks of culture in Greece, much as music and movies are in the U.S.) went to 5E, when the average weekly salary was 500E. Being forced to utilize the Euro instead of its own currency meant that Greece did not have the key tool that the U.S. used to stop the freefall of our economy into Depression - a federal reserve that could lower interest rates to stimulate investment. Tax Evasion: while you hear in Greece the meme that taxes are too high and discourage business investment (the argument you hear to get the U.S. to lower its corporate rates from the nominal 35 percent, while also pushing for a flat-tax instead of a progressive tax structure), I question the premise based on what I saw at the port of Pireaus and other popular ports: namely, row after row of yachts the size of cruise ships, sporting the flags and registration of places like Malta, Channel Islands, Cayman Islands, Panama - that is, tax havens. We’re talking ships costing probably $50 million or $100 million - money paid for by evading taxes that would otherwise have gone into government coffers. I looked into the registry of one of these yachts, moored next to our tiny little vessel in Poros: registered to a investment company called Lightstone based in Tortola, British Virgin Islands. Another highly conspicuous ship which gets everyone agog in Pireaus is The Maltese Falcon a “one of a kind” ship-rigged sailing luxury yacht, commissioned and formerly owned by American venture capitalist Tom Perkins. It is one of the largest privately owned sailing yachts in the world at 289 ft,. The yacht, which is registered in Malta, was sold in 2009 for about $70 million to Elena Am-
brosiadou, the founder of IKOS Ltd., the Cyprus-based hedge fund. The common denominator, it seems, is “hedge fund”. These are companies that invest other people’s money, who are expecting a return. I am wondering how the investors are benefitted by hundreds of millions of dollars going into a vessel that immediately depreciates and that does not benefit anyone but the CEO who has the authority to sail it. The solution that was imposed on the Greek people punished ordinary people for the sins of others. Austerity destroyed any kind of purchasing power, and is the reason for all the shuttered stores, for unemployment rates of 25 percent. But what you see now is a renewal - a chef who lost his job when his restaurant shut down went into business for himself, opening a patio-style lunch place in the midst of the bank buildings that reminds me of Austin’s truck-style eateries. Hip restaurants, cafes, cocktail and coffee bars are opening up in shuttered shops that became obsolete, like fabric stores that fell out of favor. These are the opportunities that people need in Greece (and in the U.S.) Here’s my prescription for solving Greece’s economic crisis (which would work here too): Stimulate international investment directly into communities (not into or through the government): Real estate: I see prime buildings that are vacant that could be purchased a discount prices, restored (generating jobs) and turned into a productive purpose (also stimulative). For example, on one prominent street, I ask Constantine E. Cavoulacos, who is an architect in Tekem SA, a family architectural and engineering firm that has built 1200 projects in Athens, who out of pride in his city, has volunteered to be a guide to tourists like me in the city’s “This is My Athens” program, what such a building might cost and how much it would cost to refurbish. The combined figure, $2.5 million, for a beautiful building in a prime location seems to me to be a very good investment, and there are many such buildings all around. (He would be an ideal agent for foreign investors to locate appropriate properties and calculate the costs, c.cavoulacos@takem.gr.) Such properties should be
prime for investment - either for villas, or for commercial purpose like a boutique hotel, or retail or office space. But these could also be purchased by foundations, refurbished, and turned into business incubators such as I see at the Social Impact Hub, where dozens of young entrepreneurs have very inexpensive office space in a building that a family owns and makes available (Social Impact Hub, SocialImpactaward.gr, is part of a global community, Impacthub.net). This would also help stem the brain drain: Young educated people are leaving Greece to find jobs. (See “Young Greeks Seek Options Elsewhere,” By Niki Kitsantonis, New York Times, Sept. 14, 2010, www.nytimes. com/2010/09/15/business/ global/15drachma.html?_r=0). Sustainable development: On the other hand, many of the shuttered, deteriorating structures should be knocked down and replaced with parks (in traditional Greek architecture, homes were built around a courtyard, now there is just a sprawl of building to accommodate a metro area of five million). Families now gather, and children play soccer, on the cobblestone boulevards that ring the Acropolis because there are so few parks. Athens should take advantage of the declining population due to the loss of young people and the economic woes: the population of the “city proper” was 665,000 in 2014, down from 796,400 in 2004- interestingly, about the same number as in Classical Greece; the Athens Metropolitan Area (with 58 municipalities) has a population estimated at 3.75 million in 2014, well below the 5 or 6 million that local people were quoting. I am optimistic when I go about the countryside and see wind turbines and solar panels, artificial lakes which generate hydroelectricity, that will help Greece achieve energy independence and are the big-scale technological projects that will provide jobs. Greece should be prime for international investment it offers an excellent infrastructure, educated population, glorious weather, a very desirable location, where wages and salaries are comparatively low, the standard of living comparatively cheap. Foreign investors would need some guarantees against nationalization of resources, and probably tax incentives. Another source of foreign investment into Greek’s econ-
omy comes from the realization that there are some 1,800 islands, but only a couple of hundred are inhabited: the government could sell (or if that is not acceptable, lease) private islands such as one gorgeous island we spot with a single house a short distance from the shore of the Peleponnese and 10 minutes sail outside of the port of Poros. Tax reform: the way it was described, the “little people” (as Leona Helmsley used to say) pay too much tax and clearly, others are not paying enough. Greece (like the US), needs tax reform that is fair, and better ways to assure collection (as Germany has). A taxi driver cites tax policy as a key source of the problem: “Companies need lower taxes, he says. They now have a 60 percent tax rate. The old system was 2025 pertcent. There is a new deal every year.” Clearly, some rationality and stability is necessary. Drop the Euro: “The solution is to leave the Euro – because living standards are all different,” says Catharina Flamic, a German who has been guiding and living in Greece for more than a decade. “Greece was better off before – the banks telling us how to live. One currency doesn’t work – there are power countries. The EU money only sent to international banks, not to the Greeks.” Her view was echoed by Eleni Pape, who grew up in East Germany and has lived in Greece for more than a dozen years. Make a fair agreement with bondholders for a reasonable repayment. Don’t attack pensions, retirement, or social programs (I notice the name on one building: “The Ministry of Health and Social Solidarity”). Meanwhile, out of desperation, the government is privatizing public services (a German company is itching to take over the utility company). “Greeks are masters of improvisation,” says Flamic. But they need to be masters of their fate. What I learned in Greece? Far from being innate to the human condition, democracy is fleeting unless the people are engaged and vigilant. Just having democracy isn’t any assurance of keeping it. And economic vitality, narrowing the gap between rich and poor, social and economic mobility, and feeling engaged, that one’s participation matters, are key.