Michael Fry: Greece is stuck in the past

Yanis Varoufakis is traipsing around Europe in bid to cut debt. Picture: Getty
Yanis Varoufakis is traipsing around Europe in bid to cut debt. Picture: Getty
Share this article
0
Have your say

GREECE has no option but to accept it has spent too long avoiding hard choices, writes Michael Fry.

A big city with a hot climate is often unpleasant, but in Athens there is a refuge open to everybody for nothing. It is the underground railway, gifted to the city by the European Union for the Olympic Games of 2004.

CONNECT WITH THE SCOTSMAN

Subscribe to our daily newsletter (requires registration) and get the latest news, sport and business headlines delivered to your inbox every morning

• You can also follow us on Facebook, Twitter and Google +

Time spent in the tube in Athens is agreeable in far more than the efficiency with which it whisks you from point A to point B. Cool and cavernous, it is air-conditioned throughout, and passengers can entertain themselves by looking at videos on the plasma screens. Unusually for a laid-back Mediterranean country, the trains run on time.

Best of all, none of this need cost even a euro (or before long again, perhaps, a drachma). With no barriers to prevent free entry or exit at the stations, Athenians are requested instead to get a ticket stamped before they board the train. Do they bother? Well, it is a laid-back Mediterranean country.

The perks are not confined to the customers. The average salary on Greek railways is £60,000 a year, which includes cleaners and track-workers: about three times the normal pay in the private sector. While the revenue from sales of tickets is an annual £80 million, the wage-bill is £500m. As a result, it is actually cheaper to fly the 500 kilometres from Athens to Salonika than to go by train.

This is the system, or more especially the public sector, that the Greeks opted to defend when they voted in the hard leftist coalition, Syriza, a couple of weeks ago. Now they have sent their finance minister, Yanis Varoufakis, round the chancelleries of Europe to seek support for a halt to austerity in Greece. It was the same finance minister who started off his term in office by calling in all the plans for privatisation partially pushed through by the last government so he can take a second look at them – the implication being that these plans will not go further.

It is a popular policy because Greeks have tended to blame on privatisation economic problems that lie far deeper.

The private sector is where the brunt of the austerity has been borne, and it is former employees of the private sector that we see on television pathetically begging in the streets of Athens. Not that the Greek private sector is especially virtuous. When Mr Varoufakis met his counterpart in Berlin, Wolfgang Schäuble, he was offered 500 German tax inspectors to stop all the fiddles that go on in industry and commerce. In Germany, in contrast to Greece, both the private and the public sector do what they say they are going to do. A comparison between Greece and the UK is perhaps yet more instructive. The Greeks remain stuck in a position we abandoned more than 30 years ago, with the bloated public sector a drag on the economy rather than a dynamo (the latter having been the fond but foolish dream of those who first nationalised industries after the Second World War).

Nobody would pretend that the process of privatisation in Britain was always easy, or that its results are in every instance perfect. But just think of the times when, to get a telephone, you had to make formal application to a public authority (which, I suppose, could have refused it) and of now, when you just walk into a shop to pick up the latest gadget. It is the difference between an antiquated, state-run economy and an economy of the 21st century – also the difference, in the era of globalisation, between failure and success.

The Greeks chose a superficially easy option and avoided embarking on modernisation 30 years ago (unlike their neighbours the Turks, who have certainly proved how a laid-back Mediterranean nation can do this too). The Greek experience has only gone to show that, the longer you put off the evil day, the worse the problems become. Those problems now look for Greece pretty horrendous. But round the capitals of Europe the message apparently coming back to Mr Varoufakis and to his prime minister, Alexis Tsipras, is that you must stick with the programmes of reform and austerity that your predecessors signed up to.

We would be foolish to tell Messrs Tsipras and Varoufakis anything else. I dare say some slightly amended deal on Greek debt can be struck with them – interest rates a bit lower, longer to pay. But much more fundamental is the programme of economic reform in their country which they appear to be rather more intent on rejecting. Their case, a potpourri of special pleading, demonstrates the bankruptcy of anything that could be called socialism.

As ever in Europe, the key to all this is the German chancellor, Angela Merkel, who will no doubt be her usual friendly but firm self. There are murmurings that the victory of Syriza is a blow to her, but she does not seem to see it like that. She assures the Greeks that for them too there will one day be a pay-off from reform. So many countries – big and small, liberal and conservative, mercantile and socialist – have successfully accomplished the transition to globalised capitalism that there can be little doubt this is the way all need to go.

It is a way the UK pioneered, and today there is just no other effective model on offer, at least for any nation that wants to get rich and stay rich. Those who in the long run prefer a Cuban kind of lifestyle are welcome. Under socialism, the Cubans have no way out of it. Under capitalism, the Greeks do.

SCOTSMAN TABLET AND IPHONE APPS

• Download your free 30-day trial for our iPad, Android Android and Kindle apps

Keep up to date with all aspects of Scottish life with The Scotsman iPhone app, completely free to download and use