About that Greek public sector

Charlemagne, over at the Economist blog, can be… uneven. But this recent post about Greece’s public sector is IMO top notch. It puts the creation of Greece’s huge, poorly paid, inefficient public sector in historical context:

Take the painful question of the huge public sector, and all those civil servants with jobs for life, and unusually generous retirement packages. The existence of those jobs for life is not a cultural quirk, in which Greek officials simply like coffee and backgammon too much to do any work. It is the end result of a brutal, multi-decade power struggle between the left and the right: a struggle that got people killed within living memory…

The Greek civil war, and the bloody score-settling that followed, is a living memory for many Greeks. Any consideration of Greek nepotism or clientelism needs to be seen in that light. So for example, it is not enough to say that Greek civil servants enjoy jobs for life, and that is a big problem. (Though it is a big problem, not least because many Greek civil servants are paid pitiful wages—partly because there are so many of them. That means they will resist austerity measures all the harder, because they feel like victims in this crisis, not fat cats.) But the bloated public sector is also a function of history…

Newspapers here in Belgium talk all the time about the government needing to “buy social peace” by paying off some interest group or other. In Belgium, the alternative to “paix sociale” is a strike. In Greece, plenty of grown-ups remember when the alternative to social peace was their neighbour, or their loved-one, vanishing in the night into a jail cell or worse.

Read the whole thing. I’ve always had a very low opinion of Papandreou pere; it hadn’t occurred to me to think of him as a post-conflict figure, trying to restore social comity to a country still riven by its past. I’m still not sure that was really the case, but it’s an interesting perspective. I’d be interested in comments from our Greek readers.

More generally: the idea that liberal democracy can fix broken societies is an essential part of the EU project. That is, on the whole, a good thing. But it encourages a certain sort of small-scale-map historical amnesia, where all liberal democracies are considered more or less equal, and ugly pasts are relegated to a sort of historical basement where they’re not supposed to be able to affect the clean democratic present.

This is an illusion. Maybe to some extent it’s a necessary illusion. But the EU is full of countries where the dead past isn’t really dead, or even past.

Here’s a random thought: this blog has seen a lot of posts recently talking about economic problems in Greece, Spain and the Baltic States. All of these are countries that were, within living memory, governed by brutal non-democratic authoritarian regimes. Accident? Or is there something else at work here?

This entry was posted in A Fistful Of Euros, History and tagged , by Douglas Muir. Bookmark the permalink.

About Douglas Muir

American with an Irish passport. Does development work for a big international donor. Has been living in Eastern Europe for the last six years -- first Serbia, then Romania, and now Armenia. Calls himself a Burkean conservative, which would be a liberal in Germany but an unhappy ex-Republican turned Democrat in the US. Husband of Claudia. Parent of Alan, David, Jacob and Leah. Likes birds. Writes Halfway Down The Danube. Writes Halfway Down The Danube.

30 thoughts on “About that Greek public sector

  1. I think we too often fall prey to the tendency to compare a thing to some ideal alternative, instead of comparing to a realistic one. Italy was for many years the poster boy for a country run on clientelism, facilitated by an enormous and sclerotic public sector. In a traditional liberal view, this sector was an obstacle to economic development. But in the more comprehensive view you mention above, this system was both a kind of national glue, ensuring that patronage gets doled out evenly, and as a marked improvement over Italy’s conflict-ridden national past.

  2. Could it be argued that Poland confronted its authoritarian past earlier than most of the rest, in the 1980s, and learned appropriate lessons like an aversion to debt then?

  3. Mr. Muir,

    Thank you for linking to this article. In a nutshell, I find it very much to the point.

    A pendulum needs to swing a few times back and forth before balancing at an equilibrium. In Greece’s recent history it has swung back many more times than forth.

    BTW, I would like to point your attention to the fact that there’s too much talk about the Greek public sector in the Greek and international media and very little about the sorry state of the rights of private sector employees.

    Thank you again,
    A Greek private sector employee who has recently seen his salary slashed by 10%.

  4. Assuming its conventional definition, within living memory, World War II happened, followed by the Cold War.

    So even if you discount the Nazis as a force lingering in the memories of only only the most elderly, a significant portion of Germans grew up under a pretty authoritarian regime. Doesn’t seem to be causing them too much political or economic strife these days.

  5. Douglas,

    As far back as you care to remember, public sector jobs in Greece have been a way for the dominant faction to cement its power. For most of the history of modern Greece, that faction has been the nationalist right. For much of that time, the relevant restrictions were explicitly writ into law (e.g., you had to sign a declaration denouncing communism, I think right up to Papandreou’s election in 1981).

    Papandreou’s election in 1981 was the first smooth democratic transition of power in modern Greece. When he followed it up by filling the public sector with supporters, or at least non-rightists, most Greeks felt huge relief. Sectors such as education (not to mention the military or the judiciary) were in desperate need of purging, as you may imagine.

    Now, there is no doubt that his example helped perpetuate the view of public sector jobs as bargaining chips in the hands of politicians. Much as I dislike the man, however, it’s not obvious how else he could have acted in this regard.

    @Jordan: how do you explain the irrational fear of inflation that shapes German economic debate to this day? My favorite explanation involves memories of the 20s and 30s.

  6. The public sector has been an arena of clientilism in Greece since the beginning of the modern Greek state in the 1830’s.

    There’s a central square in Athens called Klathmonos Sq. Legend has it that it took its name (stemming from the word for weeping) in the 1840’s because, due to its close proximity with ministries and public buildings, it was there were sacked public employees congregated and shouted and cried for their lost jobs in the aftermath of any election where the party in power changed.

    A law guaranteeing the ‘unsackability’ of public servants was first introduced in the aftermath of the 1909 popular ‘revolution’ or ‘coup’ in Goudi.

    Papandreou came 70 years after that.

    BTW It was Konstantine Karamanlis (the uncle of the Kostas Karamanlis who was ousted in the 2009 elections) who legalised the Communist Party soon after he took power after the fall of the military dictatorship in 1974.

  7. Just a small correction to my post above. The square took its name in the 1870’s.

  8. Niko,

    Thanks for the dates and corrections. The comminist party was indeed legalized in 1975, but not all laws restricting employment in the public sector were immediately repealed (for example, those concerning public school teachers).

    By the way, I am not sure to what extent the bloated public sector is behind the current crisis. One little discussed contributing factor is Greece’s disproportionate military spending, by far the highest as a fraction of GDP in the EU.

  9. Try and remember that Andreas Papandreou was a very talented economist, a student and professor of economics at Harvard, professor of economics at Northwestern and he was actually the chairman of the economics department at UC Berkeley. Oh, he also volunteered in the US navy during WWII and became a US citizen.

    In other words, Andreas Papandreou knew very, very well what the outcome of his policies would be and as someone who obviously chased a certain American dream, it was very strange to see him rail against US policies, both economic and other.

    I personally am so cynical with Andreas that I believe he had secretly calculated that with EU structural aid (3-5% of GDP for years), he knew he wouldn’t be around to foot the bill so he spent like a tycoon, hiring anyone he wanted into permanent jobs and guaranteed pensions, thus guaranteeing his popularity forever in the Greek psyche. To this day, in politics, you say the name “Andreas” and that can only mean the former prime minister. Even though it’s a very common first name, people associate it ONLY with Andreas Papandreou.

    Of course, he did a lot of good, especially on the “social” front, as Greeks were finally able to freely enter any profession and he didn’t care if you were communist or fascist or whatever. He really did usher in an era of social freedom that didn’t exist before.

    But today’s mess that Greece is trying to get out of, has Andreas Papandreou’s fingerprints all over it.

    And the really ironic part of it is that his son, George, the sociology graduate and current prime minister is the one who will have to solve the financial mess that his father, the economics wizard, started.

  10. It is very interesting noting that all countries that had a dictatorship experience similar problems.
    I won’t comment on that though.
    I will comment on public sector since it is a big issue nowadays in my country Greece.
    Public sector is definetely huge in Greece as opposed to the private sector.
    The main income in Greece comes from small family businesses.This is our economic steem-maker right now.
    Greece’s public sector is NOT the main problem.The main problem is how governments, left or right spent money in Greece an for what reason.
    Let me explain this: We used to give farmer subsidies as an extran income in this country.There was and there isn’t any plan on how these subsidies are goint to be invested so that we may improve our productivity in agriculture.Farmers ask polititians what to produce in order to get bigger subsidies!It is absolutely crazy!
    Same thing happens everywere in Greece.Now that the “party is over” we face all problems at once.
    Huge public sector without ANY accountability!Everyone does whatever she wants working only in good consience!
    No accountability!No motives to work hard and with morality!Nada!
    Plus a secure job for life,small working hours.I have many friends working in public sector working only a few hours and during these hours go for shopping etc!And all of them finish work at 3 p.m. the latest!They have the whole day for home-shopping and they go during working hours!
    Go to a Greek public service on a Friday before a bank holiday.They go for ouzo!Amazing!Go to ask a question to the tax office.You have to wait in huge lines JUST TO ASK A QUESTION!
    The problem is NOT the huge public sector.It’s HOW this sector works.I don’t mind a public servant to receive good money relatively to me that i work in private sector.BUT i want him to be productive,with good quality,good behaviour towards me,treating me like they treat me when i go to a good restaurant where i pay good money to eat!Because a public sector employe is paid by MY productivity money.
    Thank you and sorry for the big comment.

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  13. Here is a post by a Greek who is not a civil servant… yet… hehe.

    Well, the civil sector is not only filled with people from the right or the left but covers the whole political spectrum and even with people outside of these political fractions. An anarchist could be a civil servant as well. Even if the majority of the servants follow the two big ruling parties in Greece it doesn’t mean that the inherent problems originate from the civil war necessarily. I would strongly argue that Greece’s cultural environment is what influences the life long mentality of the civil sector.

    This and rent – seeking behavior which promises to eject another civil servant position in exchange of more votes whenever national elections take place.

  14. Speaking of empathy, today’s Kathimerini (the greek version) has an article on the costs of the parachure agreed by the state with the former employees of Olympic Airways when the airline was wound down. The law was approved by the parliament under the previous government (New Democracy) and is being channeled along by the resent one (PASOK).
    Most of the few thousand employees will go into early retirement at an estimated total cost to the state of 1.3 billion euros — yes, BILLION. Their average age is 48-50 years (yes, forty-eight to fifty).
    Per the article, the ministers of finance and labor are trying to figure out how to handle the matter. The government appears to be legally bound to honor the terms of the agreement, but the cost is, ahem, prohibitive.


  15. As NikosR correctly pointed out, unsackability of public servants was a Venizelos and not a Papandreou invention and was in response to every government putting their supporters in every public sector position.
    The civil war has nothing to do with this.
    Now, there are different types of ‘unsackability’. Judges, for example, are there for life. They cannot be sacked unless they are convicted of something really serious. They can rule that pigs can fly and (if it is a second degree decision) noone can question their judgement. They can determine their own pay raises(and in fact this was one big extra cost incurred by the previous administration). And, if a law would be passed to end this, who do you think would get to rule on its being constitutional?
    Other public sector employees are sackable if their position is cut. So this is not a legal issue, but a political one. Morally there is a problem because perhaps many years ago you made a contract with the state: You come work for me with such conditions(including fairly low pay, perhaps unfit supervisors, but unsackability). Changing the terms of the contract does not look right.

    The problem is Greece is the bitter experience that one is trying to fill a bottomless pit. Any sacrifices will be wasted by the state, so what’s the point. We badly need a new party.
    It’s true that one can find many excuses, like the military expenditures(and the EU’s policies on these issues are insane: The US would not
    talk about bilateral issues between California and Mexico and would not be talking to Japan if it occupied a part of hawaii. On the one hand we have a common currency and various laws, and on the other no common defence-which would be a great maney-saver too: Instead of having 30 armies doing nothing most of the time, you have one capable of defending Europe from the Falklands and Perehil to Cyprus and Poland.)
    The bottom line though is that because of this, Greece should be more efficient, not less.

  16. Echoing Tomasz, I don’t get why the experience of dictatorship would destroy Greece and Latvia but not Slovakia, Slovenia, the Czech Republic, Hungary, the eastern half of Germany, Taiwan, or South Korea. Poland may have come to terms with its authoritarian past, but none of those other countries has. Germany didn’t need any contrition about the Stasi to run low structural deficits.

  17. The private sector is no shining example either. I have myself in my own spare time built systems for my work in the company I work that are much better than any commercial product. Since the company has subsidiaries in other countries, these things could be marketed and used there too for a fraction of the cost-and no maintenance costs- of a commercial system. So this would create income and jobs. Instead, the company decides to buy commercial junk from abroad, without even bothering to evaluate. This is an example of one’s wish being “that the neighbor’s goat dies”- instead of looking for something positive for yourself. When shortsightedness and plain stupidity rules,
    you cannot expect any good outcome!

  18. Alon Levy,

    The claim was never that a troubled past inevitably leads to bad economic performance. The claim was that in order to understand current economic performance it is better to look at the history of a country’s political and economic institutions, rather than relying on generalizations about national character or local culture. Do you disagree with that?

    By the way, I also cannot resist pointing out that your comparisons are a bit absurd. The South Korean economy went bust and had to resort to the IMF barely a decade ago; Germany struggled, and still struggles, with the aftermath of reunification (check out the unevenness of unemloyment figures, the rise of neo-Nazism in the East, etc.); Hungary is, as we speak, hardly in any better shape than Greece; and so on and so forth. Don’t make quick judgments based on what happens to dominate the headlines for the last few weeks.

  19. Fall in Queue: well, I’d disagree with the notion that you should generalize based on national culture, too. Cultures shift, and as for historical attributes, there’s really nothing that the current batch of crisis-stricken European countries have in common that the rest of Europe doesn’t.

    The South Korean and German examples of bust aren’t that good. The explanation in the post seems to be that a history of authoritarianism matters because it would lead a country’s political class to be more accommodating to interest group pressure, creating fiscal irresponsibility. Well, South Korea has this history, but that didn’t prevent Kim from going head to head with the chaebol. Whatever caused the crisis, it wasn’t post-reform politics – for one, Kim only took office a couple of months before the crisis. Germany, maybe. It did pour a lot of money into the East. But countries routinely subsidize their poor regions, and take economic hits in their rich regions for it, regardless of history.

    If you’re just expanding the definition of crisis and stagnation to include everything in recent history, then South Korea isn’t any different from Sweden and Finland, and Germany isn’t any different from France.

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  22. Now wait: let’s examine this theory of history in objective detail.

    You’re telling us: at time T, regime A takes over from regime B. At time T, the civil service is reasonably small, the government is well-run, the economy is doing fine.

    At time T+40 years, the country is bankrupt, the civil service is bloated like Brezhnev, and anything that remains of the private sector is mired in apparently eternal depression.

    And, naturally, this is the fault of regime A! Unbelievable, gentlemen – unbelievable.

    Go rent a copy of “Z” and watch the first 10 minutes. You’ll see what’s wrong with Greece. Greece fought the mildew. And the mildew won.

    Amazingly enough, Dimitrios Ioannidis is still alive, albeit in jail. Presumably he can read Kathimerini as well. I wonder what he thinks Greece’s problem is. I suspect his theory makes a lot more sense than the Economist’s! Do the words “tanned, rested and ready” ring any bells for any of you Eurotrash?

    Ioannidis! Ioannidis! Because history isn’t over…

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