In Greece, It's the Culture, Stupid
As Greeks once again take to the streets in protest of new austerity measures and the European Central Bank wonders how it will ever get out of the mess it's in without starting the Euro printing presses, experts from Beijing to Berlin ponder anew how to create economic growth -- or at least staunch the decline. There are many fundamental economic reasons why Greece ended up in a downward spiral: low productivity, antiquated land ownership regulations and red tape reminiscent of the former Soviet Union, just to name just a few.
However, as Greek debt approaches 200 percent of GDP, unemployment and social unrest continue to rise and the possibility of another round of defaults hangs in the balance, it becomes more and more apparent that underneath the tax evasion, corruption and uncompetitive business climate lies a culture that is perpetuating the economic crisis. That is not to say that Greeks are not hard working, or that most of them spend time marching in the streets and burning down the Christmas tree in Syntagma Square. However, in countless business and personal interactions with Greeks, some common themes emerge.
First, and perhaps most importantly, is the lack of a ‘win-win' philosophy. The belief that someone is continually taking advantage of you permeates personal and business relationships in Greece, effectively stopping any win-win scenario in its tracks. In line with that thinking, in order not to be taken advantage of, your goal must first be to take advantage of the other person, or business partner. In Greece, life is a zero-sum game.
Second is a pervasive culture of distrust, perhaps most obviously exemplified by Greek citizens' paradoxical relationship with government. Between direct government employment and employment in state-owned enterprises, roughly 1-in-4 Greeks are dependent on the country's extensive bureaucracy for their livelihood. Prior to the Troika-forced austerity measures, public sector employees worked shorter hours and earned higher wages than those in the private sector and had extensive pension and bonus perks. At the same time, Greek citizens distrust their government to a degree not seen in most democratic political systems. This mutual distrust is highlighted by widespread tax evasion and a general unwillingness to comply with other rules in order to create a better society.
Third, is the society's underlying xenophobia. The public expression of this is coming to the fore with the rise of Golden Dawn, a political party whose agenda is overtly nationalist and populist. For an economy where tourism accounts for 15 percent of the economy and 1-in-5 jobs, open expressions of xenophobia could thwart efforts to revive this sector.
Why is understanding the underlying cultural characteristics important in the context of the Greek economic crisis? For the Eurozone and ECB it could very well mean that if Greece's fortunes do not improve soon, the Greeks will not hesitate to bring about a 'lose-lose' outcome. In a world where life is a zero-sum game, if I'm losing, then the other side must be winning at my expense -- better to bring down the entire house rather than just my piece of it.
The pervasive environment of distrust in their own institutions and among broader society will continue to undermine Greek efforts in support of true reform. A culture that often applauds using deception to outsmart others fundamentally harms the business environment. Greek representatives of foreign companies have been known to undermine their foreign business partners by secretly competing with them for potential contracts. It is also not uncommon for Greek representatives of foreign companies to get paid off by their Greek competitors to lose contracts. In essence, the foreign company is betrayed by the very partner it thought was promoting its business in Greece.
To be sure, this state of affairs is not something Greeks themselves enjoy. They seem to have created a society that they find disheartening, but are nevertheless unable to change. As a result, corruption and cynicism are widespread and deeply rooted. It remains unclear how things were allowed to get so bad in this ancient land -- perhaps it is rooted in a legacy of occupation, civil war and dictatorship. But blaming the past for the failures of the present is not a recipe for economic revival -- and that is something Greece desperately needs.