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Complex Layers of the Greek Debt Crisis

by Jen Hinton on 24th September 2012

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As a foreigner living in Greece, many of my friends and family scattered around the world have asked me about my take on the Greek debt crisis.  If there’s one thing that I like to tell people about the crisis, it’s that it is complex.  Most people and especially most media outlets try to simplify it, taking just one or two issues on. But there’s so much happening on so many different levels, that it can’t and shouldn’t be watered down without at least acknowledging the inherent complexity.  Whether it’s a journalist who proclaims that Greeks are lazy and now they have to pay for it, or whether it’s a group of Greek people who blame the European banking system… they are all overly-simplified analyses and thus shirk the responsibility that is inherent on every level in the crisis.  Here I will give a quick overview of some of the many levels and many layers of which the Greek debt crisis consists.

The Panorama

Let’s start with the global perspective; the larger, systemic level to this crisis.  The systemic level has many layers.  One layer is the fact that our global monetary system is based on debt, that all of our money is interest-bearing debt and that the system requires there always be much more debt than actual money in circulation. This is a fundamental flaw and unless it changes, we will face crisis after crisis.

Another fundamental flaw in the global economic system is that it relies on profit and greed as its main drivers and, thus, necessarily creates massive amounts of inequality and encourages corruption.  The #1 priority in our current economic and political systems is profit.  Any system that prioritizes profit over the wellbeing of people and the environment upon which people depend is destined to fail.

Another big question, which I can’t go into in much detail here, as it’s such an enormous issue, is, “Who’s in power?”  It seems to me that the answer is a very complex, and largely unknown mixture of names from multinational corporations, a huge global banking/financial sector, and governments.  Globalization has created a very powerful corporatocracy with all kinds of intricate and dynamic connections between private and public interests worldwide.  And it’s important to acknowledge that while some people clearly benefit from existing power structures (i.e. the multi-billionaires), it is not simple enough to frame this as an “us vs. them” issue, as we are all constantly engaging in these structures in our daily lives.

Austerity is Not the Answer

Some of these global issues are clear to see on the streets of Athens.  For instance, due to this prioritization of profit over people, the numbers of homeless, jobless and people below the poverty-line are increasing dramatically in Greece. The austerity measures have only served to increase the levels of inequality and poverty in a country where these were already issues.  The poorest people in Greece are the ones being hit the hardest by the austerity measures and there is no way to justify their suffering.  It’s something that I can see when I walk through town.  There are families and elderly people digging through dumpsters.  This didn’t exist when I first came to Athens, three and a half years ago.  It is estimated that the homeless rate has increased 25% in the last two years and the suicide rate rose by 40% in 2011 alone (1).  These are obvious signs that we really need to redirect our goals and values, as individuals and as a civilization. There are enough resources and there’s no reason for all of these people to be on the streets, while a group of wealthy people are becoming even wealthier.  This is surely a systemic flaw and one that we have all been playing along with for far too long.

Chaotic History

If we zoom-in even further to Greek level, there is definitely a cultural crisis happening.  Before going into this cultural crisis, though, I think it’s important to give a brief review of the very volatile modern Greek history which, of course, has had an immense impact on the current situation.

As so many other nations, Greece has had a very difficult recent history.  For better or worse, this place of sea and sun is located in an extremely strategic geo-political location; the meeting point of East and West, North and South.  As such, foreign powers have always tried to have a foothold on Greek soil.  Greece was under Ottoman rule for 400 years, until the early 1800s. Then, after a revolution, foreign kings were put in place by Western European powers.  In World War II, Greece was occupied by the Nazis, who ruthlessly slaughtered entire villages. Then, there was a civil war between the Communists and anti-Communists.  After the civil war, the Greeks endured a dictatorship (supported by the US and UK governments) for 7 years (2, 3, 4)). And finally, in 1975, a democratic constitution came into force in Greece and the nation began pursuing a path to become a “modern European country”, with funds from the European Economic Community.  In just a few decades, millions of Greeks flooded to the cities, in a mass exodus from the countryside villages. They got modern jobs and started becoming modern consumers.  But, obviously, Greece had a very different history and, thus, culture from the Western European nations, which is part of why the European funds were misused in Greece (5, 6), contributing to the massive public debt.  These cultural differences also contributed to the huge levels of private debt that people accumulated in order to become modern consumers as quickly as possible.

Cultural Crisis

In the context of the current crisis, Greece is coming face-to-face with a number aspects of its culture that many Greeks don’t necessarily approve of.   The volatile history of the past few centuries (including foreign occupations in many forms) and rapid modernization have created a situation in Greece in which there is very little trust, difficulties in organization and communication, institutionalized corruption, and very hierarchical social structures.

One aspect that many Greeks are not happy with is the acceptability of corruption and cheating that has become a norm in the culture.  The institutionalized bribing and dishonesty have become inescapably obvious and are undeniably part of the current crisis.  The enforcement of laws on all levels ties into this, as well, of course.  I noticed when I first came to Greece that this society is hanging by the string of cultural norms, rather than the rule of law.  Rather than obeying the laws in Greece, one obeys the cultural norms; that is, whatever his/her peers deem acceptable, regardless of whether the law agrees or not.  Greece has excellent laws to protect the environment and people’s health, but they aren’t enforced.  There are laws to protect workers and ensure that employers pay and treat their employees fairly.  However, because laws are rarely enforced by law enforcement agencies or the courts, all too often, the rights of people and other species are violated at the peril of Greek society, as a whole.

Yet, it’s important to note that many of the new austerity laws are enforced.  For instance, a new retro-active tax law that makes employees pay taxes on income gained years ago, despite the fact that tax was already paid on that income at that time.  It is interesting that government officials find austerity measures enforceable, but not environmental and workers’ rights laws.

These are only a few of the cultural aspects of the crisis, but they make it clear that Greece’s historical, cultural and political background make this crisis much more complex than is often acknowledged.  This is not only the place where democracy was born, but also where it has been lost and has been struggling to revive itself.   It is clear that Greece is going through some serious self-reflection and has a great opportunity to transform its cultural narrative into something more transparent, embracing this beautiful country’s uniqueness rather than continuing the quest to be just another rich, modern nation; a quest that so much of the world is caught up in.

Whose Fault is the Greek Debt Crisis?

So, whose fault is the Greek debt crisis?  Who’s to blame?  The way I see it is that we all have responsibility, not just the Greeks.  This is not to say that we are all guilty and should feel bad, but rather to say that we all have the power and responsibility to do what we can to help change the system that is failing everyone.  Greece is experiencing a cultural crisis and that has played a significant part in the country’s current debt crisis.  However, much larger, more significant aspects of the debt crisis lie in the fundamental flaws of the global economic system and, as such, it’s also a cultural crisis for all the “developed” nations of the world.

It is a time of reckoning and an opportunity to create and support alternatives based on the wisdoms gained from these shortcomings.  Are greed and the profit motive really the best drivers of economic activity?  Should our money be based on interest-bearing debt?  Should our lives revolve around consumption in order to grow the economy?

(For more information about the global economic system and its fundamental flaws, check out Free Money Day’s ‘About’ page.)

* Image credit: If you are the creator of this awesome image, please let me know so I can properly credit you.

Additional references:

1) “How are Austerity Measures Affecting Society?”,  University of Iowa Center for International Finance and Development

2) “Operation Gladio“, Wikipedia (see “Greece”)

3) “Under the Eagle’s Claw: Exceptionalism in Postwar U.S.-Greek Relations, Volume 2”, Jon V. Kofas,  (see page 100)

4) “Britain and the Greek Colonels:A blog on British foreign policy towards the Greek junta, 1967-1974”, Alexandros Nafpliotis (The London School of Economics and Political Science)


6) “EU Funds for Projects that Never Existed”, Deutsche Welle, Jannis Papadimitriou

This post was written by

avatar Jen has a very diverse background, with academic and professional experiences ranging from theater to business to environmental studies. Her expertise is systems thinking and she has a contagious enthusiasm for seeking holistic ways of moving beyond humanity’s current crises.

Jen has written 17 posts on Post Growth Institute. Contact Jen

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