You can tell people you don’t cheat on taxes. And when your best friend, coworker or brother tells you an anecdote on how he got away with something, tell them you would have just paid it, because you want to live in a country that isn’t corrupt and broke.
Neat idea. I actually live in a state where two years ago less than 1% of the population self-reported purchasing anything online that didn’t collect appropriate sales taxes up front (such as Amazon at that time). The IRS estimates around 18% of income isn’t properly reported in the US, either. It’s also extremely rare to see people actually going the speed limit these days. Many people cheat when they’re able to cheat, and they generally don’t brag about it. That’s nothing special about Greeks, just that their system essentially makes it a bit easier to get away with it.
But anyway, all of these plans for greater austerity hurt the people who didn’t cause it in the first place. That’s not to say that they shouldn’t happen - they might indeed be needed - but I’m getting a little tired of a “The Greeks deserve it” mentality that seems to be gaining traction.
I think income inequality is also a reason for the cheating. When you see a system rigged against you, there is no reason to actually respect it.
I disagree on a number of items here and will try to reply in detail. Short version: Yes the USA has a corruption problem too, though not nearly as severe as Greece. Going 10 clicks over isn’t the same as lying repeatedly to save on taxes. You also can’t say “it’s not the people man, it’s the system!” The system and the people are the same, they’re a democracy in the EU. The blame does belong to the people and their elected representatives.
But I know most people lie on their taxes (and pirate TV and games etc etc). I try not to. I’m not saying it’s easy either, corruption is probably the hardest thing society has to manage.
I didn’t say it’s as severe in the US, so that’s not something you’re disagreeing with. The IRS states it gets shorted by about 18%, while Greece gets shorted about 25% - nearly half again as much. I also didn’t say that speeding is the same as cheating on your taxes. In many ways, it’s worse - more deaths occur because of people doing that. It’s feasible that someone may die because my state didn’t collect the sales tax. However, the reduction in reaction time that extra 10 MPH makes will indeed cause many deaths in a very direct manner when leveraged over all the cars out on the road. That said, the severity wasn’t even on my mind. Rather, the examples were to point out how people cheat when a system allows it. Water finds the easiest path downhill, so to speak. And yes, I agree with Alstein - the worse things seem, the easier that path of cheating seems when compared to following the rules.
Oh, and “the system and the people are the same” because it’s a Democracy just doesn’t match up to reality. I’m sure you know better than that, so perhaps you meant something else?
Gorath
1586
AFAIK things only got worse again early this year, when the current government took over.
The IMF is a strange beast. This instituition is far from neutral. I agree though that they provide the best numbers available. I also agree that Greece needs a second debt cut. This is not the time to negotiate about it though.
The two main things that Greece hasn’t managed to do in the past 5 years is reforming it’s tax collection and reducing corruption. One of the major reasons for this is that previous governments were involved in both, so political drive for change was very limited. I think the ideal party to enact reforms like these is Syriza, since it’s an outsider and doesn’t have a history within the established political system. It would have been nice if the Eurogroup and Syriza could have agreed earlier this year to work together on that, but it’s looking more and more like a lost opportunity. Of course, even with political will these are areas that are difficult to reform and results are not likely to come soon.
Not even Syriza wants to touch tax collection and corruption, let alone the more-pensions-than-pensioners problem and the gazillion no-show civil servants. But the two points you mentioned are the key for a fair deal with the rest of the EU. What sense does it make to pump billions of EUR into a country full of corruption? In this condition Greece is a bottomless pit.
What they really need is a zero tolerance law against corruption. Fire everybody on the spot who gets caught. Offer 5k in cash to everybody who brings enough evidence for a corruption case which holds up in court. Won’t happen though.
[…] In fact, I read somewhere that Germany actually needs Greece to repay to not miss it’s own SGP targets.
I don’t know, but I doubt it. Mr Schäuble is pressing for a budget without new debt - for the first time in a very long time.
Everybody I know and pretty much 100% of the press expect that the money given to Greece is lost.
So, yeah, this recent deal is just yet another non-solution, designed to make it look like Greece was given yet another chance.
Agreed. We’ll be in a similar situation again in a few years. The current EU has a serious lack of discussion and problem solving skills.
Nezz
1587
There’s my fundamental problem with the EU regime: it wants to level all cultural and legal differences across a really big, diverse continent. Whatever it is the Greeks are doing in their country, it worked for them before the Euro. Now we call it corruption and nepotism, and tell them how bad they are. They used to farm and consume what they farmed; now we tell them they must liberate their markets and allow their famers to be driven out by cheap imports. What used to be able to co-exist is now forced to compete, and the dissension this causes will only continue to fester.
I really don’t want to care whether the Greeks adapt northern accounting practices or the Protestant work ethic, or which politicians they elect. It should be their business. Any regime that makes it mine is incredibly scary.
ShivaX
1588
To be fair, they signed up for it. And when you start looking for help and money, odds are the people your asking for it from are going to have stipulations. Especially the third time around.
Philosophical I agree with you let the Greeks be Greeks and do stuff their own way. But there were real economic benefits for the people when Greece joined the EU in 2000. Greek economic growth almost doubled from over 2% to over 4%, from 2000-2007. The 1980s were a particularly ugly period for the country with GDP growth at only .7% per year so I wouldn’t call the old Greek system working all that well for the Greeks people.
Eh, They had a dictatorship from 67 to 74. That’s the previous period of super growth). But the huge grow you see in that period is probably due to much increased levels of nepotism and corruption than usual (which does allow for growth, although not necessarily for freedom or competition), and the fallof in the 80s much likely adjustments from that into what the real economy under saner competitive terms really was. Oh, and also adjustments from the war they lost against Turkey.
There’s no such thing as an old Greek system, such as there’s no such thing as a German tradition of fiscal resposibility. Those two things (the Greek system people despise and the German fiscal moralizing, are fairly recent phenomenons that we shouldn’t allow to be descriptive of countries as a whole.
If Kansas became insolvent (The most likely state to do so), I’d expect Congress or the President to put someone in charge of their budget.
Gorath
1592
Some numbers to put the help Greece received so far into perspective can be found on page 2 of this official European Commission document.
Until 2013 Greece received ca. 380bn€. That’s 33600€ per Greek inhabitant, 3% of the EU GDP and 177% of the Greek GDP.
The Marshall plan had a volume of ca. 13bn$ (15% of it as loans, the rest grants) which was ca. 5% of the US GDP and ca. 2.1% of the recipient countries’ GDP.
According to Wikipedia that’s 127.1bn$ in 2013 money. Germany received roughly 11% of this, all as a loan. Greece received roughly 5.4%.
German experts estimate that ca. 30-40bn€ would be necessary to implement a BIG tax reform in Germany. A project everybody knows is necessary but no government dares to do because the German tax system is a monstrosity. Officially “we don’t have the money to do it”.
magnet
1593
The Marshall Plan was explicitly designed to boost European economies, whereas the purpose of the Greek bailout is only to make sure creditors are paid on time. There’s a big difference between giving a country a loan, and giving a country a loan + forcing them to commit to austerity. For instance:
Also, the vast majority of the German “loan” was not paid back to the US. It was lent by the US to German companies, but paid back to a German fund that used the repayments to make loans to more German companies.
In the early days, the money was used to rebuild Germany’s heavy industry and infrastructure. Later, the ERP functioned as a kind of German Small Business Administration, making loans to small and midsized start-ups. During the Cold War, it helped subsidize West Berlin.
I think even Syriza would be delighted to get a deal on such generous terms.
Real question - can that actually happen under the law as it currently stands, or would it take some kind of amendment?
Reemul
1595
Yep and that someone would be from Russia or Iran I suppose.
California did issue IOU’s once. That said, it hasn’t happened before as far as I know- however, Puerto Rico wants to declare it, but territories definitely can’t.
Timex
1597
What exactly is meant by “IOU’s”?
I mean, aren’t those called “Bonds”?
Not in this case. I seem to recall vouchers that could be redeemed – maybe – when the money was available, with no interest and no tradable market value.
The California vouchers were the result of a budget fight, not insolvency, iirc.
Aleck
1600
Dan, where does that 25% figure come from? The numbers I’ve seen are typically 75% to 100%.
One weird economic fact that’s been bouncing around: back in 2012, the University of Chicago published a paper finding that many greek self employed professionals spend more servicing their debt (a number that’s verifiable) than they report as gross income (a number which is clearly cooked). Since people typically don’t spent more than 30% or so of gross income servicing debt, that implies that many self employed professionals – of which there are a much higher proportion in Greece than most of Europe – could be under-reporting their income (and hence underpaying their taxes) by 66% or more.
