After the Bell: The lesson of the slippery economy of Greece

I’ve recently returned from a holiday in Greece and I’m reminded that you visit places for their ancient history, but you find yourself inadvertently fascinated by their modern history. Of course, visiting anywhere as a tourist is somewhat of a false experience; you are almost by definition visiting the nicest places; you are in a great mood because of the no-work situation, and people are almost uniformly courteous and friendly because, well, tips. 

Having said that, may I just say that Greece is fabulous. 

The ancient monuments were as spectacular as we expected and as the guidebooks claim, if not more so. The islands are as beautiful as their postcards and too much fun. You can’t help but be overwhelmed by the smarts of people who lived in the ancient eras – their buildings, sculptures, and inventions – and what great delight they took in their myths and stories that make The Game of Thrones seem tame. 

It was a joy, too, to see that Greek people still attend plays by Euripides as part of the Athens Epidaurus Festival which runs for three months, can you believe, in the old Epidaurus Theatre. Of course, it also hosted Coldplay and Sting.

As it happens, the Epidaurus amphitheatre for 14,000 people, with its astounding 6th century BC semicircular stone seats and perfect acoustics, is also part of the Sanctuary of Asclepius, possibly the world’s first healing sanctuary. 

Asclepius was the ancient god of medicine, son of Apollo, and bearer of two entwined snakes around his staff, which is why pharmacies often use the two-snake symbol. Did you know that - I didn't. The Epidaurus Theatre was part of the sanctuary because the ancients believed that apart from eating more veggies and doing more exercise, culture was an essential part of good health and the process of healing. And that, my friends, among many other reasons, is why we love ’em.

You almost have to tear yourself away from being mesmerised by the past to notice the present – and the present doesn’t look too bad. The Greek financial crisis, which devastated the economy, is now receding and the long, hard slog to financial stability is almost over. 

At a rough guess, about one in 20 shops in the centre of Athens is boarded up – fewer than you would see in downtown Johannesburg, or Portland, Oregon, as one fellow tourist told me. 

Greek government debt is now investment grade again. 

The country has just adopted a six-day work week for some industries. I am not making that up. Our guides told us that Greeks who left during the financial crisis are now returning, and building is happening everywhere. 

And yet, you also caught a whiff of irritation and impatience about Greece’s current state, reminiscent, oddly, of South Africa. There is a style of frustrated, angry questioning: Why, oh why, is this or that being done… or not done? Why, oh why, is the Greek shipping industry not building ships anymore? And so on. 

There is of course no comparison between the countries, but there is one lesson SA could and should learn from Greece – when it comes to excessive government debt, just don’t go there. 

There are SA commentators who claim in reputable business newspapers that SA is under-borrowed and should turn its face away from “austerity” policies. Indeed, this was the central policy proposal of the Multi-Party Charter, the serious name for the Moonshot Pact. Remember that? It seems so long ago.

What happened in Greece, simply put, is the old lesson that a government can survive one crisis, it may survive two, but it cannot survive three at the same time. Greece had, for years, a moderately popular socialist government, Pasok, which dominated for much of the period between 1981 and 2012. But the combination of the financial crisis in 2009, the southern European euro crisis in 2011 and the discovery that it had been hiding great chunks of its debt turned the country upside down. 

A strong growth period between 2001 and 2008, during which it was handily outperforming most of the rest of Europe, presumably relaxed economic concerns, and the perennial Achilles heel of socialist governments – excessive debt – suddenly hit hard. 

The triple crisis forced austerity on a population somewhat in disbelief and keen to blame outsiders, mostly Germany, for being hypocritical and not helping with fiscal bailouts. Ultimately, Europe did help somewhat, but not before a devastating period where GDP collapsed by a frightening 10% in 2011, getting hit again, like everywhere, during the pandemic. 

There didn’t seem to be much enthusiasm for Pasok’s old rival, New Democracy, but the centre-right party has maintained its 40% or so support level. Pasok, on the other hand, was almost extinguished by the crises, although it has come back marginally in the past few elections, getting 12% of the vote last year. 

Greek GDP growth has been higher than European growth for the past four years, made tangible by the multitudinous construction sites around the city.

But the crisis is plainly not over: Greece still has a gobsmacking debt level of 162% of GDP and until that is fixed, it's difficult to say the country is fully recovered. Even more, I suspect Greece has a unique selling-point kind of problem to solve, much like SA. For Greece, the obvious answer is tourism, which is now easily the largest sector of the economy. But what beyond that? 

Still, overall, it’s a credit to the country that it didn’t opt for some crazy experiment, like dumping the euro, but rather took the long, hard road and stuck it out. Like Odysseus, the country tied itself to the mast and avoided the tempting siren calls, steering clear of the rock of Scylla and the whirlpool of Charybdis. 

See, if you are Greek, there is always an analogy out there waiting for you, easily within reach. DM

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