In a recent presidential debate, Republican candidate Mitt Romney argued that, under Obama’s leadership, the United States was on the road to a debt crisis like Greece’s.
But “fiscal cliffers” such as Romney, Speaker John Boehner and other Tea Party co-horts should note: America is not Greece.
I say this from a very personal and professional frame of reference. I am both a U.S. and Greek citizen, and I have lived and worked in both countries as a banker and as a local taxpaying citizen. I also have a strong knowledge of both Greek and American history and culture. Unlike agenda-toting politicians and policymakers, I have “been there and done that” in both countries.
So, let’s talk about the comparison. Both Greece and the United States are highly indebted, but what happened in Greece—in this case, economic collapse—will not necessarily happen in America, unless you follow the “cliffers” ’ agenda: calling for a choking austerity that throws out the baby with the bathwater. This “therapy” has changed nothing in Greece but instead has caused accelerated suffering.
Let’s discuss why America is not Greece. First of all, the U.S. is spread across a continent, and has vast mineral, agricultural and energy resources, coupled with the most advanced and flexible labor and capital markets on Earth. Innovation and creativity still have a U.S. address, and the U.S. dollar is not only our currency, but the global reserve currency. If we want to devalue it, we can. Greece has none of these attributes.
Though breathtakingly beautiful and soulful, Greece is a mountainous country of 11 million citizens inhabiting a landmass considerably smaller than the state of Utah (51,000 square miles versus 86,000 for the Beehive State). While the country produces some of the tastiest and healthiest food on the planet, Greece is hardly an agricultural powerhouse. Other than tourism and shipping, Greece is among the least competitive countries in the Western world.
Of course, vast natural and agricultural resources alone will not save a country. But here we come to the real reasons why America is not Greece: civics and culture. America was built on strong, flexible democratic institutions by people who (generally) valued the rule of law. Greece emerged via a heroic but haphazard rebellion out of the wreckage of the Ottoman Empire, after 500 years of Turkish rule. Half a millennium is a long time, and the Greeks had absorbed Ottoman modes of governance over the course of the centuries. Ottoman rule was capricious and cruel but could always be leavened with graft. A government position was not a public trust, but a means to access and to plunder the public purse.
Notwithstanding Greece’s emergence in the family of European nations, the methods
and mentality of government remained locked in a corrupt, cronyistic past. Like their Turkish predecessors, office holding for Greek public servants provides a means to enrich oneself and one’s circle, rather than to develop the country. It is no surprise that the Greeks’ well-known talent for entrepreneurial energy was most pronounced in shipping—which was not tied to Greece—and to emigration abroad.
Not much of this has changed. Recently, a pair of Greek techies, after years of trying to establish a business in Greece, decamped to California where they incorporated—online in 15 minutes—and ended up selling their app to Google. Were the Greek bureaucracy less concerned with obstruction and graft, this company could have been Greek.
Ultimately, the most successful and freest societies are those with a culture—of governance, of economics and of society—that respects individual genius and eccentricity and fosters transparency. Greece does not fit this category, and this is why that country is on the constant edge of a fiscal cliff.
Ironically, while membership in the European Union was supposed to modernize Greece, the flow of structural funds from Brussels had the opposite effect, keeping Greece’s calcified system afloat. A wall of money from the E.U. suddenly democratized graft and provided Greek politicians and officials the opportunity to expand civil service as a patronage tool and to dole out funds heretofore unavailable. Until recently, few questions were asked in the clubby atmosphere of Brussels, and in any event, the E.U. Commission had no powers analogous to the U.S. federal government.
Embracing the Euro resulted in a spending binge; Greece could borrow at a vicarious German credit rating, consumer interest rates plummeted, and the government and people went on a spending spree. Not just in Greece, but in Spain, Portugal and Italy—countries whose cultures tolerate corruption more readily than countries from northern Europe.
Beyond the ludicrous economic comparison between America and Greece, there is a great deal we in the United States can learn from Greece. First, that choking austerity in economic hardship does just that—it chokes. Second, that the real deficits in many parts of Europe, most illustratively in Greece, are civic and cultural, rather than financial; every time a political and economic upheaval happens elsewhere in the world, their loss is America’s gain. The best and brightest, and the most hardworking and optimistic, make their way here.
While the U.S. deficit is too high, and living beyond our means is both irresponsible and dangerous, in analyzing an economy, you need to look beyond the numbers to the underlying culture. This is America’s greatest asset, and Greece’s greatest liability.
Alexander Billinis is an international banker who lives in Serbia.
[Editor's note: This version clarifies the sentence that the U.S. stretches across the North American continent, but is not itself a continent.]