by NICHOLAS D. KRISTOF
Europe declared war on Keynes, and Keynes is winning. In the United States, Republicans lambaste President Obama’s stimulus package as a failure and insist on bone-crunching budget-cutting. If you want to know how well that works, come visit Europe — especially Greece. Yes, Greece needed a wake-up whack and economic reform, but Republican-style austerity knocked the patient unconscious.
Contrast the still-shrinking economies of Europe with the stirrings of recovery in the United States, and you feel lucky to be an American and a beneficiary of President Obama’s stimulus.
It’s stunning here in Athens to see many traffic lights not working, to see beggars pawing through garbage for food, to see blackened ruins of shops burned in rioting. I was even greeted by a homeless man who spoke impeccable British-accented English.
That man, Michael A. Kambouroglou, 35, claims that he studied English literature at Cambridge University and worked for years in the tourism industry, most recently at a five-star hotel. He told me that he had enjoyed a good life, visiting the United States and traveling around the world, until the day nearly a year ago when the collapsing economy caught up with him, and he was laid off.
“To be honest, I never thought it could come to me,” he recalled. “It happened in a flash.” Kambouroglou says he goes out every morning, knocking on doors and looking for work, but in this economy it seems hopeless. The overall unemployment rate here is 21 percent — 48 percent among young people — and the European Union forecasts that the Greek economy (and all of the euro zone) will shrink further this year.
When Kambouroglou’s savings ran out, he moved under a bridge in Athens. The suffering is widespread. Some 250,000 Greeks now receive free meals from churches or shelters, according to the Greek Orthodox Church.
There’s no doubt that Greece had been living recklessly and needed structural reforms. While much of Europe was fundamentally healthy until the crisis hit — the caricature Americans hold of a socialist Europe in decline is a vast exaggeration — Greece truly was a mess. For example, if you’re a business owner, taxation often works like this: Instead of paying a tax bill of, say, $100,000, you pay $40,000 to the state, hand a $20,000 bribe to the tax collector, and keep $40,000.
Republicans are right to see in Greece some perils of an overgenerous government: The state sector was bloated, early retirements and pensions were sometimes absurd, and rigid labor markets undermined Greece’s competitiveness. But the problem was not a welfare state — Greece has much less of a safety net than northern Europe. Rather, it was corruption, inefficiency and a system in which laws are optional.
I drove around Greece and found driving here easy because traffic rules don’t seem to matter. If you’re blocked by a one-way street, you barrel through in the wrong direction. Stop signs are merely suggestive. No-passing markers before blind turns mean: pass anyway, and pray. When an entire economy operates without rules, it has a problem.
Yet instead of structural reforms or improved tax collection, what has changed in Greece, so far, has mostly been slashed budgets. And, as in the rest of Europe, austerity in the middle of recession has made matters worse — just as John Maynard Keynes predicted.
Granted, there are no easy solutions for Greece, but this path doesn’t seem to be working. “It might end up as a social revolution,” Kambouroglou said grimly. That’s too pessimistic, but my hunch is that the latest rescue package will fail (except that it will buy time, perhaps its purpose) and that Greece eventually may leave the euro zone. In any case, the rescue packages seem more about saving French and German banks than saving Greece.
Countless Greeks are giving up on their homeland and emigrating to northern Europe or Australia. Gloom is as thick as a morning fog on the Peloponnesus.
“The state has ceased functioning,” editorialized an Athens newspaper, The Kathimerini.
That’s an exaggeration, but schools, hospitals and social services are devastated. Staff at some halfway houses for the mentally ill haven’t been paid for six months, and electricity has been cut off. “And it’ll get worse,” predicted Dr. Cristos Panettas, the chief psychiatrist of the Psychiatric Hospital of Attica.
One of the earliest recorded economic crises in the Western world came in Athens in the 5th century B.C. Fortunately, Athens was then led by the great Pericles, an early Keynesian who did not respond by slashing budgets.
Instead, he ordered a public works initiative and built the Parthenon. I dropped by the Parthenon the other day, seeking inspiration, and a guide, Miranda-Maria Skiniti, was incisive about the lessons: “We need Pericles today.”
There’s ageless wisdom there for Greeks, Europeans — and Americans.
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Nicholas D. Kristof, a columnist for The New York Times since 2001, is a two-time Pulitzer Prize winner who writes op-ed columns that appear twice a week.
Mr. Kristof grew up on a sheep and cherry farm near Yamhill, Oregon. He graduated Phi Beta Kappa from Harvard College and then studied law at Oxford University on a Rhodes Scholarship, graduating with first class honors. He later studied Arabic in Cairo and Chinese in Taipei. While working in France after high school, he caught the travel bug and began backpacking around Africa and Asia during his student years, writing articles to cover his expenses. Mr. Kristof has lived on four continents, reported on six, and traveled to more than 150 countries, plus all 50 states, every Chinese province and every main Japanese island. He jokes that he’s one of the very few Americans to be at least a two-time visitor to every member of the so-called Axis of Evil. During his travels, he has had unpleasant experiences with malaria, mobs and an African airplane crash.