I Wish I Had Written That!

by Ira Katz
by Ira Katz

"Letter from Greece" by Napoleon Linardatos (Salisbury Review, Winter 2005) sums up and gives more anecdotal evidence for bad economics and perhaps even worse government than any short article I have read in a long time. From foreign aid to farming subsidies to cultural decay they are all explained in a direct straightforward way that will make readers of LRC exclaim, "Of course!" Unfortunately the full text is not available online from this somewhat obscure quarterly so I will quote from it extensively to bring it to your attention.

He begins by describing one of the usual methods for the European Union to help the poor relations, the public works project.

The Egnatia Motorway across the north of Greece is one of the ‘largest road construction projects in Europe’. Six hundred and eighty kilometers long and 24.5 meters wide, it requires the construction of 1,650 bridges, 74 tunnels, 50 interchanges, 43 river and 11 railway crossings. A modern Greek marvel in the making where at least half of the costs are financed by the European Union. In Greece today, a plethora of public works are completed or in progress thanks to the generous aid of the EU. Billions in funds have been transferred southward to the EU’s only Balkan state member since its entry in 1981. By the 1990s, that assistance averaged about 3.5 percent of GDP yearly. To put it in perspective, it would be as if the U.K. received around $62 billion from the EU in 2004. For almost a quarter of a century, Greece has been the beneficiary of a European willingness to become one cohesive whole [or at least the willingness of the bureaucrats in Brussels, my aside], but despite the bridges, ports, tunnels, roads and agricultural subsidies, Greece remains as far away from the European spirit as it did when it joined the Union.

There is always some optimism when a grand public project is announced. The Athens underground was supposed to solve the city’s traffic problems, the Olympic Games were supposed to revitalize tourism, and the Egnatia Motorway is supposed to make Greece the economic tiger of the region. There are pronouncements of great hopes when a project begins, more pronouncements when the project begins, more pronouncements during the construction and a couple more at the opening of numerous openings. Finally pessimism seems to overtake everything. These public projects are like miracles without miraculous ends. The great leap forward is always postponed for a later day.

Of course we could compare this typical history to countless others in the Third World like the Aswan Dam in Egypt. But even more telling is to compare this southern tale with that in the north of Europe as recently related by Karen Kwiatkowski, where in Ireland economic freedom has been such a powerful force for peace and prosperity.

The next passage on the pernicious effects of farm subsidies is evidence that all libertarians should be ready to recite in a political discussion.

European assistance has been to Greece what oil has been to the Middle East; the lifeline of poor government, mischievous habits and exasperated hopes [and in Africa and everywhere else where foreign aid has been prevalent!]. Kathimerini, an authoritative daily newspaper, reported what the cotton subsidies have done in agriculture: there was cotton production of good quality in Greece, cultivated efficiently in the most suitable fields at a good price – now farmers receive subsidies that are up to three times the market price of cotton. Cultivation of cotton has expanded in millions of unsuitable acres. Excess well drilling has drained the valleys of their underground water, and pollution from the senseless use of fertilizers has been linked to serious health problems in the adjacent residential areas. This year the cotton farmers are to receive 690 million euros in subsidies. Since this amount is based on an agreed-upon quantity to be produced, farmers will produce more and attempt to get the national government to make up the difference. The common practice is to block major motorways with tractors; then the negotiations start.

Here is a perfect example of government interference in markets for all you economics professors to use in Econ 101. "Can we all repeat after Master von Mises, ‘government causes malinvestment’."

The cultural effects of these policies are corrosive akin to putting carbon steel in an acid bath. Mr. Linardatos continues:

Farming is associated with independence and self-sufficiency but the subsidy farmer is a new breed. He is entirely dependent on the political process, which he thoroughly cultivates, and his connection to the land is shallow. If the farmers are not out fighting for their ‘rights,’ then someone else will be: The teachers who do not want to be evaluated, contract civil servants who want to become permanent, policemen who do not want to police, students who do not want to learn. The list is long, reflecting a Greece cut to pieces with each faction trying to impose absurd demands on the rest. The pre-eminent action of civic participation is to demand employment in the public sector, or to defend retirement at 50, to build houses illegally in the forest, or to exploit fully one’s state-sanctioned monopoly.

How did these terrible predicaments come to be? As is usually the case we might look to the class who have time to think these things up.

For the local intellectual class, this is the triumph of politics. For decades now, progressive ideas are the only ideas in Greece. They have been so thoroughly instilled in everyone, from the first grader up to the Prime Minister, that they permeate everything. Any movement in a different direction is anti-social, reactionary, liberal, or an Anglo-Saxon barbarity. Under the tutelage of progressive ideas there are privileges without duties, advantages without merit, crime without punishment and hard work with no reward. . . .

This is the relativism of everyday life. The most important thing is what you can get away with. It is the tragedy of the commons writ large; a public sphere where the private and the public meet under the most disadvantageous terms. Someone would expect that decades of policies intended to foster social cohesion would produce a society of benevolent people. Instead we have narrow-minded, cynical egoists gyrating in alternate states of self-satisfaction and self-hatred.

On that dissonant note we might all stop and think of the policies in our own countries that decade-by-decade, year-by-year, even day-by-day are acting in a similar way to affect the way we live.

February 1, 2006

Ira Katz [send him mail] teaches mechanical engineering at Lafayette College. He is the co-author of Handling Mr. Hyde: Questions and Answers about Manic Depression and Introduction to Fluid Mechanics.

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