Political Order and Political Decay (17 page)

The absence of a strong capitalist market economy in Greece meant that the state became the de facto source of employment, and nineteenth-century Greek governments began packing the public sector with political supporters. By the 1870s, the Greek government had seven times the number of civil servants per capita as the British government of the same period, and a senior minister could earn half as much as the richest landowner.
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To use the terminology developed in chapter 3, the Greek state expanded dramatically in scope, taking on a range of activities, including the running of businesses that properly should have been left to the private sector, while remaining extremely weak in terms of administrative capacity.

Greek society in the middle of the nineteenth century was organized around rural patron-client relations, a system that morphed seamlessly into a democratic patronage system in which members of parliament controlled votes through the granting of jobs and favors. There was no attempt at public-sector reform until the modest ones undertaken by the governments of Trikoupis (1875–1895) and Venizelos (1910–1933), in which educational standards and life tenure were established for civil servants.
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External events had the potential to pave the way for a deeper reform of the party system. In 1922, Greece was defeated by Turkey, a calamity that led to a transfer of populations that brought nearly a million and a half Greek refugees from Asia Minor back to the Greek mainland, one-fifth of the total population at the time. Many of these refugees were highly entrepreneurial and contributed to the takeoff of the industrial economy shortly thereafter. They were, moreover, unincorporated into the existing patronage networks. At the same time, the rise of the Soviet Union led to the formation of sympathetic Communist parties around the world based on an ideological form of mass mobilization. This included the Greek Communist Party, which joined the Moscow-led Third International in 1920. All of these developments promised the emergence of a new, nonclientelist form of politics.
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Unfortunately, while broader participation and new forms of political recruitment did emerge in the interwar years, Greek society was so intensely polarized that it could not achieve basic stability. It lurched through a series of coups and conflicts that led to the suppression of democracy by an oligarchic regime in the mid-1930s. This was succeeded by years of foreign occupation and civil war. Democracy was again interrupted by the brutal seven-year dictatorship of the colonels between 1967 and 1974, with stable liberal democracy emerging only after their departure from power. These social conflicts left deep divisions within Greek society and increased the overall level of distrust.
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What is notable about the evolution of Greek political institutions is that economic modernization did not, as in the case of Britain and the United States, lead to a middle-class coalition whose object was reform of the state itself and elimination of the pervasive system of clientelism. Rather, the emergence of a stable electoral democracy after 1974 led to the rollback of merit-based bureaucracy and the steady widening of a more sophisticated form of clientelism by the two dominant parties, the center-right New Democracy (ND) and the Pan-Hellenic Socialist Movement (PASOK). The restoration of formal democracy in Greece after the fall of the colonels has been rightly celebrated as an opening move in Huntington's Third Wave of democratizations. But insufficient attention has been paid to the quality of democratic government in Greece, the fact that Greece never created a truly modern, impersonal public sector. This seemed not to matter to anyone until the euro crisis in 2009.

COLONIZATION OF THE STATE

When we speak of clientelism in Greece after World War II, we are no longer talking about the system of local notables and their followings that dominated nineteenth-century Greek politics. The Greek parties, now dealing with mass electorates, evolved into much more sophisticated and well-organized vote-mobilizing organizations, similar to the machine politics of the United States in the late 1800s.
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This system has come to dominate Greek government, as George Mavrogordatos illustrates with examples from education and banking. Up until the 1980s there was automatic recruitment of university students into the secondary education system based on the order in which applications were submitted. There was limited meritocracy in this system, and it fueled an uncontrolled growth in the number of teachers, as candidates exceeded job openings. But it was at least not susceptible to political manipulation. All of this changed when PASOK came to power in 1993, and the party took control of temporary teacher postings and used them to reward its own party followers. In addition, the system of inspectors general was abolished and existing schools' principals effectively demoted, clearing the way for a system of automatic advancement that eliminated any trace of meritocratic evaluation of teacher performance. These were ideologically justified as anti-elitist or pro-Socialist measures. What they ensured was not popular participation (a questionable goal in any case in education) but party control over discretionary appointments.

Something similar happened to the state-owned National Bank of Greece. Up until the early 1980s, it had been a highly respected island of meritocracy within the Greek government, with some 90 percent of its personnel being recruited through examinations. This changed with PASOK's rise in 1981; the party expanded the bank's overall payroll by as much as 50 percent (to some sixteen thousand employees) and exempted the new hires from competitive examinations. The number of patronage appointees thus increased from 10 to 40 percent of the workforce, with promotions to higher grades being entirely controlled by the party. When Mavrogordatos asked the bank's personnel manager what total employment was, the latter said that only a court order could force him to divulge that figure.
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While it was PASOK that politicized the hiring of teachers and bank workers in the above cases, both parties participated in stuffing the public sector with their own followers. ND and PASOK traded places in power in 1981, 1989, 1993, 2004, and 2009. Following each election, they sought to purge their rival's political appointees and replace them with their own. However, the strong Greek public-sector unions have negotiated rules guaranteeing tenure for many public employees. So rather than turning over personnel with every change in party (as in the case of the American patronage system), the Greek state has simply expanded to make way for new recruits. Needless to say, neither of these practices was good for bureaucratic quality, and the ever-expanding public sector contributed mightily to Greece's budget deficits and debt woes. A report by the Organization for Economic Cooperation and Development on the Greek public sector after the onset of the euro crisis noted that Greece had more than seven hundred thousand public employees, a fivefold increase between 1970 and 2009. Only one public-sector worker has been laid off for every private-sector employee since the start of the crisis, and public-sector wages plus bonuses were one and a half times those in the private sector.
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LOW-QUALITY GOVERNMENT

The Greek state is large and expansive but, with a few exceptions, of very low quality. Its problems have become legendary across Europe since the start of the euro crisis: the frequent loss of land titles due to inadequate record-keeping systems, the backlog of court cases, long waiting times at hospitals and other government facilities.

The origins of clientelism in Greece are not hard to find; it is the result of the early arrival of electoral democracy, before a modern state had an opportunity to coalesce. In this respect the Greek experience is no different from that of America, and is similar to many other developing countries in Latin America and South Asia. What is noteworthy about Greece is the failure of a reform movement to arise as the country modernized and began to develop economically. Greece has never seen the emergence of a coalition of groups built around the middle class that has agitated for civil service reform. Instead, newly arrived social actors, such as urbanites and immigrants from Asia Minor, have gotten co-opted by the existing clientelistic system and been made to play by its rules.

Why have some countries been able to reform their clientelistic systems while Greece has not? I will return to this question more comprehensively in chapter 13, which summarizes the comparative experience of developed-country state building. But there are several factors that emerge from this case already that hint at parts of an answer.

The first has to do with the absence of a strong tradition of indigenous statehood. Although Greece was the “birthplace of democracy” in ancient times, it began the modern era as an Ottoman province in which domestic elites were recruited to work for an illegitimate foreign power. The Greeks fought bravely for their freedom but were unable to achieve it on their own; even after independence, foreign influence remained strong, as the linkages of the first Greek political parties to different Great Powers attest. These foreign influences were evident in the country's fluctuating borders over the centuries. This pattern of foreign influence continued up through World War II and the cold war, where Greece was a pawn in larger international struggles. As in other parts of the world including, as we will see below, Italy, Communist and other parties of the extreme left tended to reject clientelism in favor of mass mobilization based on ideology. The dynamics of the cold war, however, ensured that the United States would support a corrupt and clientelistic conservative party over a cleaner left-wing one.

And indeed today as it struggles with its financial crisis, the central issue in Greek politics remains resentment of the influence of Brussels, Germany, the International Monetary Fund, and other external actors, which are seen as pulling strings behind the back of a weak Greek government. Although there is considerable distrust of government in American political culture, by contrast, the basic legitimacy of democratic institutions runs very deep.

Distrust of government is related to the Greek inability to collect taxes. Americans loudly proclaim their dislike of taxes, but when Congress mandates a tax, the government is energetic in enforcement. Moreover, international surveys suggest that levels of tax compliance are reasonably high in the United States; higher, certainly, than most European countries on the Mediterranean. Tax evasion in Greece is widespread, with restaurants requiring cash payments, doctors declaring poverty-line salaries, and unreported swimming pools owned by asset-hiding citizens dotting the Athenian landscape. By one account, Greece's shadow economy—unreported income hidden from the tax authorities—constitutes 29.6 percent of total GDP.
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A second factor has to do with the late arrival of capitalism in Greece. The United States was an early industrializer; the private sector and entrepreneurship remained the main occupations of most Americans. Greece urbanized and took on other trappings of a modern society early on, but it failed to build a strong base of industrial employment. In the absence of entrepreneurial opportunities, Greeks sought jobs in the state sector, and politicians seeking to mobilize votes were happy to oblige. Moreover, the Greek pattern of urbanization in which whole villages moved from the countryside preserved intact rural patronage networks, networks that industry-based development tended to dissolve.

A final factor has to do with trust, or what has been described as social capital.
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I began this chapter noting that Greece shared with southern Italy a reputation for being an extremely low-trust society. Some social scientists have argued that trust is the by-product of other forces in a society, like an effective government, or else strong economic growth that allows everyone to get richer together. Others have suggested that lack of trust is a cultural condition that exists independently (or exogenously, as economists would say) of the political or economic systems; it is a cause of systemic dysfunction rather than an effect.

In my view, Greek distrust is rooted in politics, particularly in the absence of a strong, impartial state, but over the years it has perpetuated itself as a cultural habit. Distrust has been pervasive in both traditional rural Greek society and in the bitter political struggles of the twentieth century. Greeks have been divided by family, kinship, region, class, and ideology, despite the fact that Greece is one of the world's most ethnically homogeneous societies. Feeding these social and political cleavages is the fact that the state has never been seen as the protector of an abstract public interest, in the manner of the German and French states. Rather, it is seen as an asset to be grabbed and exploited for narrow partisan benefit. Hence, no contemporary Greek political party has made reform of the state itself part of its agenda. When the European Union and the IMF demanded structural reforms in return for a restructuring of Greek debt, the Greek government was willing to consider virtually any form of austerity before agreeing to end party control over patronage.

The situation of Italy is in certain ways similar to Greece; deep distrust and cynicism play an important role in weakening public administration in that country as well. But the Italian situation is more complicated because Italy is a far richer and more diverse country. There has at least been an ongoing struggle against clientelism and the political corruption it engenders. But no more than in Greece has modernization by itself been sufficient to bring about the emergence of a fully modern state.

 

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ITALY AND THE LOW-TRUST EQUILIBRIUM

How the quality of government varies across Italy; weaknesses of the Italian state in the South; where the Mafia came from; Italy's struggle with clientelism and corruption; the importance of trust for good government