Greek Disease

Inside the new sick man of Europe.

The first time I tried to apply for my Greek residence permit, there was no one there to take my application. To the bemusement of the lawyer who accompanied me, the office was shut in honor of -- no joke -- the patron saint of lawyers. When I did finally manage to submit my paperwork, the clerk merely shrugged when I asked how long it would take. "A year," she said, "maybe two."

As the spouse of an EU citizen, getting my permit should have been a formality. But legal arguments, my lawyer advised, would get me nowhere. Instead, a call to the government office that deals with foreign journalists got me my residence interview scheduled in record time -- delayed only by an inconvenient, month-long Christmas strike. (Though to be fair, the six chain-smoking, frappé-drinking officials who attended the interview to rubber-stamp my application were reasonably friendly.)

This is the image of the Greek civil service that's making the rounds in Europe these days: a group of lazy, corrupt, and inefficient officials who may or may not show up for work before retiring on cushy pensions. As Europe grapples with the fallout from Greece's excessive state debt, frugal Germans are balking at the idea that they should bankroll their tax-dodging, early-retiring Mediterranean partners.

Of course, there is some truth to this narrative. Generations of Greek governments have padded the civil service with their supporters and in the process created a flabby monster of a state that in 2008 ate up 48 percent of Greece's GDP. No wonder pressure is mounting in Brussels and Berlin for deeper budget cuts before Europe will come to Greece's rescue.

There's a tendency at the moment to blame Greece's current financial woes on a failure of the Greek character, as if it could be explained by stereotypes of Mediterranean laziness. But while it's true few civil servants put in what a German taxpayer would consider a full day's work, the dirty secret is that the system assumes they don't. Few families can survive on a civil servant's salary, so nearly everyone works a second job or engages in petty corruption. Many public employees work on temporary contracts with few benefits, and since tax evasion among the self-employed is rife, workers bear the brunt of the country's tax burden. As an old Soviet joke making the rounds here puts it, "We pretend to pay them, and they pretend to work."

Teachers teach after-school classes at private frontistiria. State doctors expect fakelakia, literally "little envelopes," or see their state patients in their private offices after hours. According to a study done last year by the local Transparency International office, the going rate for fakelakia for an operation was 870 euros, or about $1,180.

Take Marianna, a 32-year-old waitress in Athens's bohemian student district Excharia, also famous as the home territory of Greece's small but ferocious far-left anarchist and anti-authoritarian movements. The neighborhood catapulted to international attention in December 2008 after the fatal police shooting there of a 15-year-old boy set off weeks of rioting and violent clashes between police and protesters. Marianna has a degree in art restoration and worked for a while for the Ministry of Culture. But the pay was so low and irregular that to survive, she had to take extra work in a café -- where she was usually paid under the table.

"I worked for the ministry, I was usually employed on three-month contracts, but I only got paid six months later," she said. "If I wanted to get a new contract, I had to be nice to the right person, give them favors." Eventually, she gave up. She makes more money working full-time waiting tables.

The rot is built into the system -- and that's one reason it's so difficult to change. Greece's bloated, inefficient state sector strangles the economy with a bureaucracy that makes doing business legally nearly impossible. It allows corruption to flourish.

"Greeks don't understand the simple truth that they're paying for everything two times," says Stravros Katsios, who teaches economic crime and governance issues at Ionian University. "They are paying two times for their education system, they are paying two times for their health system and two times for their public sector: the first time through taxes and the second time through corruption."

As Greece emerged from the poverty and political instability that dominated the first two-thirds of the 20th century, Greek families poured their resources into educating their children. Degrees were supposed to be the ticket to a better life in a new European Greece, but many young people despair at finding decently paid, steady work that will enable them to have a family and independence. Well into their 30s, many still live with or are supported by their parents.

Greeks aren't under any illusions about their state or society. They know their schools are terrible, their hospitals are crumbling, and their economy is far from competitive.

That's one reason many Greeks are taking all this talk of austerity measures in stride. Polls consistently show that a wide majority of Greeks support Socialist Prime Minister George Papandreou's proposed fixes. Many are cautiously hoping that the crisis might actually force real reform. "Every Greek knows what's happening," says Vangelis Agapitos, an independent economist. "People know the situation is bad so they're willing to do their part." But, he said, they want to their sacrifices aren't just going to line the pockets of politicians: "However, they're saying, don't try to fool us."

Before his election, Greeks were skeptical of the American-born, bicycle-riding Papandreou, whose father and grandfather were both prime ministers. But he's won some grudging respect with his willingness to stand up to the unions and other traditional allies on the left, as well as with his appointment of a largely non-ideological, technocratic cabinet.

There have been the inevitable strikes and protests against higher taxes and civil sector pay cuts -- Greece is still Greece -- but so far they've seemed half-hearted. Despite the militant bellows of "We will not compromise!" shouted by union officials over bullhorns, the first major protest called by Greece's main civil servants union, held on a rainy Feb. 10, was a mellow affair that drew only a few thousand people. This week, farmers finally called off their month-long blockades of major roads and the Greek border with Bulgaria, sheepishly acknowledging the government had no money to give them. And on Feb. 17, tax officials called off a planned 24-hour strike.

Papandreou's government is under enormous pressure to simply cut deeper, especially when it comes to the civil service. He's countered that any long-term solution requires tackling the roots of Greece's problems -- combating corruption and nepotism, eliminating waste, and rebuilding trust in the government to encourage a culture of tax and regulatory compliance.

But fixing Greece will be no easy task, and the government is walking a fine line, trying to slash deeply enough to assuage market and European fears without deepening the recession or sparking more serious public resistance. If Greeks really decide to riot, it won't be civil servants marching under umbrellas. It will be masked anarchists smashing shop windows, torching banks, and bombing government offices.

For now, Greeks are hunkering down. The global recession is now hitting hard: Thousands of shops have closed, and caf és and restaurants are half-empty. The austerity measures will no doubt deepen the pain. But Greeks have been through bad times before and they seem willing to wait this one out, at least as long as they think better days lie ahead.

"We know it will be difficult," said Anna, a nurse. "But I'm worried for my children. Will they have a future?"



China's High-Growth Ghost Towns

Visiting the eerily vacant epicenter of unsustainable progress, far out in the grasslands of Inner Mongolia.

In the gritty Inner Mongolian wind, I stood at the pinnacle of the global economy, at least in terms of GDP growth: the main drag of one of the fastest growing cities in the fastest-growing region in all of China, the world's supposed new economic powerhouse.

Built in a breakneck five years, Kangbashi is a state-of-the-art city full of architectural marvels and sculpture gardens. There's just one thing missing: people. The city, built by the government and funded with coal money, its chief industries energy and carmaking, has been mostly vacant for as long as it has been complete, except for the massive municipal headquarters. It's a grand canyon of empty monoliths. In a paradox only possible in today's economic system, Kangbashi manages to be both a boom town and a ghost town at the same time.

Kangbashi represents a particularly destructive economic force at work in China today: an obsession with GDP that ignores all other metrics of progress or human capital. GDP as calculated in China -- or the rest of the world, for that matter -- doesn't make any distinction between quantity and quality, or between creative and destructive expenditures.

Due to the industrial pollution billowing out of the country's GDP-enhancing factories and mines, cancer is the leading cause of death in China. A recent government survey showed that 30 percent of children in Yunnan province suffer from lead poisoning. Perhaps the biggest and most destructive GDP boost came from construction of the Three Gorges Dam, for which 1.24 million people were evicted. Even some of the newly rich, however, shower in tainted brown tap water.

Meanwhile, in places like Kangbashi, an accelerated development in the real estate market has not been matched by long-term sustainability, and in recent months, predictions have grown louder that China's real estate bubble is about to burst. This debate has been batted back and forth by columnists and TV talking heads lately. For now, income growth is still outpacing housing price growth, meaning that the real estate market is not technically a bubble.

Still, China's emphasis on growth at all costs is creating some bizarre monsters, and Kangbashi is one of them. Six years ago, Ordos county officials decided to move their headquarters out of old, cramped Dongsheng and into land that was then occupied by two small villages inhabited by about 1,400 people. By the end of 2008, the new district of Kangbashi was crisscrossed with 2.4 billion yuan ($352 million) worth of roads. Officials initially said they expected the population to reach 100,000 this year and 300,000 by 2020. They also say the population reached 50,000 last year, which seems improbable given that pedestrians on the street were outnumbered by street sweepers. A local real estate agent, Cao Ting, told me it had actually been easy to sell apartments. She said 80 percent of the apartments had been sold. I believed her even though 80 percent of them looked empty, with no curtains or furniture visible during the day and no lights on at night. The buyers were mostly investors or future residents waiting for schools and hospitals to open before moving in.

The new buildings look great from the outside, and they're economically fine on paper, if you believe the local government. And they may continue in this state, since the government will prop up the property market because it holds up so much else as well. Local governments' revenues are completely dependent on land sales. Eventually, perhaps, the population will catch up with this accelerated development.

When I went to visit last October, however, the lonely residents of Kangbashi didn't seem likely to be welcoming new neighbors anytime soon. Over glazed pork one night, I struck up a conversation with a middle-aged Chinese interpreter for German engineers employed at the state-owned coal mines nearby. Later that night, he showed me how he staves off the loneliness: sitting alone in his hotel room with a microphone in his hand, crooning along in online karaoke rooms.

Kangbashi's eight-story library has a computer lab with about 100 brand-new computers, but I saw only an attendant and two teenage boys playing games. Near the town's reservoir, two large screens were showing footage from the National Day parade celebrating the 60th anniversary of the People's Republic. I looked up to see a sea of people in a clenched-fist salute in Tiananmen Square. But I was the only one watching. The only other people in sight were a dozen laborers landscaping the center dividers, their faces shrouded against the cold wind.

Across the reservoir, cranes were parked around construction sites. A trade and commerce district is in the works, according to blueprints decorated with cartoon animals and wispy shooting stars in the style of Disney's Fantasia. The image of spindly glass skyscrapers reflected on the water bears a striking resemblance to Dubai, funded by government revenue from fossil fuel extraction. But whereas Dubai is already bankrupt, here construction continues. At least, for now.

Courtesy of April Rabkin