Rod Dreher

Rod Dreher


Is the Greek family wrecking Greece’s economy?

posted by Rod Dreher

Yes, says a Greek economic exile. Excerpt:

Upward of 75 percent of Greek businesses are family-owned. Most are small and rely on family labor, which is as flexible as it gets — in practice, no minimum-wage or maximum-hour laws apply. Women often work for their husbands without salary, and divorce laws don’t effectively ensure the divorcing spouse’s stake in the family business or remuneration for the work she put into it — meaning it’s very difficult to leave a marriage. Young people are similarly constrained. The lucky ones land government jobs through family connections or work in a family business, “helping out” with no pay while formally unemployed. The unlucky ones toil for meager wages at someone else’s family business, where they have almost no chance of advancing into management. Many live with their parents up to the age of 35 because they can’t afford to live on their own. Unsurprisingly, fertility rates are very low. Young people also depend on their families to supplement their wages and pay the “tips” necessary to get decent health care.Those who desire independence join the flourishing Greek diasporas in Europe and the United States. I left Greece when I realized that, as an aspiring lawyer with no family connections in the business, I would probably spend the initial years of my legal career serving coffee to someone’s father or son. Until Greece can find a way to disentangle the private sector from the family and find another way to allocate resources — free from the intergenerational, class and gender inequities of the family unit — no amount of reform will make a difference.

But wait, people like me think we’d be in better shape if we lived an economy with more small, family-owned businesses. Are we missing something important?UPDATE: Here’s what: Peter Boone and Simon Johnson explain why the economic crisis in Greece matters to what Dubya would call us non-Grecians. Excerpt:

When the problem was just Greece, the numbers were already large. In our view, the Greek government needs 150bn euros over three years to be sure it can refinance itself through a recession. The Portuguese will roughly need 100bn euros. If those amounts were made available – will that support the confidence needed to buy Irish and Spanish bonds, or would it scare investors because the protests from Germany would be so large that it would be clear no more funds would be available in bailout mechanisms? There is no easy answer to this question, but yesterday’s action suggested that markets are not at all confident policy makers are going to stop this crisis soon. They are surely right: Greek strikes, a weak Portuguese government deeply in denial, and German hatred for bailouts, all make a path to restore confidence very difficult.Yesterday was also a wake-up call for the United States. It is no longer reasonable or responsible to say: “US banks have no exposure to Greece”. US banks are heavily exposed to Europe, and this is turning into a serious Europe-wide problem. The US badly needs to make sure this does not spread beyond Greece and Portugal/Ireland.

Mr. Panos, who might be the Greek finance minister, I dunno, offers a different diagnosis on the economic situation:



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Priest Raphael

posted April 24, 2010 at 4:40 pm


No, I think HE is the one who is missing something…..



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Lord Karth

posted April 24, 2010 at 4:48 pm


It sounds to me like the problem is more one of tax rates and regulatory barriers to business expansion. If the marginal business tax rates (or, alternatively, labor regulations) in Greece are such that it does not pay to hire new employees, of course one will demand that one’s children join the family firm !
Your servant,
Lord Karth



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GingerMan

posted April 24, 2010 at 4:51 pm


This is the trade-off. America has more open and fluid labor markets than the EU. This means more instability, but also means more growth. Without growth, you have a stagnant economy, which has its own problems.
You can argue that the problems associated with growth are WORSE than the problems of stagnation, but the Front Porch Republic crowd deludes themselves if they think there is any free lunch to be had here.



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Jon

posted April 24, 2010 at 5:01 pm


Sounds to me like the problem is the fact that family members are exepted from the labor laws. If you had to pay your incompetent son the required wage, you might be more willing to hire a more competent outsider and the son could go try something he might be better at.
I don’t think this is a problem across the EU in general. Sounds more like the sort of dysfunction you find in the Middle East where people simply don’t trust anyone they are not related to. Is this Geeece’s heritage from the Turkokratia?



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H.S.

posted April 24, 2010 at 5:38 pm


Sadly, sometimes another way to spell ‘family-owned’ is ‘exploitation.’



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Your Name

posted April 24, 2010 at 6:29 pm


A system like that works well in a pre-industrial economy, as it reinforces and solidifies a caste system. If your last name is X, your ancestors were all bricklayers and your descendants will all be bricklayers. You’ll marry a woman from the same caste level more or less chosen by your parents, and there’s not much individual control over your destiny. It falls apart after industrialization, since many traditional jobs require far fewer human beings, or can be entirely replaced by machinery.
Greece might have been able to adjust during the late 1800s and early 1900s, but ended up in war with its neighbors, occupied by the Axis during WWII, had a Civil War, and even had an internal military takeover of the government during the late 60s and early 70s. Not helping matters was the US position to support any government, no matter how brutal or corrupt, as long as it was anti-communist (see also: most of South America). Add in a unique alphabet that’s not compatible with the rest of the Western world, no major industries or resources to export, and it’s hard to hold Greece up against the rest of Europe. Definitely makes more sense to compare them to parts of the former Soviet Union.
Southern Italy has a lot of parallels with Greece right down to the “stay with the family until your 30s and only join the family business”, but has a wealthier northern half and was spared most of the 20th century turmoil that Greece endured.



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Lindsey Abelard

posted April 24, 2010 at 6:59 pm


I think the stagnant economy that the front porch republic people believe can work IF AND ONLY IF the birth rate is low enough and the number of young people entering the economy is small enough that there is still plenty of freedom and opportunity for those kids despite having a no growth economy. This probably means a fertility rate of around 1.0, like Japan. Even though Japan’s economy has barely grown in the last 20 years, they have been able to provide enough jobs for Japanese young people because there are so few of them.
Where the front porch people go off the deep end is their belief that such a system would work for the U.S. This is not possible because both our indigenous fertility rate is too high AND we have immigration. I think the front porch people are ignorant of this problem because I have never seen them argue that the U.S. should implement China’s “one child” birth policy, which would be absolutely necessary for a stagnant economy.
Small business is preferable to large business. However, competent small business is preferable to incompetent small business and all too often “family-owned” business is incompetent business.



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Denis

posted April 24, 2010 at 7:58 pm


What a silly article! Greece is in economic trouble because the state borrowed more money than it can pay back. One huge frivolous and foolish waste of money: the Olympics. Today the Olympic facilities are abandoned, but they still haven’t peen paid off. You can see what they look like here: http://tinyurl.com/5hkufr
Where would the 30-year old son work if not for his family? Would he be one of the many public sector workers whom the state can no longer support, and who are now striking?



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Jon

posted April 24, 2010 at 10:07 pm


Re: Add in a unique alphabet that’s not compatible with the rest of the Western world
If Greece’s woes trace to its alphabet what are we make of China and Japan, both of which have highy complex (and non-alphabetic) writings systems, for which you need special software to handle on a keyboard.



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mm

posted April 24, 2010 at 11:54 pm


Maybe Greece is underdevloped because their alphabet cannot use acronyms to communicate ideas at a faster rate.



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Your Name

posted April 25, 2010 at 12:03 am


Jon: It’s not the biggest issue in the world, but it’s another factor that isolates Greece from the rest of Europe, especially in the 20th century when the Cyrillic-using countries were walled off economically. Japan, China, Saudi Arabia all had luxury goods that were highly valued and scarce in the west. There’s not a lot that you get from Greece that you can’t get from Italy or Spain, which are going to be closer to the stronger economies of France, Germany, and England anyway.
I have nothing against Greece or its alphabet, but think about buying a bottle of wine. You don’t have to speak German to recognize a Riesling, but telling a ??????????? from a ?????????? or being able to pronounce either name is going to require specific familiarity with another script.



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godisaheretic

posted April 25, 2010 at 12:11 am


add in their pension system with ridiculously low retirement ages.
so, when your economy is disfunctional, but your people want higher living standards, what to do?
oh yes, borrow beyond reason.
Q: guess when the worst time in history would be to borrow excessively?
A: at the end of economic growth based on lots of cheap energy sources.
Q: what is the biggest country to have such excessive debt?
A: why the good old USA of course.
yes, there is huge economic pain ahead.
it is a FOOLISH country that goes into more debt in this time where economic growth is near its end.
Greece will soon be down to a third world level economy.
It will foreshadow where the USA will be in a decade or two.
but have a nice day everybody, since it could be worse!



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Lindsey Abelard

posted April 25, 2010 at 2:11 am


California will be a much bigger disaster than Greece and Portugal put together.



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Debbie Georgatos

posted April 25, 2010 at 4:45 am


I have been married to a Greek Immigrant for 36 years. Yes, many of the things you mention in the article are a detriment for the Greek family but there are also many positive things about Greek families. I know Greece is changing, so many of the positive things are going by the wayside, but my experience with our Greek family here in the US has been very positive. Yes, my husband is late most of the time, and his Mom was a little pushy, but for the most part, it has been positive. It is too bad that the Greeks in Greece need to live at home until they are in their late 30′s as it does facilitate them not maturing and being independent, but financially they don’t have many other choices. We lived in Greece for two years and it was quite an experience; they are characters. I wonder if Greece should have joined the EU. Our relatives there seemed to be better off financially before Greece joined the EU. It’s hard for Greece to work together with the Germans, etc. as they run their lives so much differently. I wish the Greeks all the best.



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Jon

posted April 25, 2010 at 8:19 am


Re: what is the biggest country to have such excessive debt?
We shouldn’t be happy with the US debt, but it’s a lower fraction of our GDP than Greece’s (or Japan’s for that matter), and we have a functional and diverse economy underlying it. The US can afford to pay its bills still.



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Jon

posted April 25, 2010 at 8:22 am


Re: You don’t have to speak German to recognize a Riesling, but telling a ??????????? from a ?????????? or being able to pronounce either name is going to require specific familiarity with another script.
Export goods from non-Roman-script countries almost always have their names and any relevant text transliterated into Roman script. Moreover, the Greek alphabet is the most familiar of all foreign alphabets to us, since anyone who has had math classes or cotact with fraternities will recognize the letters.



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Roland de Chanson

posted April 25, 2010 at 10:50 am


Re: the Greek alphabet — I recall that Lenin wanted to introduce the Latin alphabet to make economic exploitation of the West easier. And Atatürk improved the level of education in Turkey with the change to Latin alphabet from the Arabic. I am not sure either problem reduces to the shape of the script. But I could be wrong. Someone should tell Israel just in case.
Re: the ravaged Olympic sites — ? ????? ??????? ?? ??? ???????? ??? ????????. (La Grèce a toujours semblé un rêve. Et une ruine.)



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Clare Krishan

posted April 25, 2010 at 11:26 am


I wouldn’t be as sanguine as Simon Johnson is about which way the “contagion” is flowing and how to practice financial hygiene – commentators elsewhere imply that the US bankers on Wall Street shilled the Grecians in order to finance the international municipal bond feeding frenzy at the Olympic Games, not the other way around!
When it comes to economics and family values, never lose sight of how infantilized societies turn to the nanny state for succor. When men fail to live up to their responsibilities as family patriarchs, their womenfolk prefer the patriarchy of the state. Privatized gain and socialized losses is the moral hazard at play in this international financial shell game. Certain players make private fortunes out of others’ social welfare. What is happening in California is much worse than what is happening in Greece. Why? Because we have no clue. In Greece its all in the bright sunlight of sovereign debt issue, stateside its all in the murky workings of local Federal Reserve Board meetings.
Beware any pundit (like Simon Johnson) when then speak of liquidity thusly: “What can the authorities do? The only path is a new package of “liquidity assistance” for countries under pressure but not yet ready to call in the IMF. The liquidity is available from the ECB – it can provide emergency loans to all the banks in the region to prevent bank runs from toppling them.” Intentional inflation as political policy is criminal — the banks print paper money ex nihilo and then put it into circulation with your hard-earned and prudently saved dollars in a process akin to embezzelement – for they have “invented” funds that compete for the investment opportunities your pension- and mutual- and CD funds are seeking to earn a return from. That drives down the interest rate — the price of capital — to unfairly low levels. Governments then borrow at these unrealistic rates, leaving private patrimonies severely undercut… and young members of families get a free ride on welfare when they’d learn better how to be mature members of the community if they worked they way to establishing their own household patrimony (oikos in Greek, root of our word, economy). The appeal of matrimony works best when the effort required to create a patrimony is rewarded by real returns on the investment. However when Statist banks can undermine the social fabric with the onanism of FIAT currencies, don’t be surprised that “the family” unit ceases to function the way nature intended…! See chapter 13 “The Cultural and Spiritual Legacy of Fiat Inflation” for more on the socialized losses of legal tender powers here:
http://blog.mises.org/8833/the-ethics-of-money-production/
~+~ Inflation Habits ~+~ Hyper-Centralized Government ~+~ Fiat Inflation and War ~+~ Inflation and Tyranny ~+~ Race to the Bottom in Monetary Organization ~+~ Business under Fiat Inflation ~+~ The Debt Yoke ~+~ Some Spiritual Casualties of Fiat Inflation ~+~ Suffocating the Flame



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Jon

posted April 25, 2010 at 1:15 pm


Re: When it comes to economics and family values, never lose sight of how infantilized societies turn to the nanny state for succor.
Good grief, all peoples turn to their governmment to handle problems too big for individuals to hnadle. This is why we have governments.
Re: the banks print paper money ex nihilo and then put it into circulation with your hard-earned and prudently saved dollars in a process akin to embezzelement
Um, who do you think printed the “hard-earned” dollars you saved? You didn’t print them up on your HP in the basement I hope. By the way, why is money in these discussions always “hard-earned”? Aren’t there any lazy people out there? And in today’s America there aren’t a whole lot of people who really do “hard work” as our ancestors understood. Most of us work in comfortable climate controlled environments sitting on our rears doing nothing more strenuous than banging away at a keyboard and chatting on a phone.



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Nick the Greek

posted April 25, 2010 at 1:16 pm


The article proceeds from the premise that if the family and the economic system come into conflict, then it’s the family that needs to change – surely the reverse of the Crunchy Con position?



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Pat

posted April 25, 2010 at 2:20 pm


We worship the word ‘family’ in this country, forgetting that the most famous ‘family’ is the mafia.



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elizabeth

posted April 25, 2010 at 2:28 pm


Isn’t there also considerable lack of transparency and a deep tradition of corruption, as well as a tradition of who you know being more important than what you know, or can do? Meritocracy is still even in the USA. It hardly seems worth attacking “the Greek family” – as if there is only one – for systemic problems that involve centuries of economic shifts, wars and military dictatorships. Makes for a nice, simple analysis, though. It’s worthy of Faux Nooz.



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Lindsey Abelard

posted April 25, 2010 at 6:32 pm

Indy

posted April 25, 2010 at 7:35 pm


Well said, Jon @ 1:15. I vote for retiring “hard earned” as it sounds too defensive. Most of us work, hard at times, moderately at others. No point in making it more than it is, we’re big boys and girls, let’s keep it real.



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stari_momak

posted April 26, 2010 at 5:23 am


Well, since the Greek ‘economy’ has been based on family owned businesses for, what, 3500 years, it seems to me the problem (i.e. 35 year olds at home, and fertility) lies elsewhere. I’d love to blame immigration – -and certainly Greece has experienced a lot of Albanian and Levantine illegal immigration, but here that is not the culprit. What is the culprit, and this is the factor that uniteds Greece, Spain, and Portugal, is that they tried to run an economy on a real estate ponzi scheme (sound familiar?). For a while there, every German, Dutchman, and Englishman was heading to Santorini, the Algarve, or Torremolinos and buying up property at inflated rates. The local who sold the property thought he was rich, and spent spent spent. But good things come to an end. The Brits have no more money, and the Germans etc. are also running out. So no more real estate millionaires in buggfugg Crete. No more bureaucrats living off those millionaires (drastically underdeclared) taxes.



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Peter

posted April 26, 2010 at 12:06 pm


Continuing on your paen to Poland, it’s worth pointing out that corrupt Greece is also one of the most religious countries in Europe. In fact, the most economically vulnerable countries in Europe (Portugal, Spain, Poland, Greece, Ireland) are also among the most religious and countries where defacto state religions have contributed to corrupt markets and governments.
No wonder secularism in Europe has so many fans.



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stefanie

posted April 26, 2010 at 6:04 pm


Another feature of small businesses in general (and from what I read, more so in Greece) is their dependence on cash and tax evasion. There’s a reason the IRS audits so many small businesses based on cash, like restaurants.
Combine that with “all in the family” clannishness, and it’s understandable why Greece has a massive tax evasion problem, and how a European (read French and German) bailout isn’t going to help them in the long run.



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Jon

posted April 26, 2010 at 7:06 pm


Peter,
Awkwardly for your thesis, a number of European nations have state churches without notable corruption: the UK and Sweden come to mind.
And Spain is now a very secular nation. Gay marriage sent into effect there with very little drama from the electorate, not counting the bishops of course.



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Debbie Georgatos

posted April 27, 2010 at 3:11 pm


I agree with Mr. Panos. Greece’s problems are all Bush’s fault like everything else. Anyway, does Mr. Panos have any more UTube’s? He is hilarious and has the Greek mannerisms and way of thinking down to a “T”.



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Afterthought

posted May 1, 2010 at 10:39 pm


The Mediterranean lifestyle of laziness, graft, favoritism and corruption are great if you are content with a neo-lithic village economy*.
If you want a modern economy? Not so much.
* perhaps not even then…



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