Yesterday I arrived in Rhodes, Greece on a two week work-related trip. Rhodes is a very nice spot, and Greece generally excellent, after a day here I can recommend it to anyone looking for a warm, pleasant and friendly place to spend a little time. And really, what could be a better way to spend two weeks of work time than on a Greek island? However, as soon as I arrived in Rhodes I was struck by a hint of something going wrong in Greece, something which I think may not be the fault of ordinary Greek people, and which maybe serves as a harbinger of all of Europe’s fate. I thought I’d blog on my first impressions of Greece, with perhaps a little added opinionating about how Greece’s economic problems are presented by the pro-austerity gang who are in the ascendant in America and Europe. I’ve only been here a day so nothing I say is even worth of elevation to the level of considered opinion; it’s just idle musings on my first impressions of one (very rural) part of Greece.
Before I came I had visions of the islands from Porco Rosso, and pretty much everything else I knew about Greece I got from Gerald Durrell and sir Lawrence Alma-Tadema, so I think it’s safe to say that I was arriving here with a pretty blank slate as far as cultural expectations go. However, Greece has been in the news a bit recently, with its economic woes being seen as a barometer for the trouble spreading over all of Europe. So I was interested, given my limited knowledge of life in Greece, to see how the land of capricious gods compares with the scary stories and hype that are broadcast across the western print media.
The first thing that I have to say is that everyone I have met (except the scary tattooed guy on the plane) has been friendly and warm, and embarrassingly multilingual. The food is excellent and the weather perfect – the only noticeable drawback of May weather in Greece appears to be that it is bone dry, and I really don’t know where the water for the hotel pool is coming from – I have seen precious little evidence of any water that isn’t in the sea. And there is a lot of sea, cobalt blue and amazingly pure. But then, I am on an Island… and the sea wasn’t very kind to me. Within minutes of dipping my toe in, I was stung by something.
However, as soon as I arrived in Greece I noticed a kind of neglect and decay that I really wasn’t expecting from a European nation. I don’t think it’s new either, and I have a suspicion that what I see hereabouts has very little to do with the global financial crisis and its effects on Greece. I think it’s part of an older, deeper malaise that is moving through all of Europe and just happens to have affected Greece first. Amongst the countries I’m familiar with, I think it will hit Britain next (or already has). What I see in Greece makes me think of many of the things I see in Britain, only without the patina of aggressive British defensiveness, and with sunshine.
This decay was obvious at the airport, which is a kind of cute but crumbling 70s relic, with holes in the ceiling through which the wiring can be seen, those low and oppressive ceilings so common in 70s public architecture, and a barely functioning arrivals lounge – there is no passport control, but it hardly matters anyway because the doors for non-EU passport holders are broken and don’t open. Once you’re outside that and out into the sunshine, you’re greeted immediately by a site that is quite rare in most of the rest of Western Europe and certainly very rare in Japan or Australia: a horde of extremely old passenger cars. They’re tiny, dusty relics from before the era of pollution controls – 80s and early 90s vehicles mostly, and battered, obviously heavily used. The taxis are all new Mercedes, but ordinary passenger vehicles are often much older than I am used to seeing in Europe. The city bus is also very old and battered, the seats obviously replaced many times and the shell battered and scuffed.
The next thing I noticed, once in my taxi, was how overgrown and neglected the countryside looks. Thick, wild shrub and grasses that were obviously untended reached right up to the roads (which are also in quite bad shape), and there was rubbish everywhere. It doesn’t appear that any effort has been made to maintain the unused land near roads and public facilities, and it’s turned into a kind of wasteland. I don’t think this the Greek government, local city authorities, or residents intend to let the countryside go wild, and in a dry and fire-prone area like Greece it’s probably not a very good idea to allow wild shrub to encroach on roads to the extent that they do here. I think this is neglect, and this sense is only enhanced by the state of the buildings I saw on my journeys through Rhodes.
Rhodes is littered with abandoned, half-finished buildings, and also with the deserted shells of abandoned businesses – especially hotels. Many of these buildings are obviously in the early stages of construction, and obviously no one is coming back to them. Some appear to have been abandoned a long time ago, not as far as I can tell during Greece’s most recent economic problems. This reminded me of Beppu, which is also a town undergoing a collapse in tourism revenue, and also has abandoned hotels and pachinko parlours scattered across the urban landscape – as well as areas of overgrown landscape that should be (and probably once was) carefully tended. It’s as if the Greek municipal authorities don’t really care about the impression that their town gives when people first arrive, or don’t have the money to do anything about it, or both.
We hear much about the infamous Greek government’s “profligate” spending and taxing policies, but looking around Rhodes I don’t see much evidence that ordinary Greek tax-payers are getting much bang for their buck. Whatever municipal services Greece provides don’t seem to be showing up in the most obvious and immediate way – rubbish disposal and parks management. I suspect that there are many Greeks who observe the same thing, and wonder why they’re suddenly having to tighten their belts when they don’t get much in the way of visible public services to start with.
I think Rhodes has in common with Beppu a long-term collapse in its main industry – tourism. This isn’t a novel, post-GFC phenomenon, but is a long-term, sustained trend that isn’t going away and reflects a brutal reality for peripheral tourism towns in developed nations. These towns grew during the boom eras of population growth and tourism, before globalizaion, and in the period when the working class of the developed world had relative purchasing power and free time. These factors combined meant that it was easy for these towns to sustain a huge tourist industry, and areas like Beppu or Rhodes grew rapidly on tourist money. But after the purchasing power of the working and middle classes began to decline, and as Asia developed, I think these tourist towns began to run into trouble. They had to compete with Asian countries for tourists, but comparatively they aren’t a great deal cheaper – travelling to Beppu, for example, costs a Japanese worker only half as much as a trip to Thailand or Cambodia, but hotels cost more. I suspect the same is true for Europeans, who now have options in Eastern Europe (places like Latvia and Croatia) for short trips, and Asia for longer trips. In such a situation, former tourist towns have to either adapt and find new industries, or they will become fading remnants. Beppu may adapt or may fade, depending on the success of its new university; but Beppu has easy road and rail connections with population centres like Kokura and Fukuoka that have huge industrial bases and thriving economies. Rhodes is an island in a country that doesn’t have a large industrial base to start with. What is it going to do?
This is another example of how the GFC may be a symptom of a bigger economic shift, and of western nations’ inability to find a solution to that shift. Industry and economic growth is heading East, and with the development of the East huge sections of traditional western economic activity are being hollowed out. In response to this the west has tried to sustain its economic growth through bubbles, and each successive collapse has simply destroyed more jobs. Greece’s economic problems aren’t solely caused by the GFC, which is simply a symptom of the desperate measures western economic policy-makers have taken to try to deal with the loss of real economic power. The result of this long-term economic decline in Rhodes is a countryside festooned with abandoned, half-finished buildings and sad, empty hotels. The same phenomenon is hitting the UK now, but instead of too many buildings unfinished, the UK has too few buildings, and too many ordinary people up to their eyeballs in debt trying to keep hold of the home they have. They do have the empty businesses though, as whole towns lose their retail sectors and corporate lending dries up.
I’ve got no idea what western policy-makers should do to stave off this change. I don’t know if they can, but I think that “wait for Asia to collapse” is not a policy option, and neither is it wise to seek new and innovative ways to reinflate the housing bubble. I think that maybe they need to revitalize industry policy: pick things they’re good at and make them work. Spend taxpayer money on finding ways to make stuff again. Industry policy is what made Japan, Korea and Thailand successful, and the fruit of that policy can be seen in their theft of western business. But fighting off Asia is going to mean a return to deficit spending, an acceptance of government debt, and a recognition that the market doesn’t just pick winners: it strangles losers. And currently, Europe and the USA are looking like the losers. Rhodes is the sign of things to come, and I think the UK is next if they can’t begin to reflect on the underlying causes of the GFC, and the best way of coming to terms with the new world order.
Compromise and Conceit 
May 6, 2013 at 8:18 am
There are two themes I’d like to address in your post, Greece and Western economies more generally. Personally I don’t see a strong link between them so I’ll address them without reference to each other.
Firstly Greece. I’ve only visited Athens, so my view of Greece is heavily distorted by the small sample, but I’ll share my impressions. I visited pre-GFC and in my opinion, the sense of decay and neglect have little to nothing to do with present economic circumstances. While in Athens, I was constantly struck by the juxtaposition of an ancient civilisation in ruins and the current set of squatters living in 70s era shitholes around them.
The ruins where what I was there to see, and the contrast with Rome was massive. In Rome, the ruins are everywhere, they’re generally built around and minimally protected with a fence or similar. You can see the damage that time and neglect have done to them, but I didn’t get the sense that the damage was continuing. They were just ruins that people that lived there didn’t think about much day to day, but sort of cared about. In Athens the ruins were in worse shape and even elementary levels of care seemed too much effort. The entire place was filthy and all of the modern buildings looked like candidates for urban renewal led by the same army that gave us modern Basra.
I was floored by how few ruins I could casually stumble across and actually disliked the place so much I tried to move my flight forward. The acropolis looked like it was a building site run by a militant union that only worked Wednesday mornings and that it was going to take longer to repair than the thousands of years it had taken to arrive in the current condition. Until I visited, I’d been in favour of returning the Elgin marbles, now I’d support Athens having to get its shit in order before any return – and I can’t imagine that ever happening.
I did ask one local about the terrible state of the place and his reply was that while the buildings were terrible, no one was going to move out of them or sell because they were close to the acropolis and therefore worth lots (but apparently owned by cash strapped owners who can’t afford upgrades or basic maintenance).
I do have to agree with your comment that whatever the Greeks were paying taxes for, you can’t see signs of what they got for it. Given that, austerity looks irrelevant. You could shut the government down and the only difference would be the number of rioters on the street when their 14th month salary doesn’t arrive.
On Western economies, I haven’t done any research, but I think the standard economic wisdom is that the industry policy wouldn’t help as the East still has too much competitive advantage from low wages. Theoretically, the rise of Eastern manufacturing will raise wages over there till the West can compete again and everything balances out. I suspect there is a mixed real outcome for this. If we look at Japan, there was a time when their ascendance was unstoppable, but eventually they arrived at roughly the same living standard as the West [1] and then the rise stopped. We’re starting to see other nations benefit as South Korea hits the same point and industry focuses on somewhere cheaper.
Under that approach, we just have to wait until we’re so broke that Eastern companies ship some of their work to the ruins of London. Practically speaking, industry policy in a democracy is unlikely to prevent that from happening, but China’s currency controls and much stronger regulation may prevent it from occurring there (at a price of keeping their people artificially poor).
[1] Though I’d say they still have much nicer people living at that same standard, which gives the impression that it’s much nicer than it is. It’s amazing how simple politeness makes your entire country seem vastly nicer.
May 19, 2013 at 6:05 pm
I’m back online so I finally have time to reply to comments! Thanks for your observations. First, let me say that I’m really liking Greece despite these comments. When you say “It’s amazing how simple politeness makes your entire country seem vastly nicer,” I agree entirely and so far my experience of Greece has been just that. Everyone is really warm and friendly and cheerful in this relaxed and genuine way, plus the weather is basically perfect every day. That makes the whole place really great, and suddenly I’m not fussed by rubbish or broken glass or things that don’t work.
re: the Elgin marbles, while I think that to a certain extent the claim that the Greeks should get their shit together before the marbles can be returned has its merits, I still think they should be returned on the basis of two arguments. 1) It’s up to Greece if they want to wreck their cultural heritage. It’s worth noting that in the 1970s there was a huge and very militant campaign in Sydney to protect old buildings, and if the business community had had their way there would be no heritage buildings in modern Sydney. At least one woman died (was murdered) during that campaign, which ended with much of inner-city Sydney retaining at least some of its historical character. So at the time that the British museum first furnished this “Greece should get its shit together” argument, much of the developed world was still pretty casual about its own historical monuments. Witness, for example, St Paul’s in London, or the parliament. I’M not a big fan of either, architecturally (I think the parliament is really ugly) but it’s worth noting that they are really crowded in by modern surrounds – you can’t get a decent view of St Paul’s when you’re near it because it has been completely surrounded by ugly modern buildings, and the parliament is surrounded by really ugly roads, barriers and other modern encroachments. 2) The British museum also refuses to return relics to people who they know full well will look after them and give them the respect they deserve: Aboriginal bones, for example, will be buried with full honours, but the British museum still resists returning them. I think they have other reasons for retaining the marbles (i.e. that they are imperial loot that they don’t want to give back) and the “get your shit together” argument is just an excuse. Which isn’t to say that it would be a shame if the marbles were returned and then slowly destroyed by neglect, but that’s just too bad.
I haven’t been to Rome, probably never will, but I think I like the way that Greek ruins are being managed on Rhodes. There, you can basically walk amongst them – I saw a couple snuggling under the shadow of the acropolis there, and when I was in the stadium a couple of people were standing on the old steps, rehearsing a play. It’s natural and simple, and I think it goes well with the ruins, which after all are the remains of places that were once used for very similar purposes. Last night I saw a concert being played in an old temple, and thought it was a really nice backdrop for some classical Greek music. I’ll probably change my tune once I’ve been in amongst the acropolis and its hordes of tourists, though …
Regarding western economies, I think that your view is steeped in the fatalism of modern neo-liberal economic theory, and I’m not sure that this fatalism is well placed (like you I have done no reading on this, so I can’t defend my criticism of your research-free opinion). Japan, for example, has managed to remain competitive with developing nations where other nations have failed, primarily through maintaining a high-tech industrial edge. Australia has resources, but has also managed to maintain a competitive education sector and service sector despite the high dollar and competition from the USA (which has a better university system at the elite level). Classic neo-liberal theory suggests that we shouldn’t pick winners, and should compete on open markets and too bad if the jobs all go offshore to low-wage developing nations, but I don’t think that’s the whole story. In terms of tariffs and subsidies I think it’s probably correct, but there are other ways to select winners in industrial policy. For example, education and research funding can be used to ensure that a developing nation continues to be able to compete and develop in leading-edge technologies. Arts policy can ensure that the country remains adept in the technological and educational underpinnings of cultural exports, without necessarily investing in specific projects. Australia is quite competitive in computer gaming, for example, and could have a large and vibrant porn industry if the correct legal basis was established. This doesn’t mean that the government needs to invest in specific porn film projects[1], but through good policy it can enable such an industry to flourish.
I think to a certain extent Australia and Japan continue to do this, but the UK has given up on this kind of policy, and this is part of the reason that the UK has deeper economic problems than just those due to the GFC. I suspect that Greece could have done the same thing, e.g. by spending government money to support education, research and development in the maritime industry, and also through the simple expedient of capital works not just on the acropolis, but on cleaning up the streets and airports of Greece and finding innovative ways to encourage tourism. I guess that was part of the motivation for the Olympics, but the Olympics are probably a good example of the flaws in straight-out government funding for major projects: they weren’t a very cost-effective way to encourage tourism. But investment in the underlying infrastructure and skills base that maintain tourism would pay off, I think, through private sector growth. Industry policy doesn’t have to mean “sinking money into pointless white elephants.” It can also mean investing in the baseline human and physical infrastructure necessary to maintain an industry[3]. And I think the reason Greece is showing evidence of years of decline is that it hasn’t been doing this. I doubt it is even a case of “hasn’t been doing this wisely,” which some might say about Japan, for example. But of course, I don’t know the details of how and what Greece has been investing in vis a vis industry policy – it’s just my guess based on the general evidence I see for a long period of economic decline.
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fn1: though I do relish the idea of the government running a large fund to invest in porn films, a la the Australian Film Industry fund or whatever it’s called. The idea of having the Australian Adult Film Board selecting great Aussie porn flicks to fund is just too pesky to resist[2].
fn2: didn’t the guy from Hustler suggest this in connection with TARP funding in the USA? I approve of that kind of peskiness
fn3: It’s possible that Greece is suffering from a tourism version of resources curse, in which it can just trade on the existence of the acropolis and thus has ignored all other kinds of tourism development that might diversify and expand its tourism base, at least in Athens. Rhodes was an example of this in another way: the presence of beautiful weather and beaches means that the local government seems to think it doesn’t have to care about things like functioning roads and rubbish collection, because people will just come for the beaches. This only works so long as you don’t have to compete with Croatia. I’ll have more to say about my opinion on this in a future post, I think.
May 20, 2013 at 11:32 am
”It’s up to Greece if they want to wreck their cultural heritage”
On one level I agree based on liberalism, but on another level it’s not just the Greek’s heritage. The ancient Greeks feed directly into all the West’s cultural history. Based on that what we’re facing is two groups of children arguing over who gets Grandma’s silverware – the ones who moved to another city or the ones who didn’t.
“too bad if the jobs all go offshore to low-wage developing nations”
I don’t support an argument that economics is generally a zero sum game, but in some (like this one) circumstances it would seem to be partially true. For example, if all the jobs leave to the low wage nation, then the low wage nation isn’t going to be low wage for long. Therefore what really happens is both countries reach a median point where they can’t take jobs from each other but both still have enough work to drive further development in their country (i.e. funding schools).
This is basically what’s happening with China with the rise of their middle class. The industry policy that China is using is attempting to fight/delay this process to maximise their end position. But ultimately that won’t influence the broader tide. China will rise to become the equal of the West broadly economically speaking [1].
”… the government needs to invest in specific porn film projects…”
Finally! A bipartisan policy that Tony and Julia could agree on!
“I think to a certain extent Australia and Japan continue to do this, but the UK has given up on this kind of policy, and this is part of the reason that the UK has deeper economic problems than just those due to the GFC.”
I don’t really agree. It’s just that the UK has bet on banking, tourism and Doctor Who as its investment options. The UK then has a problem that 1) these aren’t enough to support the entire nation and 2) they have terrible mechanisms in place to share the wealth [2].
[1] Specific things like cultural outputs or manufacturing/service splits are going to vary depending on individual cultures/governments. So the caveats are just attempting to point out that it won’t be an undifferentiated mess.
[2] Specifically, they attempt to share the wealth by taking it off the first guy and directly giving it to the second rather than getting the second to setup a Chinese Massage place that just bills the first guy. That’s the Australian model! [3]
[3] And presumably the Chinese.