The Fiscal Crisis In Southern Europe Is A Consequence Of Corruption, Illegality And Lack Of Morals – Scandals In Italy, While The Greeks Are Forced To Work By Chinese Bosses

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By Paolo von Schirach

October 11, 2012

WASHINGTON – During the recent US Republican Party primaries, former Pennsylvania Senator Rick Santorum emerged from nowhere as a national leader on the basis of one key message: values shape societies and therefore their performance. This is undoubtedly true.

Values and politics

What is less clear is up to what point is it the task of elected officials to preach values, as opposed to dealing with the policy issues at hand. This is a very difficult question for which there is no good answer. It is nonetheless true that, if a society loses its moral compass, then even the best and most enlightened leaders will fail to carry out meaningful policy changes. Modern democratic societies are based on voluntary action, not coercion. Leaders can say all the right things, but if the people are unwilling to listen and follow, then it will all be for nothing.

Italy: not just a fiscal crisis

And this is precisely the case in Italy. As the country was facing an impending fiscal disaster in November 2011, in a rather unorthodox fashion the Italian President Giorgio Napolitano, (bear in mind that the duty of the presidency in Italy are largely ceremonial), forced then Prime Minister Silvio Berlusconi out and appointed Mario Monti, an economist with no political affiliation and impeccable personal credentials, to be the new Prime Minister at the head of a “technocratic government” whose task was to save Italy. Everybody agreed that this was a smart move. And indeed the Monti team moved in and managed to pass austerity measures that at least shored up the country’s finances.

Widespread corruption

That said, the Monti technocratic government soon discovered that it had and still has to deal with a lot more than a serious fiscal shortfall and a stalled Italian economy. The country is mired in corruption scandals, themselves tell tale signs of a deeper problem of widespread lack of morals. Recent headlines, from Rome to Milan to Reggio Calabria in the deep south are about scores of corrupt public officials, abuse of power, kickbacks and strong ties between elected officials and organized crime. (Mafia, Camorra and ‘Ndrangheta).

Half the country goes in the opposite direction

In other words, while an honest and capable Prime Minister preaches austerity, belt tightening, higher taxes and sacrifices, half the country –all the established political elites leading the way– goes in the opposite direction.

They want to keep the old system going, just as if nothing had happened. Forget about the need to save public funds. Forget about productive investments. As the old Italian adagio says referring to politicians: “We steal so that we can rule, and we rule so that we can steal”. Italy is a country in which unethical behavior is the norm and illegality quite common.

Values matter

So, here we are back to Rick Santorum and his efforts to demonstrate that no policy will succeed in a society that lost its sense of ethics. Mario Monti has just introduced fresh anti-corruption legislation. But there is already deep skepticism about its possible impact. And this is because the law targets precisely the same political elites whose votes are necessary to pass it. New laws may be passed. Serious implementation is another matter.

The Greek example

Similar picture in Greece, in fact worse, as the Greeks have a surprising proclivity for (often violent) denial. It is now painfully obvious that the Greek catastrophe is the result of bad policies sustained by lack of ethics. The Greeks had become accustomed to a system in which most people wanted government jobs that required minimal performance, a system in which bribes were needed to get anything done, a system in which public accounts were falsified and endless borrowing was the only strategy.

One might have hoped that, being finally faced with bankruptcy, Greek society would wake up and sober up. No, just the opposite happened. Indeed, as Greece’s imminent demise and the consequent need for an urgent EU-IMF bailout became evident in 2010, the people kept protesting often violently against the austerity measures deemed necessary to cut down the deficit. Workers protested, teachers protested and even taxi drivers went on strike.

Blaming others

In simple words, in a country led to bankruptcy by the outlandish mismatch between the cost of public programs and revenues, while an unproductive economy produces little of value, when the whole thing blew up nobody wanted to take responsibility. And, to date, they still do not. Prime Minister Antonis Samaras applauded a recent official visit by German Chancellor Angela Merkel as a political endorsement by the most powerful European Union country, as a gesture of solidarity with embattled Greece by the country that funds its rescue.

Well, the Greeks used the opportunity for a violent demonstration against the rescuer. “Do you want to know the truth? Germany is the cause of all our troubles. In a mean spirited way, reminiscent of the Nazi occupation, the Germans want to colonize Greece by imposing on us draconian austerity”. This popular “interpretation” of the roots of the crisis is bizarre, itself evidence of people living in a fantasy world in which there is no personal accountability. Whatever the problem, it is someone else’s fault.

When the Chinese run the show

Want another example? The Chinese conglomerate Cosco took over half of the Port of Piraeus, near Athens. The outcome is so stark that it is almost comical. On the side of the port operation run by the Chinese, salaries have been slashed while discipline is strictly enforced. As a result, productivity is sharply up on the Chinese side, while it is the same on the Greek side. For instance, on the Greek side union rules prescribe a crew of 9 to work a gantry crane, on the Chinese side they use a crew of 4. That is a 50% saving in manpower to perform exactly the same job.

Different standards

The Chinese managers expect excellent performance, their Greek counterparts do not. Of course, there are plenty of disgruntled Greek workers who have complaints about the Chinese. Some filed lawsuits, arguing that labor laws have been broken, while safety standards are ignored by the Chinese. May be so. But now under serious, no nonsense Chinese management we have half a port that performs up to world standards. The side under Greek management does not. Values do matter.

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