RENEE MONTAGNE, HOST:
To get a better sense of how Greece ended up having to face those dramatic austerity measures, we spoke to financial writer Michael Lewis. He writes about Greece in his new book "Boomerang," and focuses on the problem of taxes and how many Greeks don't pay what they owe the state.
Thank you for joining us.
MICHAEL LEWIS: Thanks for having me.
MONTAGNE: You have told us before that Greece is a country that lacks civil society. What exactly did you mean by that?
LEWIS: The degree of trust the citizens have for each other. And this lack of trust is expressed in their relationship to their state. They don't pay their taxes, and they really don't pay their taxes. I spent time with tax collectors while I was there, the tax collectors who had been demoted in their jobs because they'd actually tried to do them.
So it's endemic. It's not – this is not a small part of the Greek problem, but a very big part of the Greek problem - is the people don't believe enough in the state to pay what they owe the state. But at the bottom of this is an attitude that you're not going to be prosecuted for this; that it's not really a crime to evade your taxes.
MONTAGNE: And is that true?
LEWIS: It's not true that it's not technically a crime, but it's true that the legal system in Greece has been structured in such a way that you'll never be prosecuted. But it's just one half of the equation. The other half of the equation is how they regard the state as a source of personal revenues. This massive credit bubble that we all went through, everywhere else you saw booms in real estate, booms in asset values. In Greece, you saw a bubble in government jobs.
MONTAGNE: Yeah, you describe it as a giant piñata.
LEWIS: Or a goody bag, you know. It was something that - both political parties were vast patronage operations, and the state jobs were the form the patronage took. And why the Greek system is so intractable is that there are just too many Greeks who are essentially, on the dole.
I mean, the example that I love was an example that was figured out by a former finance minister named Stefanos Manos. And Manos sat down and showed me that the Greek National Railroad generates a mere $100 million euro in revenues a year, and pays out $400 million euro in salaries to the employees of the Greek National Railroad. He'd actually made a calculation that it would be cheaper to put the Greeks who took the trains into taxi cabs than to keep this railroad running.
But every aspect of the Greek government is run this way. It's run for the employees. This is at the bottom of the euro crisis. Different societies in Europe have different assumptions about what's right and proper, and the Greek assumption is so radically different from the German, it's very hard to see how you make the two conform to each other.
MONTAGNE: When did this all, though, come about? I mean, at what point did Greece have a railroad system where it would be a lot cheaper to put all those customers in cabs? Is this decades old, or every election has brought more and more layers of bad management?
LEWIS: You know, it's funny. When I was there, I would try to poke and prod Greeks about where this problem came from, because this isn't news to the Greeks. The Greek people are more cynical about each other than I could ever be about them. You ask them, where does this come from? And they will take you back a hundred years.
The story is the tragedy of the modern history of Greece. This isn't a problem that just was sort of - materialized with money in the 21st century. It was just the kind of – an absence of the institutional framework for a successful democracy, for a very long time.
MONTAGNE: Do you see this changing in the future?
LEWIS: This is the great question, because the headlines out of the European crisis that move the markets every day, they describe, essentially, this event that we're watching as a struggle between financial markets and European elites - that the European elites want to hold the euro together and are doing whatever they can to do it, and the financial markets like what they have to say one day, don't like what they have to say the next.
Underlying all of this is the behavior of the populations – the fact that ultimately, the sentiments of the people will be expressed. And the Greeks are torn because they know that to leave the euro is to return to total chaos. But to stay in the euro is to endure decades of austerity, misery, wrenching change.
So there's no good choice. And no one can know which way an entire population is going to jump, especially when faced with long periods of seeming hopelessness and pain. So my own hunch is that no; that eventually, political pressures will build up in Greece. The population will say, we've had enough of this; anything is better than this - even if it's not - and that they will jump ship; that they will pull themselves out of the euro.
MONTAGNE: Michael Lewis is the author of "Boomerang: Travels in the New Third World."
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