Back again.

Here’s my latest Commentator piece, on the Greek referendum:

Greece has long been seen as a disaster waiting to happen, and that disaster is now happening. Greece for far too long (a) has spent beyond its means, but worse (b) has not invested borrowed money wisely, and worst of all (c) has set up its internal affairs to make it easy for the mass of Greeks to avoid paying the taxes needed to support this situation.

True, successive attempts to bail out Greece in the past few years have made footling mistakes. Once the sums of money involved compound up to levels that are not going to be paid back under any conceivable scenario, the time comes ruefully to write off some of those debts and start again.

Everyone involved is poorer, sadder and — in principle — wiser. But in return for this strategic concession international lenders can insist, nay demand, that Greece implement radical reforms so as not to end up in the same absurd situation again. What if Greece’s leaders and system won’t or don’t or can’t deliver that? Chaos. A fine University of Chicago round-up of it all is here.

All this would not matter so much if Greece were not in the Eurozone (and in the European Union and NATO). Bad-tempered defaults could take place at arm’s length as has happened plenty of time.

But a Greece in the Eurozone is a different matter. The Greek government thinks that it has negotiating levers denied to non-Eurozone defaulters, namely to threaten to wreck all sorts of EU processes if it does not get its way.

This of course infuriates top EU leaders who are already scrambling to find ways to give Greece money on a scale far exceeding the sorts of money available for normal development assistance for (say) Africa, and who have been startled by the failure of successive Greek governments to fulfil many reform promises that are clearly in Greece’s own interests.

Right at the highest level of EU policy-making, the vital ingredient of personal trust between key people has gone. Hence the omni-shambles of the improvised Greek referendum, where voters are being asked to vote on options that may not exist as banks and other vital functions of a modern economy start to seize up across the country.

I was on Sky TV live from Crawford Towers this very morning, talking about the pros and cons of trying to make progress in these incredibly sensitive negotiations by announcing positions on Twitter. Basic answer: bad idea. This sort of crisis is when above all else leaders need to trust each other and try in private to strike tough deals they can then defend publicly. Accounts differ as to who in all this has been more beastly to whom. But my own sense is that the Greek leadership tried various self-indulgent and naive power-plays that have not come off, leaving the senior EU negotiators personally baffled/exasperated/angry.

What is the morality of all this? Leftist commentators insist that the Greek masses are being bullied and impoverished by heartless capitalists. How dare the EU defy genuine Greek democracy? Time for Greece to leave the cruel Eurozone?

Rightist commentators point out that Greece and the Greek problem have already had staggering sums of money thrown at them, to no avail. Time for Greece to leave the sensible Eurozone?

Probably.

But beyond that are unspoken assumptions about what level of wealth Greece and Greeks ‘ought’ to have. Is it not unacceptable that Greeks as Europeans apparently face the prospect of slumping backwards towards the meagre living conditions and wretched health-care of (say) Africans?

Or put it another way. Don’t Europeans merely by virtue of existing ‘deserve’ to be richer than (say) Africans? And don’t all other Europeans owe Greeks a duty of solidarity to stop things getting that bad?

The answer is a resounding No. It makes no moral sense to subsidise Greeks to live beyond their means when there are far more far poorer people in the world also needing support. The more so when probably every single Greek family is implicated one way or the other in cutting corners, or not paying taxes, or voting for corrupt, lazy governments. Not just now and then, but over decades.

Tough. Therefore what?

There are options. If the Greek government were sane it would leave the Eurozone, suspend its membership of the EU, and invite in experts from Hong Kong to produce a monster package of reforms sweeping away thousands of footling rules and restrictions and slashing government functions.

The aim would be to make Greece within weeks the most open and least corrupt economy in the western world. Armed with that clear signal of a clean start mobilising every Greek citizen to work hard and start behaving honourably, the Greek government could return to the word’s financial markets and start cutting smart deals.

Will that happen with the motley eccentric far-Leftists now running Greece? No. Instead we’ll get more evasive vainglorious grandstanding and accompanying anguish and stupidity, whose unpleasant consequences will echo on down the decades.

Oh, and Greece should not expect Russia and/or China to offer fat cheap loans so that Greeks can live at higher standards than their own citizens without working hard and paying taxes.

Conclusion? Don’t ignore laws of nature. The only thing separating any of us from living in caves and chewing grass is the compounding wealth arising from self-discipline, human inventiveness and hard work.

Smart policies have compounding effects that make you rich. Wasteful or stupid policies have compounding effects that make you poor.

It can’t be said often enough:

Man is free to evade reality, he is free to unfocus his mind and stumble blindly down any road he pleases, but not free to avoid the abyss he refuses to see…

As of this evening there are various slightly more emollient noises sloshing around. But it’s hard to see how any sort of useful deal can be struck if the EU leadership simply don’t trust the current Greek leadership to do whatever they promise.

On Sky TV I was joined by Greek actor/writer Alex Andreou, a fan of what the Leftist Tsipras tendency is trying to achieve. From his writings on this subject:

The choice being presented to the Greek people is a difficult one. Stuck between the devil and the deep blue sea, as they say. On one hand, continuing a programme which has decimated the country and its economy, plunged millions into poverty and has killed many thousands. On the other, the complete unknown. No, not automatic Grexit, as some would have you believe. But certainly the possibility of it.

The side which supports saying “yes” to the disgraceful agreement being offered, in exchange for staying in the Euro, paint it in two ways: First, as a battle between certainty and uncertainty. But that is misleading. Because, by examining our country’s trajectory over the past five years, the certainty being offered by a “yes” is a certainty of more misery, more poverty, more humiliation, more degradation. Those recommending “yes” to taking more of the medicine being extended to us, do so in the full knowledge that this medicine is poison.

Second, the choice is being painted as one between emotion and reason. It is, of course, not unusual for the established to be presented as reasonable and the radical as emotional. It is pretty much the whole basis of conservatism. But fear is also an emotion. And what drives the “yes” camp seems to be a very clear terror of the notion that the unknown might be even worse. It is the logic of locking yourself inside your cabin on the Titanic, because the lifeboats are small and the ocean frozen.

Nicely put. However, his piece and his measured (if in my view weak!) arguments today on Sky (“negotiating by Twitter shows just how far the Greek government is committed to democratic transparency…”) fail to take into account the systemic inability of Greece to pay its way in the world, in part due to mind-boggling tax evasion that the whole population have accepted as normal. See this comment below his piece by someone who seems to know what they are talking about:

WHAT THE IMF, ECB & EU AND THE POPULATIONS OF OTHER EU COUNTRIES KNOW AND ARE NOT FORGETTING IS THAT GREECE HAS RECEIVED BILLIONS AND BILLIONS SINCE IT JOINED THE EU AND MORE MONEY SINCE IT HAS BEEN ACCEPTED IN THE EURO ZONE, OF WHICH PRACTICALLY NONE HAS BEEN SPENT AS AGREED AND EVERYBODY – NOT JUST GOVERNMENT OFFICIALS – POCKETED SOME OF IT ONE WAY OR THE OTHER. IT IS A WAY OF LIFE HERE.

OVER THE YEARS I’VE HAD TO USE A PLUMBER OR ELECTRICIAN, ETC. BUT NEVER RECEIVED AN INVOICE, FOR OVER 3 DECADES I NEVER HAD A LEASE FOR HOUSES OR APARTMENTS I RENTED; A FRIEND OF MINE HAS DONE FOR 130 000 EUROS WORTH OF WORKS IN HER HOUSE ALL WITHOUT BEEN HANDED AN INVOICE AND EVEN IF YOU KEEP ASKING FOR IT YOU WILL NEVER OBTAIN IT. THEY ALL KNOW EACH OTHER SO EVEN IF YOU COMPLAIN TO THE TAX OFFICE NOTHING IS DONE AND THIS GOES ON EVERYDAY.

I COULD BORE YOU WITH HUNDREDS OF EXAMPLES. ONLY A SMALL FRACTION OF THE POPULATION PAYS TAX AND ACT AS GOOD CITIZENS. AS SEVERAL ECONOMISTS HAVE INDICATED, GREECE’S PROBLEM IS ITS NON-WILLINGNESS TO CHANGE AND MAKE THE NECESSARY TAX REFORMS! WHY ARE THE SHIPPING COMPANIES STILL NOT PAYING TAXES? WHY IS THE CHURCH PAYING REDUCED TAXES OR NO TAXES AT ALL ON THE VAST MAJORITY OF THEIR BUSINESSES? WHY IS THE LAND REGISTRY NOT DONE YET? BECAUSE IT IS A SURE WAY TO KNOW EXACTLY WHO OWNS WHAT AND IMPOSE TAXES LEVIES.

In short, there are two issues here all entangled. Should previous Greek debts somehow be written off, if only for the simple reason that Greece is never going to be able to pay them? And on what basis should anyone sane lend money to Greece in the future?

Given that writing off the debts or great chunks of them means that German taxpayers have been royally stiffed (as they were assured would NEVER happen when they unhappily gave up the DM), the willingness of German leaders to put billions more at risk must be doubtful.

Which, of course, explains why ‘negotiating’ via Twitter is unwise. It’s never enough to be firm, principled, energetic, or clever in this sort of negotiation where you need to maintain a sensible relationship with key partners on a wide range of fronts, not just this one. You want them to do things that may cause them huge political and personal grief.

So you need to be wise. And, above all, you need to be convincing.