Courting Disaster: Eight Addictions Preventing Greece's Economic Recovery

There comes a time in every potentially fatal crisis when diplomacy becomes a criminal disservice and people who really care need to speak the unvarnished truth.

For the leadership of Greece, the EU, IMF and ministers who met at last week's Annual Meetings that time is, as my Spartan mother would say, immediately if not sooner.

The Greek people deserve to be told what they have subconsciously known all along and what their raging resistance to change confirms.

The reason this is so difficult is because it's not about making minor adjustments. It's about managing the addictions that created this problem and are making recovery impossible.

Practices that become addictions are not character flaws, calls for moral judgment or evidence of inferiority. They are habits that in some doses and under some conditions bring about great results. But in changed conditions and excessive quantities, can inhibit adaptation, become self-destructive, and in Greece's case, could eventually leave them powerless in determining their fate.

At an IMF panel discussion on Europe held in Washington, D.C. this past weekend, Gao Xiqing, president of the state-owned China Investment Corporation argued that the current financial crisis shows the shortcomings of western-style democracy and culture and said, "You come down to the ultimate question: Can you pull it off? Culturally, you need to change your way of living and change your way of spending."

This dictate is an Asian echo of German statements made a few months ago demanding that the Greek government starts forcing Greeks to spend less time relaxing and more time working a-la-Germany, if they want German support.

Added to these voices we also have the Troika -- the IMF, European Central Bank and the European Commission -- de facto telling Greek lawmakers that implementing changes in Greek lifestyle is a condition of their releasing the 8 billion euro tranche of bailout loans Greece needs to meet its next payroll.

Chinesification, Germanification, Troikazation. Many prescriptions are being offered to save Greece from committing economic suicide and begin recovery, all of which bring to mind the proverbial joke that asks, "How many psychiatrists does it take to change a light bulb? Only one, but the light bulb has to want to change."

Funny as this may be in the abstract, considering the dire consequences of unwillingness to change, this is profoundly sad as it applies to Greece and affects the global economy, and no joke at all.

If Greeks want a recovery, they must start managing these addictions:

1) Strikes and Protests: For two days this week, protesters blocked the Troika's entry to ministries. The inconvenience and ill-will that transportation strikers and protesters create among Greek citizens and the tourists the economy depends on is nothing compared to the way they are eroding stakeholder confidence that Greece can change. Every time Greeks block traffic, they block recovery.

2) Still Spending: Perhaps mirroring what the Greek government models as it continues to dream it can collect enough new revenues to avoid having to cut costs, Greek citizens are still spending. Last month I saw plenty of middle-class Greeks still vacationing in Greece and beyond... and complaining vehemently about their situation as they stood in line at the Eiffel Tower and Topkapi Palace. This month the Troika is enduring the abuse of protesters to try to help the government see the difference between real and virtual savings.

3) Short-Term Thinking: First cousin of Still Spending is Greece's continuing determination to "Live for Today." In fact, the Greeks have a saying for days just like these. "I ftohia theli kaloperasma," says "Poverty needs to be endured well," i.e.: especially when you're poor, you need to have a good time. Panormou cafes just north of Athens' downtown protest centers are packed with unemployed youth definitely not implementing austerity. The Greek refusal to project the consequences of today's choices forward and start acting strategically could be fatal.

4) Shooting the Messenger: Every time Finance Minister Evangelos Venizelos returns from meetings with global leaders and explains what will happen if Greece continues to resist change, the Greek press turns the issue into a question about his character and beats him mercilessly.

5) Selective Law Enforcement: Protecting the rich and condoning corruption.

6) Pseudo-Social Protection: Acting as if keeping all public sector employees on the payroll and professions closed is protecting people when in fact it's suffocating growth.

7) Senseless Disincentives to Work: When asked why significant numbers of educated people don't work, Greeks most often say, "Then mas volevi," meaning "it doesn't pay." Many highly skilled retirees in the prime of their lives with valuable work experience have no incentive to work because added income decreases their pensions. So they either sit unable to contribute their expertise, or find corrupt ways to earn untraceable (and therefore untaxable) income.

If by some miracle an educated young person finds a job these days, the pay is so low that parents have to subsidize the kid's employment costs. If that includes paying for an apartment in another city, many parents can't afford it. And even if they can, the net is a financial loss to the family, not a gain. Consider also the meta-loss; the next generation not being given the opportunity to develop and take charge of Greece's future.

8) Shipping Most Precious Resources Abroad: So what are the kids talking about while spending money in cafes? How to get out of Greece... immediately if not sooner. While the parents are still resisting rehab, the kids are packing to leave.

Seventy percent of Greek college graduates want to leave Greece, and 40 percent are actively seeking jobs abroad.

Part of the reason Greece got into this crisis is because her infrastructure fell so far behind that of other developed countries. If she doesn't find a way to keep educated youth in Greece now, the loss of a whole generation will put her an additional 20 years behind, and becoming competitive will be hopeless.

Some might add "Stupidity and Stubbornness" to this list while others consider the strikers and other tough resisters nothing short of smart.

The more objective assessment is that Greece is experiencing cognitive dissonance. That's an uncomfortable stage of change where people feel stuck in an impossible dilemma and particularly tough when they think change might compromise their core identity.

Would Greeks still be Greeks if they stopped living for today... or striking? Who would the Greek mothers and fathers of democracy be if they compromised their independence?

Admirable parents.

The easiest way out of dissonance is to reach for a priority that transcends the dilemma and gives people the will to change.

Like putting the impact of these addictions on your children and the long-term survival of a sovereign country above the question of an identity crisis.

The longer Greeks stay stuck in their internal struggle, call it social or psychological, the greater the pressure becomes for the Troika to give up. That might temporarily relieve Greece from having to struggle with choices related to getting external support.

But very soon after the Troika drama ends, Greece will implode any way, and in a state of political and financial bankruptcy, will have to face exactly the same set of difficult choices... and somehow finally make the tough ones.

And in the meantime, here is a titanic tidbit to add to Gao's Chinese dictate. The number of Chinese traveling to Greece and opening businesses in Greece is mushrooming faster that you can say "shiitake." If there's any doubt about that, look out the window as your plane taxis into the Athens Airport. See that massive China Air plane next to you? Notice the huge percent of Chinese tourists at the hotel's buffet breakfast. Have you ever seen that before in Greece? No. See who has moved into the store down the street vacated by your bankrupt Uncle Panos? A Chinese citizen... who speaks Greek.

What Gao didn't say but the presence of so many Chinese in Greece may foreshadow is that if Greeks don't change their way of living to save their country, the Chinese will bring their way of living to Greece, as they have taken it to Africa and elsewhere. Apply their collective, un-democratic approaches and more austere lifestyle to take advantage of the opportunities created by unyielding Greeks stuck in between choices.

Greece is driving herself into a state of vulnerability where her bargaining power will be so diminished that what could have been healthy partnerships with foreign investors will become virtual occupation.

Of all paradoxes, is Greece really prepared to have her addiction to individual independence give the Chinese, Germans, or anyone the opportunity to ring in a new century of... Ottomanization?