10/06/2011 09:09 EDT | Updated 12/06/2011 05:12 EST

Lessons From Greece's Bankrupt Society

It wasn't just a domestic credit crisis that brought that country to its knees -- it was a much more serious case of social corruption and mistrust, an ailment so deeply entrenched in their national psyche that it could only be wiped out with the help of a deep and painful crisis.


Greece, the country that once upon a time was busy inventing democracy, philosophy and the notions of social justice for the world, has suddenly earned a reputation as one of the most reckless nations of our times -- a dishonest, fiscally irresponsible and nearly rogue problem child of the West that now also has the ability to trigger a global domino effect and pull us all into a whole new financial crisis. How did the Greeks manage to get themselves into such an abyss and what lessons could their experience hold for the rest of us?

I have just returned from spending a week in my sunny birth country, where the only topic of conversation seemed to be "the crisis." They are all debating the root causes of their financial demise and they're as dramatic and angry about it as Greeks have always been -- except this time their exchanges also contain a remarkable amount of genuine introspection and perhaps even a little bit of self-recrimination. They're shocked by the extent of their catastrophe. They can't even see their way out of it yet and they're actually afraid to speculate about their future. As a result, most uncharacteristically, their passionate debates are now almost exclusively focused on trying to figure out just how they got themselves into this mess.

Two hundred years ago Greece emerged from centuries of foreign occupation as an extremely poor nation. It remained near the bottom of Europe until the second half of the 20th century, when it suddenly began to prosper, joined the EU, happily absorbed vast amounts of infrastructural development funding from its wealthier European siblings, attracted some decent foreign investment and showed up one day as one of the continent's most insatiably consumerist "nouveau riche" societies. Ten years ago, when George W. Bush was trying to persuade his fellow citizens to spend their way out of their post-9/11 economic doldrums, he may have been drawing his inspiration from Greece, where meagre income earners were receiving unsecured loans from their banks to fund their extended summer vacations!

But in the end it wasn't just a domestic credit crisis that brought that country to its knees -- it was a much more serious case of social corruption and mistrust, an ailment so deeply entrenched in their national psyche that it could only be wiped out with the help of a deep and painful crisis. Evidently citizens of the modern Greek state had never been willing or able to organize themselves into a properly functioning society.

For a third of the country's families, the state had always been viewed as nothing more than a convenient source of livelihood (one million Greeks are employed in the public sector -- in a country of just 11 million, or roughly three million households). For the wealthier third of the population, the state was nothing but a nasty, enormous and usually very avoidable layer of overhead for their highly individualistic lifestyles. And for the demoralized and disillusioned final third, the ones that were once upon a time considered to be their country's "middle class," the state was nothing but a desperate, worthless and unavoidable source of financial punishment. The publicly-employed third are still draining that nation's coffers at a remarkable rate; most of the wealthier or self-employed know exactly how to avoid paying taxes; and the former middle class is now rapidly losing its historical ability to prop up the state through its own economic activity and taxes.

A society becomes truly bankrupt when the breakdown of the social trust bond (the foundational relationship between the state and its shareholders) eventually morphs into a form of extreme individualism among the majority of its citizens -- and that's exactly what is happening in Greece now. The public employees are angry and can't imagine having to sacrifice an inch; the wealthy are angrier because they have never believed in contributing; and the relentless squeeze of the middle class is now translating into a national panic and the beginnings of a brain-drain. It is unfortunate that it took a crisis this deep and this painful for Greeks to begin realizing what was wrong with the way they organized themselves over the past few decades, but I remain optimistic that my birth country will eventually come out of this mess as a wiser, more functional society -- and hopefully the world economy will manage to contain the spread of this very localized infection.

For the rest of us, however, there should be a fairly obvious lesson in all this: Resist and refute the siren songs of an emerging class of anti-establishment, ultra right wing (previously fringe) politicians whose populist messages about an ever-shrinking role for governments are sometimes quite catchy among the uninformed. It is perfectly reasonable and responsible for us all to be demanding more accountability, transparency and efficiency from our public service providers -- but it's wrong to assume that the path to more prosperity is through ever lower taxes and less government. The more we try to erode the social trust bond and shift the pendulum away from supporting the common good, the more we risk putting ourselves on that same slippery slope of pure individualism that is now wrecking the livelihoods of millions of Greeks.