by Austin Bay
June 22, 2010
In a box in a drawer, I've a dozen Deutsche marks, a few
French and Belgian francs, Italian lira, Spanish pesetas, Greek drachmas,
Turkish lira and British pence.
After the European Union adopted the euro as its official
currency (January 1999), my traveler's spare change collection -- excepting the
Turk and Brit coinage -- eventually became numismatic souvenirs.
The conventional wisdom at the time pushed a narrative of
inevitable Euro-progress. At some point, the Euro-zone (nations using euros)
would expand, and the Turkish lira and the perfidious British pence, too, would
Now, however, the Euro-zone faces a crisis catalyzed by the
potential default of big spending, low productivity nations -- Greece, Spain
and Italy, with Portugal and Ireland also in trouble.
Greece teeters on the edge. The Wall Street Journal's Paul
Hannon wrote this week that "the failure of its (EU) systems for
monitoring and controlling build-ups in government debt" are why the
bailout loans given to Greece by the International Monetary Fund (IMF) and
fiscally disciplined EU members like Germany became necessary.
He's right. "Failure of its systems for
monitoring," however, is a euphemism -- economic diplo-speak for a very
difficult word: corruption. Greek governments cooked the books (its actual
deficit is twice as high as officially reported), violated fiscal agreements
and borrowed money they could not repay.
Corruption lies at the dirty core of the Euro-zone's
trouble. Governmental corruption and its cohort, illicit business practices,
are a pervasive, multicultural, global affliction.
Corruption coupled with systemic lack of accountability --
to include personal accountability, where managers and workers let
lackadaisical and lazy work practices slide -- eventually produces more than
anger, cynicism and financial turmoil. Even among economies in the developed
world, it stunts economic productivity, robs the future and sows the seeds of
armed conflict. In the developing world it undermines aid efforts, manacles
fragile economies and as a result condemns millions to poverty.
Transparency International (TI) ranks Greece and Romania as
the most corrupt nations in Europe, tied for 71st internationally. TI also
provides a stunning statistic: In 2008, 13 percent of Greek households paid a
bribe. The Greeks call it "fakelakia" (little envelopes), but the
money is huge, around $950 million to public and private bribe-takers.
The Greeks know it. Reuters cited a Greek poll, taken in
early June, which found 78 percent of the Greek people "accept the view
that many or all in government are corrupt." FoxBusiness.com reported
Greece's finance ministry "has discovered rampant tax evasion and
corruption, including bribery, in its own tax collection offices." The
finance ministry is investigating "70 government officials who make about
$62,000 on average a year, but own anywhere from $982,000 to $3.7 million in
real estate." Greek tax evaders cost the country $27 billion a year. Last
month, the EU and IMF loaned Greece $120 billion. You do the math.
Greeks working in
internationally linked businesses, like tourism, face the consequences of this
corruption. Earth Times quoted a guesthouse owner on the island of Ikaria as
hoping "the firm focus of international attention" may help Greece
"combat its homegrown corruption and government waste."
That's an anecdote from a businesswoman in the fiscal
trenches. Ikaria is where the mythical Icarus' body washed ashore. With wings
of wax and feather, Icaurus and his father, Daedulus, escaped from Crete, but
Icaurus, despite dad's warning, flew too close to the sun and his wings melted.
Icaurus didn't lie, but he lacked discipline -- thought he could do his own
thing. He plunged into the sea. Hotel operators understand the myth's 21st
The big idea driving the euro and the European Union was
political -- to create a larger common interest based on linked economies.
Perhaps growing common interests would ultimately forge a common identity, or
enough of one to end Europe's destructive wars, especially those pitting France
That is still a very good idea, which is why a European
"common market" makes sense. Honest trade builds bridges. A common
currency union, however, which lets crooks in Athens pick the pockets of a
French farmer or German brewer, seeds conflict.
The D-marks and francs in the souvenir box may have a