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Tourists as tax spies and similar Greek tragicomedies

The gap between the new Greek government and the basic rules of civilization and common sense has grown and it has probably become unbridgeable by now. 320 billion euros is a lot of money but the mental deterioration of the Greek political elite and the moral degradation of pretty much the whole nation is even worse news.

These days, it's being decided whether and when Greece will join the third world. But the new Marxist leaders of the cradle of the Western civilization seem completely disengaged.

Of course that their economy in the modern sense is dependent on lots of financial transfers involving the foreign countries, especially because the overwhelming majority of the Greeks have been made totally incapable of living without the help of the nanny state.

The international aid may only continue if some conditions that were negotiated – or perhaps modified conditions that are similarly promising – are satisfied to guarantee that the Greek public finances will be moving out of the hopeless state where they have converged so that new insane piles of debt are no longer produced in the future. But does the new government want to do something to improve the situation – and to convince the creditors as well as the potential future creditors that it wants and it is able to improve the situation?

They seem to have very different priorities.

For example, the typical moronic Greek voter doesn't like the Troika (the "triplet" EU+ECB+IMF bunch of officials representing all the creditors) – so their representatives spend hours and days by talking the Troika out of existence, by renaming it to "the institutions", by moving the negotiations away from Greece and back, and so on. They don't understand that the Troika already *is* the most imaginable politically correct and borrower-friendly solution – under normal conditions, the Greeks would be interacting with special units of the Bundeswehr, not with polite international technocrats.

The other side is rational – so of course that the Eurozone ministers are mostly ready to rename "Troika" to "the institutions" or "the wakalixes" if it makes the Greek communist clowns happier as long as the principle is the same. And they may move the negotiations from one place to another – even though every rational person must be shocked by this totally unjustifiable transfer of hundreds of Greek communist apparatchiks from one side of Europe to another. One must ask: Why? Are these totally indefensible extra expenses the thing that Greece wants to pay exactly during the days when it should be proving that it is able to save at least some money? And are these longish discussions about irrelevant formalities a good way to spend the days whose every hour may be fatally important?

When someone is lethally threatened, the survival instinct commands him to forget about the details and focus on the essential thing. Syriza's government seems to focus on the silliest imaginable details in that situation – and they seem to be proud about it!

But if Tsipras and comrades want to abandon the existing bailout conditions agreed upon in 2010 and 2012, do they actually have any acceptable alternative? Everyone who is sane knows that there is basically no peaceful alternative that would avoid a dramatic and abrupt collapse of the living standards in Greece. Greece is in real mess and any suggestion that there are some easy solutions is a self-evident lie – unfortunately one that millions of degenerated Greek voters aren't able to identify as a lie.

Can they improve the government's budget if they want to return – and put on steroids – the welfare state they have had, to spread tens of billions for extra new gifts to their voters and the nation in general, to squeeze the Greek commercial lenders even more than they have been, and to escalate the jihad against the Greek wealthy folks who are really the potential employers and the only key to an improvement?

The obvious answer is No, things are guaranteed to be much worse than they have been at any point in the last 41 years. Syriza is the concentrated essence of everything that is wrong and crippling about the left-wing politicians in the history of the whole mankind. But maybe they have gotten some alternative ideas that are unknown to the right-wing and generally sensible politicians and economists, haven't they?

Yanis Varoufuckis has told the Eurozone finance ministers what the alternative idea is: He plans to hire undercover tax spies among tourists and students. They will be equipped with hidden cameras and sound recorders to catch the Greek entrepreneurs who avoid paying taxes from their revenue. The message will be broadcast to the finance ministry in time and the tape will self-destruct in ten seconds. Isn't it exactly the kind of a great alternative idea that may save the Greek finances?

(Ubelievable enough, Varoufuckis himself has arrived to some Eurogroup negotiations with a camera that was on – he was also 35 minutes late.)

If you were a teacher of the civics and a 10-year-old boy would invent this idea to improve the society, he may be praised for this creative idea and perhaps get a B from his homework. But holy cow, Mr Varoufuckis is supposed to be an actual finance minister – moreover one in a country that counted itself as a part of the developed, first world. And not just an average finance minister who doesn't have to do much. He is supposed to drive the Greek finances through these extremely dangerous, and possibly fatal, waters. His ideas about economics are as childish as those of a B-earning average 10-year-old boy. As soon as it became clear that the Greek political system is totally crippled because loons like this took over, the negotiations with them should have stopped. They just can't lead anywhere.

Of course that in principle, it's possible that one catches someone who evades taxes – almost everyone does and if you record a sufficient number of conversations or whatever is needed, you may be able to find some evidence. But what will you do with the evidence? Will the Greeks be happy to punish those entrepreneurs who became victims of the rats' attacks?

Most people in Greece are evading taxation – to one extent or another. Sometimes they help each other to do so. You are suffering so much, my friend, and the government is so evil when it wants to collect the money – it is only a nice government when it gives the money to everyone. The degree of compassion is high. Obviously, if someone becomes a target for rats, other people will be even more compassionate with him. You can't jail these tax evaders – a big portion of the productive Greeks would be eliminated if you did.

Even if these people are forced to pay, it won't really improve the finances much. First, the rats will cost something and the taxes they will be able to recover may very well turn out to be smaller than the cost of these new rats (left-wingers like Varoufuckis – but even those who consider themselves much more moderate – always overlook all the costs of their beloved policies). A rat may have a proof that taxes from a German family's lunch were not paid – but he or she may need to be paid much more for this "achievement" and no other tax evasion has really been proven. From this viewpoint, the informers may be nothing else than a new layer in the insanely bloated Greek bureaucracy.

And even if the rats were cheap and if they managed to catch some significant amount of unpaid taxes (again, you can't really start to jail these folks because everyone could be jailed), it wouldn't really help with the finances in the big picture because many of these people could be "partial payers of taxes" who don't pay everything because they're scratching out a living. The extra payments they would be forced to make could send them out of business – and actually lower the Greek tax revenues in the future.

The amount of tax evasion that is tolerated by the Greek society (or another society) corresponds to the typical moral standards and habits over there (or elsewhere). If you want to improve the situation, you have to do it pretty much uniformly so that all competitors are affected equally – and such a change must be gradual and is a slow, impersonal process. A selective targeting of random targets by rats can't improve the situation.

This whole line of thinking (inventing would-be clever ideas such as the undercover tax spies), this whole philosophy is nothing else than a totally vague wishful thinking, a utopia that hasn't been analyzed quantitatively by its very authors at all. Communists like Varoufuckis are dealing with the nonsensical nature of their communist utopias by piling new utopias on top of themselves – whole skyscrapers and pyramids of extra utopias. The undercover tourist tax spies are a joke and that's how the Eurozone finance ministers rightfully understood it when they laughed out loud after Varoufuckis has presented this "plan".

If the folks in Syriza want to save Greece from a really profound drop that will take many decades to be undone, they should fire almost all public employees, flatten the taxes, abolish the minimum salary and 13th and 14th salaries and bonuses for clicking the mouse and for the early arrival to workplace, and so on and so on – and they should collectively commit suicide because if people like Syriza actually stay alive in Greece, chances for a recovery will be slim for the rest of the 21st century. Doing less than these things is just not enough to save their country.

If they fail to do so, the public employees will be fired automatically when Greece goes bust later this year – but it will happen in a disorganized way that will also destroy most of the things in the Greek public sector that were actually useful or vital for somebody (there are not too many of them but they exist, like in every human society). Of course that the creative powers of capitalism will show their muscles and Greece will ultimately rise from the ashes, but it may have to start from scratch and such a path may take a very long time.

(Greece won't have the money to manage the courts, police, and prisons in a few months so it may be rather rational for Greeks not to pay any taxes now – and to steal other things, too. I am not recommending it but I do think that the further collapse of the discipline – along with the deteriorating tax revenues – is more or less unavoidable in these conditions, with these expectations.)

Today, the markets reacted nervously to the new wave of Greek complications (plus some weak Chinese data and hints that the Federal Reserve may soon start to raise the U.S. dollar interest rates). I guess it's not the end of it. But the fall of the euro because of the Greek tragicomedy is irrational. The more likely it is for Greece – the weakest link in the chain or the most bankrupt country in the world, as Mr Varoufuckis correctly called his homeland – to leave the Eurozone and perhaps the EU as well, the stronger the currency of the remaining EU should become.

Too many people still prefer their irrational knee-jerk reactions, however.

Another quote by Varoufuckis seemed fascinating to me: He said that to give a loan to Greece was a crime against humanity. Wow. I hope that if helping a country that has crippled itself by having voted populist left-wing scum for 40+ years is viewed as a crime against humanity, people outside will notice and will choose other, very different solutions such as carpet bombing in the future.

BTW Juncker, a potentate in the European Commission, has "promised" that Greece will never be expelled from the Eurozone or the EU. Obviously, this promise will be violated – but even the fact that this proclamation will make it harder and slower to expel Greece makes Juncker's comment extremely irresponsible because the expulsion will be needed to preserve the existential interests not just of the EU or the Eurozone but that of many actual European nations. It's the presence of clueless idiots like Juncker in the EU hierarchy that perhaps justifies the drop of the euro.

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snail feedback (11) :

reader Shannon said...

Nothing will stop the tax spies students or tourists to blackmail the shop owner by demanding further discount so they won't report them ;-).

reader William said...

It emerged today that even the former finance minister - Hardouvelis - sent his money abroad:


reader LB said...

PS. They can squeeze the banks more. It's call default

reader LB said...

Then the shopkeeper will record the interaction, and that will show the extortion

reader Fred said...

Juncker once stated that when things get serious you have to lie. So this lie by him about Greece never leaving the euro means that things are very serious.

reader Shannon said...

Mmh... how would he prove the identity of the customer if he pays cash or with somebody else's card ? Nah...

reader LB said...

It was about 'tourists' shaking down shops. If the shopkeeper records the transaction, then the 'tourist' is the one committing the crime.

reader mke said...

"Helping a country" my arse. Europe has been making good money on Greece's debt. I thought the higher the benefit, the higher the risk. You don't like it? Well, just do not buy greek bonds.

reader Luboš Motl said...

Dear mke, the help to Greece in recent years went well beyond the market interest rates.

In 2010, the interest rate was artificially lowered and in 2012, a haircut reduced all the debt by 1/3 or so.

All this reduction was clearly a gift of the other Europeans to the Greeks. You are insane if you don't see it.

It's great that the interest rates for commercial lenders were high because of the risk but one must still remember what the risk was. The one and only risk was that Greece will become an economically dead, non-existent entity.

So I insist that if this "risk" turns to a "sad fact", Greece will no longer belong to the people who were connected with the defunct entity known as the "Greek government" and all the territory and everything non-essential that belonged to the Greek government will be confiscated and divided to the lenders to partially satisfy their claims.

There was never a risk of any other sort. Greece can't just continue to live and not to pay - it would not be a default but an attempt to steal a horrendous amount of money.

I haven't lent a penny to Greece but I will always insist that those lenders who have lent something have the right to demand the money as long as something like Greece "lives" in the economic sense. One simply can't "erase" the debt and continue in the life. One may only erase the debt by ceasing to exist. That's the only risk for the lenders.

reader Uncle Al said...

Luboš ineluctable lucidity suffers national and international finance not being rationally criminal. The EU and US are a race to devalue respective currencies to toilet paper, without inflation. Some $(USD) 2 quadrillion in unrecoverable debt can vanish without planetary civil insurrection secondary to utilities' and supply chains' core collapse.

First the external neutrino burst, interesting but of no major concern for non-local onlookers. A few hours later, the supernova. Addressing the neutrino burst is futility. Europe historically collapses. A more worthy carrion eater then gorges. Will it be Russia with iron and nothing to lose, or China with flesh and everything to lose?

reader Luboš Motl said...

It's a great point, Shannon. These "tips" that the spies would demand could mean that a significant portion of the recovered tax revenue goes to foreign owners which is effectively analogous to a 100% interest paid on this money - so for example, it's a very bad idea to use this money to repay the money that could be borrowed cheaper than that.

I wrote this comment - a much longer one - yesterday but I got a blue screen of death, and then 4 more, including 2 preventing me from completing system restore, which I completed in safe mode, thank God, it works now, a day without BSOD is probably enough to see things are fine. Probably due to my reckless uninstalling of the Windows Phone and USB drivers a day earlier.