Greeks, Goldman Sachs, US Goverment–whose mess is it?

Note: this post was inspired by a lively back and forth between the authors of the Monevator and Money Energy on the issues surrounding the Goldman Sachs scandals, the responsibilities of various nations involved and the economic differences between the US and Greece.  You can see those posts and threads here and here.

Watching the Goldman Sachs scandals unfold as a US citizen and resident of France has been an interesting journey to say the least. To me, Goldman Sach’s entanglements with Greece felt to me like an act of war on the European Union. I wondered what the US government would have to say about all this and discovered, to my mystification, that all of Goldman Sach’s questionable behavior both in Europe and the US appeared (mostly!) legal.  See this great Newshour report for a summary of how this is possible if, like me, you still struggle to fathom it–this explanation is for Goldman Sachs’ shenanigans in the US, but the basic principles are the same as with the Greek fiasco.

Blaming Goldman Sachs? Too easy, I’m afraid.

Goldman Sachs did what any an amoral(immoral) corporation would: make money by any means legally possible. They make an easy target for hatred, especially when you see the contents of their personal emails splashed about the news (who are these people?!?) or watch their representatives being vilified by congress (Newshour coverage).  Here’s a gem from Senator John Ensign of Nevada during recent Senate hearings:

I think most people in Las Vegas would take offense at having Wall Street compared to Las Vegas, because, in Las Vegas, actually, people know that the odds are against them. They play anyway. On Wall Street, they manipulate the odds while you’re playing the game.

Does that tongue-lashing make you feel better?  . . . Me either. Part of me would love to see Goldman Sachs actually face the real threat of being held legally accountable for their actions–but that would have required their actions actually being illegal.

Blaming the US congress and US voters?

I’m not particularly impressed by our members of congress at this time. Perhaps US voters should consider vilifying (and then voting out) our politicians, rather than allowing ourselves to be distracted by their silly Senate hearings about actions the implicitly appear to condone when they refuse to make them illegal.   Indeed, by sitting back and failing to act, we are also condoning such behavior. 

And what about those Greeks?

The French media are very preoccupied with the financial corruption of the Greek government, and the rampant tax evasion that occurs there. Often sited here in France as a symbol of corruption and irresponsibility, le travail au noir, or under the table work is a common source of contention.

After all, if you found yourself forced to shoulder the debts of a fellow Euro nation, wouldn’t you want to know that the citizens of that nation were at least paying their own fair share of taxes? It all starts to seem rather incredible watching people who allegedly don’t pay into their own social programs rioting in the streets when those social programs prove underfunded.

Greek Fiscal Fraud–is it justified?

Recently, I saw a most compelling article at Le Figaro, in which Catherine Schlepp, a former resident of Greece sets out to explain the rampant under-the-table work environment in Greece.  By the time I’d finished reading it, it had  me wondering whether I wouldn’t be guilty of tax evasion myself if I lived in Greece.  As Schlepp puts it:

If the Greeks cheat and refuse to pay their taxes, if fiscal fraud has become a national sport, it’s also because the role of the government is less visible than it is in France.”

She then further details failures in all areas of Greece’s public sector from education, to the hospital system and the justice system and depicts a country with relatively low social assistance for the unemployed.  Given such a track record, it’s no wonder the Greek government struggles to impose new taxes or simply collect those already in place.  The question the Greeks seem to be asking: “What have you done for me lately?”

Schlepp argues, rather convincingly, that for the Greeks tax evasion has become a “condition of survival.” Indeed, when you factor in the arrival of the Euro, the already struggling Greeks have seen their cost of living skyrocket, keeping pace with the costs in other European countries while their salaries have failed to budge.

How relevant is the Greek example to other nations today?

What has happened (over many decades) in Greece is what happens in any nation on any continent whose government becomes too corrupt and inept to help its own citizens–or to allow them to support themselves financially without cheating. To say that economically the US is better off than Greece might well be true.  Politically, however, the US government seems to be heading closer every day towards the kind of monumental political folly that got the Greeks where they are today.  I would argue that it’s a matter of degree, and perhaps time.

And here in Europe, the question of travail au noir as people attempt to make ends meet and lose faith in their governments does not seem isolated to Greece. Here in France, I hear people talking on a daily basis about the extra hours they work on a ‘cash’ basis or that contractor for home repairs paid au noir.
Lest anyone argue (fairly) that the above is mere anecdotal evidence, I present you with the fact that under-the-table wage earners doubled in France between 2003-2008. And 65% of those caught working tax-free were French nationals–not immigrants.  See full article here (in French).  I’m sure we will discover similar problems in countries (Portugal) as well in the days to come.

Is it just me or is the guilt spread around?

I’m starting to wonder if anyone is going to escape blame here–with the possible exception of the Canadians . On one hand, it’s easy to smell a rat in the Goldman Sachs escapades, although they may have been technically legal.  And these same Wall Street companies seem to only be able to do their deals when political leaders turn their heads to their ways and average citizens become greedy (as in the US) or willing break the law (as in Greece).

What are your thoughts on the legality and morality of the Goldman Sachs scandals on these two continents?  Do regular people have as much responsibility as corporations to behave ethically?  Are the Greeks behaving unethically when they refuse to fork over their legal share of taxes to their (corrupt) government?

Economic recession, solidarity and big government

Recently, I watched a lively discussion about the failing manufacturing and industrial economy in France on C’est dans l’air ( a nightly round-table type discussion where a regular host discusses timely topics with a panel of invited experts).  During a particularly memorable part of the show, one of the economists argued that the French were going to have to show some solidarity with the factory workers whose plants are closing and whose jobs are moving overseas(or simply disappearing into thin air).

Oh, and by the way, he also argued that the French would need to look out for the large number of out jobless who are nearing the end of their unemployment benefits.  When the show’s host asked the economist to elaborate on how the country would pay for such assistance, the economist declined to state–apparently such policy must be determined by the politicians.

Solidarity, a word you don’t hear too often in the US, punctuates social, economic and political conversations  in France.  In this case, solidarity with the unemployed in France means either increasing the national debt or raising taxes. Even the noblest of intentions come with a price tag after all.

Do we, in fact have a responsibility to others during hard times, or do we simply keep plugging away with our lives hoping we can go untouched by rising unemployment and inflation–regardless of what happens to others? Should we let our times become a struggle between those who are lucky enough to go untouched by economic turbulance and those thrown entirely off course by it?   Does the cost we’re prepared to pay as a society depend on how much we personally think we’ll be affected as individuals?–Difficult questions, none of which I claim to be able to answer.

On the one hand, I love the French way of caring for those who happen across hard times.  The French remember constantly that whatever happens to someone else could, in fact, happen to them. The empathy and the government funding tend to flow freely in such cases.

However, the government is here to help you to a degree that sometimes becomes . . .invasive.

Take, for example, the wide range of government agencies that can help you overcome the red tape involved in opening a business.  Resources abound in France that are unheard of in the States–free advice, services, counseling, loans, accounting . . .Then again, if the same government that works so hard to ‘help’ would just cut back on its red tape in the first place, you might be able to start your own business without government assistance.

As much as I love the idea of helping others, I know that government ‘help’ comes with a price. The more government programs we put in place, the more intrusions occur in our lives, the more bureaucracy and paperwork springs up and the more money bleeds out into strange and wasteful practices.

Sometimes France and the US seem like two ends of the political spectrum that could both stand to learn from each other. In this case, however, I’d love to see a solution that breaks out of the traditions of both nations.  Am I wrong in hoping that we may find a way to care for those who are out of work and in financial trouble without increasing the size of government (and it’s debts) to new levels?

Of course, deciding not to rely on big government also has its costs. In this case, such a decision would demand significant personal and social action.  I wonder if we’re capable of such an undertaking, particularly in a time when all of us are feeling a pinch.  If your French, your morale is apparently quite low these days, so perhaps you could use a little boost from the government.  If your in the US, however, chances are you have too little trust in the government to consider such assistance.

DH on strike against his will.

I sometimes think the ability to appreciate a good strike is cultural.

I’ve lived in France a long time, have a French husband and have studied French government and history.  I love many things French, but the strike simply escapes me.

Stinky cheese, like the occasional strike, is a taste to be acquired.

Today, DH is taking an involuntary day off.  He wanted to go to work, but was faced with an impossible situation.  You see, any non-striking teachers are required to take ALL the students that show up at the school.  Had he gone to work, he could easily have found himself alone with 50-100 primary school students.  That’s not even safe in a quiet, stable neighborhood.  As it stands, DH works in the city with some tough kids.  He could not provide for their security by himself–much less provide them with an education.  So today, he’ll be taking a long bike ride with a friend who was recently laid off and catching up on his paperwork.

Working as a teacher in California in the past, I’ve had plenty of room for discontent. I’ve been harassed, yelled at, and laid off twice.  I’ve lived with contracts from which I could be ‘let go’ at any time for any reason with no cause or explanation whatsoever.  I once worked for a month in a school district before our administrators called a meeting to tell us that, in fact, we would notice our paychecks had been cut by 5%. I found it most amazing.  I’ve taught classes teeming with 41 kids packed into normal-sized classrooms as the budget wheeled further into chaos.  Who knows what will happen to the money I’ve saved in the state retirement fund.

I’ve been angry and frustrated before, sure, but I’ve never considered striking. Why? I suppose because I’ve known for a long time that the State of California is in a deep financial crisis and because I’d rather see education cut than say. . . medical services to people who can’t afford them.  Education is fundamental, but it’s not an immediate life or death decision.   I don’t like it either, but I don’t think striking is going to get my students a better education.  And I also don’t think it’s going to get me a more secure job or a higher salary.

Sometimes I think maybe I’m being a pushover.  Compared to the French, I certainly have been. These are people who know how to fight for their rights.  I probably have  a thing or two to learn from them, but still, the thought of going on strike seems completely foreign to me.

Today’s French strike in education is due to government cutbacks on the number of teachers.  No one has been laid off, but fewer retirees are being replaced and class sizes are growing.  In addition, the teachers trained to help students with learning disabilities and handicaps are being funneled into regular teaching positions so that less help is given to students with special needs.  Yes, teachers certainly have more on their plates and students are suffering.

Still, DH would rather not strike.  It will cost us 75 euros a day, and it he thinks it won’t bring about the change he’d like to see. Striking–at least in the education system–has become increasingly ineffective in France.  When the government is in trouble and the money simply isn’t there, it’s hard to quibble about class sizes.  Besides, the teachers unions have a tendency to strike without effectively communicating why they’re doing it–in my humble opinion and in DH’s too.

While the teachers have good cause to strike, the people whose children are sent home are left reeling and scrambling for a safe place for them to go without even understanding the teacher’s reasons for striking in the first palce. In fact, teachers in France have lost a lot of credibility in recent years due to prolonged strikes that parents and students simply could not understand.

When everyone is hurting financially, it seems to me that there are better ways of dealing with the problem than turning kids away from school.  But maybe I simply haven’t lived in France long enough to absorb the cultural institution of the strike.  Perhaps it is an acquired taste.