March 1, 2018
As Greece seemingly returns to normal, everybody in Athens, Washington, and Brussels hopes to put the whole affair in the rear view mirror, possibly because they know that, at the height of the crisis, neither Greece nor Europe dealt with their respective weaknesses.
But how can this be, when so much has been done—so many pieces of legislation adopted in Europe to deal with the crisis, so many mechanisms created, and so many measures imposed on the mostly reluctant Greeks?
Europe has done rather little to update the structure of its governance to deal with the core issues that exposed it to the crisis, whether in terms of the shakiness of the European Union or with respect to the struggle to enforce EU law evenly in all member states to facilitate “convergence in institutions.” And Greece has done little to offer quality governance to the Greeks in line with an idealized European state.
Which brings us to the inconvenient truths about the supposed “Greek success story.” The average size of Greek firms remains small, a product of many longstanding structural weaknesses at the national level that served as an almost insurmountable barrier to growth. The fallout from this can still be observed in the weak private sector job market, weak innovation and export activity, the “missing tax base,” and a persistently high consumption to GDP ratio. The adjustment programs have failed to put Greece on a trajectory that clearly separates it from these negative metrics that characterize the years until the eruption of the crisis.