The Decline of a Once Great Democracy

Greece, which gave birth to democracy, is now enduring its greatest test. Long ago, no less than four of its greatest philosophers traced out the historical kyklos, or cycle, through which forms of government evolve. They differed in particulars, but Socrates, Plato, Aristotle and Polybius all agreed on the progression: people organize first under a strong leader, and make him a king. As power corrupts, the king becomes a tyrant, and on his death, power passes to his children, who may share in a form of government known as oligarchy. As the children pass on privileges to their children and grandchildren, government by aristocracy emerges. Over time, the qualifications to vote and participate in government broaden, until every citizen is included, and there is now a democracy. But when the majority discovers that it is able to vote itself special privileges, this starts a self-destructive process which can end only in mob rule, and anarchy. Out of the chaos emerges a strong ruler; the people make him a king, and the cycle begins anew. (If you have Flash installed in your browser, you may watch the cycle illustrated at this link; the text is based on Polybius.)

Polybius, in particular (followed by Machiavelli in the Renaissance), traced the sequence of events by which a democracy gradually deteriorates, in Book VI of his Histories:

That all existing things are subject to decay and change is a truth that scarcely needs proof; for the course of nature is sufficient to force this conviction on us. 2 There being two agencies by which every kind of state is liable to decay, the one external and the other a growth of the state itself, we can lay down no fixed rule about the former, but the latter is a regular process. 3 I have already stated what kind of state is the first to come into being, and what the next, and how the one is transformed into the other; so that those who are capable of connecting the opening propositions of this inquiry with its conclusion will now be able to foretell the future unaided. And what will happen is, I think, evident. 5 When a state has weathered many great perils and subsequently attains to supremacy and uncontested sovereignty, it is evident that under p399the influence of long established prosperity, life will become more extravagant and the citizens more fierce in their rivalry regarding office and other objects than they ought to be. 6 As these defects go on increasing, the beginning of the change for the worse will be due to love of office and the disgrace entailed by obscurity, as well as to extravagance and purse-proud display; 7 and for this change the populace will be responsible when on the one hand they think they have a grievance against certain people who have shown themselves grasping, and when, on the other hand, they are puffed up by the flattery of others who aspire to office. 8 For now, stirred to fury and swayed by passion in all their counsels, they will no longer consent to obey or even to be the equals of the ruling caste, but will demand the lion's share for themselves. 9 When this happens, the state will change its name to the finest sounding of all, freedom and democracy, but will change its nature to the worst thing of all, mob-rule.

I was reminded of the kyklos, and of the problems to which a democracy is susceptible, on reading this article by Anita Acavalos at The Cobden Centre: "I Predict a Riot." A native of Greece, Ms. Acavalos is the daughter of Andreas Acavalos, a longtime management and organization specialist with PricewaterhouseCoopers in Athens who now serves on the Advisory Board of the Cobden Centre. She astutely traces and analyzes the multiple sources and factors in Greece's current economic woes, which threaten to bring down the Euro. She begins by making this key point:

In recent years, Greece has found itself at the centre of international news and public debate, albeit for reasons that are hardly worth bragging about. Soaring budget deficits coupled with the unreliable statistics provided by the government mean there is no financial newspaper out there without at least one piece on Greece’s fiscal profligacy.

Although at first glance the situation Greece faces may seem as simply the result of gross incompetence on behalf of the government, a closer assessment of the country’s social structure and people’s deep rooted political beliefs will show that this outcome could not have been avoided even if more skill was involved in the country’s economic and financial management.

And what are these "deep rooted political beliefs"? Listen to her explain:

The population has a deep rooted suspicion of and disrespect for business and private initiative and there is a widespread belief that “big money” is earned by exploitation of the poor or underhand dealings and reflects no display of virtue or merit. Thus people feel that they are entitled to manipulate the system in a way that enables them to use the wealth of others as it is a widely held belief that there is nothing immoral with milking the rich because they are commonly perceived to be everything that is wrong with Greek society. In fact, the money the rich seem to have access to, is the cause of much discontent among people of all social backgrounds for example farmers and students. The reason for this is that the government for decades has run continuous campaigns promising people that it has not only the will but also the ABILITY to solve their problems and has established a system of patronages and hand-outs to this end.

Anything can be done in Greece provided someone has political connections, from securing a job to navigating the complexities of the Greek bureaucracy. The government routinely promises handouts to farmers after harsh winters and free education to all; every time there is a display of discontent they rush to appease the people by offering them more “solutions.” What they neglect to say is that these solutions cost money. Now that the money has run out, nobody can reason with an angry mob.

Do you hear echoes of the passage from Polybius which I quoted above? Having voted itself the benefits of a free university education, the masses no longer appreciate or value those benefits, with the result that few are truly educated any more:

A closer examination of Greek universities can be used as a good illustration of why and HOW the government has driven itself to a crossroad where running the country into even deeper debt is the only politically feasible path to follow. University education is free. However, classroom attendance is appalling and there are students in their late twenties that still have not passed classes they attended in their first year. Moreover, these universities are almost entirely run by party- political youth groups which, like the country’s politicians, claim to have solutions to all problems affecting students. To make matters worse, these groups often include a minority of opportunists who are not interested in academia at all but are simply there to use universities as political platforms, usually ones promoting views against the wealthy and the capitalist system as a whole even though they have no intellectual background or understanding of the capitalist structure.

The divide between factions favoring "big business" and those favoring "big government" is really no divide at all, because both factions believe that the business of government is to bring benefits to the masses:

This problem is exacerbated by the fact that there is no genuine free market opposition seeing as in Greece, right wing political parties also favour statist solutions but in their case those solutions are criticised as favouring big business as opposed to increasing government provision for the care of the people, which is the role of the left. The mere idea that the government should be reduced in size and not try to have its hand in everything is completely inconceivable for Greek politicians of all parties. The government promises their people a better life in exchange for votes so when it fails to deliver, the people naturally think they have the right or even the obligation to start riots to ‘punish’ them for failing to do what they have promised.
. . .
Moreover, in line with conventional political theory on patronage networks, in regions that are liable to sway either way politicians have a built-in incentive to promise the constituents more than everyone else. The result is almost like a race for the person able to promise more and thus the system seems by its very nature to weed out politicians that tell people the honest and unpalatable truth or disapprove of handouts. This has led people to think that if they are in a miserable situation it is because the government is not trying hard enough to satisfy their needs or is favouring someone else instead of them. When the farmers protest it is not just because they want more money, it is because they are convinced (sometimes even rightly so) that the reason why they are being denied handouts is that they have been given to someone else instead. It is the combination therefore of endless government pandering and patronages that has led to the population’s irresponsible attitude towards money and public finance. They believe that the government having the power to legislate need not be prudent and when the government says it needs to cut back, they point to the rich and expect the government to tax them more heavily or blame the capitalist system for their woes.

Ms. Acavalos then quotes Greece's current political leader, and shows how he is clueless as to the source of all the problems:

After a meeting in Brussels, current Prime Minister George Papandreou said:

Salaried workers will not pay for this situation: we will not proceed with wage freezes or cuts. We did not come to power to tear down the social state.

It is not out of the kindness of his heart that he initially did not want to impose a pay freeze. It was because doing so would mean that the country may never escape the ensuing state of chaos and anarchy that would inevitably occur. Eventually he did come to the realisation that in the absence of pay freezes he would have to plunge the country into even further debt and increase taxes and had to impose it anyway causing much discontent. Does it not seem silly that he is still trying to persuade the people that they will not pay for this situation when the enormous debts that will inevitably ensue will mean that taxes will have to increase in perpetuity until even our children’s children will be paying for this? This minor glitch does not matter though because nobody can reason with a mob that is fighting for handouts they believe are rightfully theirs.

What is particularly troubling about all this are the parallels I begin to see emerging in our own democracy. As you read her next paragraph, compare what she is describing to the current proposals in Congress to spend our way out of a depression -- an approach that entails ever more borrowing, and ever more taxation:

Greece is the perfect example of a country where the government attempted to create a utopia in which it serves as the all- providing overlord offering people amazing job prospects, free health care and education, personal security and public order and has failed miserably to provide on any of these. In the place of this promised utopian mansion lies a small shack built at an exorbitant cost to the taxpayer, leaking from every nook and cranny due to insufficient funds which demands ever higher maintenance costs just to keep it from collapsing altogether. The architects of this shack, in a desperate attempt to repair what is left are borrowing all the money they can from their neighbours, even at exorbitant costs promising that this time they will be prudent. All that is left for the people living inside this leaking shack is to protest for all the promises that the government failed to fulfil; but, sadly for the government, promises will neither pay its debts nor appease the angry mob any longer. Greece has lost any credibility it had within the EU as it has achieved notoriety for the way government accountants seem to be cooking up numbers they present to EU officials.

In that description of Greece's economic woes I see also America's future if our politicians continue to think that the way to create new jobs and to boost the economy is by higher taxes and increased borrowing so that government can pump more money into the system. This solution robs our most productive sectors of their ability to invest and grow, and doles out money to those with political connections who simply use it to fatten their compensation packages. And it saddles our government with an ever-mounting interest burden, which the politicians are passing on to future generations.

Ms. Acavalos has not lost all hope; she sees in Prime Minister Papandreou a man who has the fortitude to face down the masses, if he will only realize that time is running out:

There are no magic wands, no bail-outs, no quick and easy fixes. The choice is between doing what it takes to put our house in order ourselves, or watching it collapse around us. This can only come about if Prime Minister George Papandreou uses the guts he has displayed in the past when his political stature and authority had been challenged and channels them towards making the changes the country so desperately needs. Only if he emerges as a truly inspired statesman who will choose the difficult as opposed to the populist solution will Greece be up again and on a path towards prosperity. He needs to display a willingness to clean up the mess made after years of bad government and get society to a point where they are willing to accept hard economic truths. One can only hope…

I see no one in current government in this country who has the ability, or the will, to turn us aside from the destructive path we are on. One has to hope that the choices we will be offered in 2012 are better than those offered in 2008. And one has to hope that the voters will be wiser in 2012, as well. For if neither of those hopes materializes, then America will become another textbook illustration of what Socrates, Plato, Aristotle and Polybius described for us so long ago.

[UPDATE 02/27/2009: Don't miss Mark Steyn's take on the situation -- written in his inimitable style. Here's a sample, but be sure to read the whole piece:

The United States has a fertility rate of around 2.1 — or just over two kids per couple. Greece has a fertility rate of about 1.3: Ten grandparents have six kids have four grandkids — ie, the family tree is upside down. Demographers call 1.3 “lowest-low” fertility — the point from which no society has ever recovered. And, compared to Spain and Italy, Greece has the least worst fertility rate in Mediterranean Europe.

So you can’t borrow against the future because, in the most basic sense, you don’t have one. Greeks in the public sector retire at 58, which sounds great. But, when ten grandparents have four grandchildren, who pays for you to spend the last third of your adult life loafing around?
. . .

Think of Greece as California: Every year an irresponsible and corrupt bureaucracy awards itself higher pay and better benefits paid for by an ever-shrinking wealth-generating class. And think of Germany as one of the less profligate, still-just-about-functioning corners of America such as my own state of New Hampshire: Responsibility doesn’t pay. You’ll wind up bailing out anyway. The problem is there are never enough of “the rich” to fund the entitlement state, because in the end it disincentivizes everything from wealth creation to self-reliance to the basic survival instinct, as represented by the fertility rate. In Greece, they’ve run out Greeks, so they’ll stick it to the Germans, like French farmers do. In Germany, the Germans have only been able to afford to subsidize French farming because they stick their defense tab to the Americans. And in America, Obama, Pelosi, and Reid are saying we need to paddle faster to catch up with the Greeks and Germans. What could go wrong?