A few days ago I heard an interview with Judit Járai, MTV foreign correspondent, who just returned from the United States after reporting from Washington for Magyar Rádió for over six years. Her appointment in 2003 was rather controversial because Járai unabashedly represented views associated with people like Zsolt Bayer and István Lovas who are considered to be anti-Semitic and partisan. The fear was that Járai might not be the best person to inform the listeners of Magyar Rádió on American politics.
Well, Járai is back and almost daily she appears on the screen as a foreign affairs expert. Last time she was asked about the Greek crisis and was only too happy to note that the Greek governments cheated and falsified data "just as the earlier Hungarian government did." Well, this was not the case. The Greeks did falsify data, the Hungarian government didn't. However, there are parallels not exactly complimentary to Hungary.
The New York Times had an interesting article about the everyday behavior of Greeks. After reading it one ought not to be terribly surprised at Greece's economic fate.
First, there is the question of taxes. What taxes? one could ask after reading the article. It seems that almost nobody pays taxes. Apparently in a wealthy suburb of Athens only 324 residents checked the box on their tax return admitting that they owned pools. Satellite photos revealed that in the area there are 16,974 pools! Studies estimate that the government may be losing as much as $30 billion a year to tax evasion. Apparently that amount would have gone a long way toward avoiding the current situation. I guess I don't have to point out that this state of affairs is very similar in Hungary. Tax evasion is a national sport there too.
But there are other similarities as well. To get better care in the national health system, Greeks pay doctors cash on the side, a practice known as "faleki," which means "little envelope." In Hungary we are all familiar with the "hálapénz" (gratuity), a polite word for "tip." Mind you, some specialists don't even wait for the envelope. They announce ahead of time the "price." That is allegedly illegal, but it makes no difference for most Hungarians. Either for those who demand it or for those who give it.
Greek officials are routinely bribed. Apparently, €300 will get people an emissions inspection sticker. The situation in Hungary is not much better. In Greece the most aggressive tax evaders are the self-employed "in a country of small businesses." The situation is the same in Hungary where there are as many as 1.5 million "small businesses," two-thirds of which are phony. People's expensive personal cars are registered as belonging to the business and therefore the price of the car as well as the price of gasoline can be deducted from the "businessman's" taxes.
In Greece tax evaders are apparently quite bold. When authorities checked the tax returns of 150 doctors in a fashionable section of Athens, more than half had claimed an income of less than €30,000. Thirty-four of them earned only about €10,000. Apparently this figure is totally unbelievable. It costs more than that to rent a doctor's office in that particular neighborhood. Needless to say, doctors don't pay taxes on income received on the side. The situation is the same in Hungary.
I have to tell a personal story. On the Internet I encountered a man from Pécs who turned out to be the son of an old schoolmate of mine in grades 5 and 6. When it became known that I was planning to visit Hungary I received an invitation from our young man. Earlier I heard how little money he and his wife (a doctor) make. Not enough to put food on the table. Indeed, the amount sounded pitiful. Great was my surprise when I saw their brand new, modern house with a two-car garage, two or three baths, a study, and three bedrooms.
Greece's population is 11 million, Hungary's 10 million. However, only a few thousand Greek citizens claimed incomes over €100,000. "There are many people with a house, with a cottage in the country, with two cars and maybe a small boat who claim they are earning €12,000 a year," the reporter was told by a high-ranking official in the Ministry of Finance. The situation is very similar in Hungary and there is no effective property tax in place that could catch some of these tax evaders. The Bajnai government tried to introduce it but the Constitutional Court threw it back as unconstitutional.
Here are a few other similarities. "If [Greeks] go to the mechanic, it is one price without a receipt and quite a bit more with it." Well, one feels at home! I talked to someone in Hungary about this problem who told me that she has not encountered one tradesman yet who offered her a receipt after being paid for work done in her house.
Apparently, there are various studies on shadow (grey, black) economies the world over and these estimate that the Greek black economy represents 20-30% of the country's gross domestic product. Estimates for Hungary are very similar. By comparison, the United States' grey economy was put in the same study at 7.8%. Quite a difference.
I began reading Ferenc Gyurcsány's assessment of past mistakes and suggestions for the party's "renewal." At one point he talks about the 2001 and 2003 period when "personal wealth accumulated while the state was getting dramatically poorer." Gyurcsány tried to change the mentality, obviously rampant in Greece as well, that citizens have no responsibility (for instance, to pay taxes) but that the state has the responsibility to provide all the social services. This was a tall order; no wonder the "reforms" failed.