Can Greeks Become Germans?

By Thomas Friedman, New York Times

….Germany is the epitome of a country that made itself rich by making stuff. Greece, alas, after it joined the European Union in 1981, actually became just another Middle East petro-state — only instead of an oil well, it had Brussels, which steadily pumped out subsidies, aid and euros with low interest rates to Athens.

Natural resources create corruption, as groups compete for who controls the tap. That is exactly what happened in Greece when it got access to huge Euro-loans and subsidies. The natural entrepreneurship of Greeks was channeled in the wrong direction — in a competition for government funds and contracts. To be sure, it wasn’t all squandered. Greece had a real modernization spurt in the 1990s. But after 2002, it put its feet up, thinking it had arrived, and too much “Euro-oil” from the European Union went back to financing a corrupt, patrimonial system whereby politicians dispensed government jobs and projects to localities in return for votes. This reinforced a huge welfare state, where young people dreamed of a cushy government job and everyone from cabdrivers to truckers to pharmacists to lawyers was allowed to erect barriers to entry that artificially inflated prices…..