I read something interesting about the Greek crisis this week. You can read it, here
Someone has said that it would be cheaper if everyone in Greece used taxis! That’s really a comment about the huge costs, to the Greek taxpayer, of building and running the railway in Greece. Can this really be true?
Actually, and if you make sure that there are always two passengers in the cab, it is a bit cheaper to use cabs in Greece. This is because the Greek government has spent billions on a brand new train set. They borrowed the money for this from German banks and, coincidentally, the new train set was made in Germany – so the money went back to where it came from.
Having built the train set, they want to use it. Otherwise, it would be like the Olympic sites in Athens. So, the trains go around and around with hardly anyone on them. That means they lose money everyday.
There are a number of issues with Greece that help explain this problem. The landscape and geography are complex – too many islands. The population is too small (12 million and falling) and the economy remains largely limited to agriculture and tourism – both seasonal activities. Bringing Greece into the 21C was always going to be expensive – that’s before you factor-in its corrupt political class and the legacies of military dictatorship. In the circumstances, I don’t blame the Greeks for not paying taxes – that would be money down the pan.
The modern high-speed railway needs too many bridges and tunnels. The lines have to be engineered with shallow gradients and curves so as to maintain high speed. The cost of this is enormous. The population of Greece’s major cities are too small, so the traffic volumes don’t make the investment cost-effective…
Still, it makes all the politicians and planners feel they have done something. A bit like the enormous highways that go nowhere in North Korea.
This story highlights the difficulties of economic union. Making everything consistent is complex and, eventually, brutal. The encouraging thing is that ordinary Greeks want to remain in the Euro. What they want are proper institutions that are consistent, transparent and accountable.
It’s a shock for Euro-sceptics, but they will be willing to trade sovereignty for this. The inconclusive elections in Greece are a sign of this.