Greece-watchers will have noted by now that the municipal and prefectural elections in Greece have been and gone, our new deficit figures are out and 17 November, the only day that really matters, has come and gone without incident.
In the run-up to this most crucial of anniversaries I wrote, perhaps too cynically, on FB:
“40% of the nation refuses to vote. The legitimacy of the state is in tatters. Yet somehow I have friends cheering one candidate or another. Why do you bother? Come 17 November Athens will burn and the streets will run with blood. Does it really matter which second rate politician will have to clean up?”
This provoked a good deal of reaction from friends back home. A.S., a high-flying friend who is busy rebuilding the brand of a major, newly privatised company back home, argues that the basic difference this time around (apart from the superior calibre of the winning candidates in our two major cities) was that Yorgo essentially won an internal battle against the rest of the Socialist party by betting – correctly – that well-respected and untarnished outsiders with grassroots support (a former Ombusman in Athens and a seasoned winemaker and environmentalist in Thessaloniki) could do just as well as any party apparatchik with a deep clientelist operation.
Intuitively, I agree that this is an important point to prove to both major parties, as it immediately reduces the returns on the enormous investment required to build a clientelist network – reducing the advantage held by incumbent politicians vis-à-vis newcomers and reducing incentives to tolerate or foster corruption. Both very very good things on a macro level.
In fact, the end result would be similar even if the winning candidates were truly second-rate and their grassroots support entirely manufactured (for the cynics out there). In the latter case, the signal is that investing in a clientelist operation is not as good a deal as investing in an Astroturf political operation. I’m still happy with that.
One thing, however puzzles me in A.S.’s account. Why now? In previous elections it was generally felt that old-school candidates were the safest pair of hands. Something must be different this time around, which made Yorgo think he could get away with his gambit. I think I’ve got a complementary explanation that is consistent with the above theory on the rise of nominations based on merit but can also explain the sky-high levels of abstention in 2010. It is simply this: the State has no money.
Remember my analysis of the bursting of Greece’s Higher Education bubble? Well I think there are a lot more examples of this sort of thing waiting to come out. One such bubble is the ‘market’ for clientelist network services. These are valuable only because they allow buyers (who pay, in part, with their vote) to influence the distribution of the State’s resources. With fiscal policy largely out of the Greek government’s hands, resources extremely scarce, and scrutiny tightening, no-one can guarantee that they can deliver these clientelist services anymore. Their networks thus become weaker and less valuable to voters. However, the price of clientelist services is fixed at one vote – which is all anyone gets. This rigidity means that as the value of clientelist network services falls, the ‘market’ can never clear. The variability of abstention statistics is essentially a function of the value of clientelist services.
One bizarre implication of this theory is that, the more abstention rises, the better the candidates we will end up electing – as the first voters to drop out of the system will not be disaffected voters but subsidy junkies.
Don’t forget, network effects work exponentially so any fall in the value of clientelist networks is big news. If we can deliver this in two successive elections, then we Greeks just might have a chance at sanity. The problem is that the rising trend in abstention (see graph) is extremely steep and could end up invalidating elections just as the electorate finally begin to get their preferences right. The implication is that Greeks should be encouraging swing voters to show up and vote blank or invalid rather than abstain.