Clientelism and Economic Policy: Greece and the Crisis.

• Author: Rohac, Dalibor

Clientelism and Economic Policy: Greece and the Crisis

Aris Trantidis

New York: Routledge, 2016, 256 pp.

Since the beginning of the global financial and economic crisis in 2008, Greece has lost almost a third of its per capita GDP. Youth unemployment in the country is at a staggering 50 percent. Almost half a million Greeks have left the country in search of economic opportunities. How exactly did the country get into its current economic situation, and why didn't Greek policymakers do something before it was too late?

There are two broad ways of answering those questions. The first stresses the importance of informal institutions and culture. Perhaps sound economic policies, fiscal restraint, and flexible markets were at odds with the "Greek way" of doing things. A particularly nasty version of this cultural account, prevalent in some circles, blames the depth of the crisis of the purported "laziness" of Greeks. Another, arguably more compelling, interpretation looks at the role of interest groups in driving public policy in Greece in an unsustainable direction. Aris Trantidis's hook belongs firmly to the latter tradition, relying on a rich theoretical apparatus from institutional and public choice economics. In his view, the Greek failure to reform can be tracked down to a specific form of clientelism that has become entrenched in the country's postwar history.

There are different accounts of clientelism, or patronage. The simplest one involves a direct transaction between the politician and voters, where rents are exchanged for support. More sophisticated accounts of clientelism emphasize the role of party structure and the role of rents in mobilizing support needed for electoral campaigns. Trantidis's account of the Greek situation enriches that perspective by studying the connections between political parties, in this case New Democracy and PASOK, and other organizational structures, including labor unions, universities, the army, judiciary, public administration, agricultural cooperatives, and local councils, which were all connected with the wider networks of political patronage. While not formalized, the theoretical account yields a number of testable implications. The most important is the idea that clientelism biases economic policies, including economic reforms, in a direction that protects rents and disperses the costs among the broad population.

After outlining the theoretical argument and embedding itself in the broad...