Boomerang: Travels in the Third World
By Michael Lewis, (WW Norton and Company, R219)
If you haven’t heard of this book or the author, he dabbles especially in the money and the sports worlds.
Sometimes, in both, as in his last book, Moneyball (which was made into a movie starring Brad Pitt and Jonah Hill), which takes a different look at the world of sport and the equality that is almost impossible to maintain. If you don’t have the money you’d better have the brains, is his solution.
Brains are also what he seems |to feel was really missing when it came to money in countries such as Iceland, Greece and Ireland, all of which he discusses at great length and with great hilarity.
Having read everything he has to say before these last frantic financial episodes in Greece, it is difficult to have empathy with the citizens of that embattled country.
It seems tax is anathema to them. Rather than find those who don’t pay income tax to be the exception, they’ve turned things around. The exception to the rule is actually those who pay.
He explains the money crash thus: the tsunami of cheap credit that rolled across the planet between 2002 and 2008 was more than a simple financial phenomenon: it was a temptation, offering entire societies the chance to reveal aspects of their characters they could not normally afford to indulge. What he further discovered when he investigated the countries perhaps the hardest hit was that when he followed the money he then found that the culture of the country determined what had happened to bring about their fall.
Also, if you think that money is not your thing and that it will be tough to follow, think again.
Lewis has the knack of putting things across in such a way that we understand, and most of the time he has us gasping at the greed of others.
In Iceland, for example, he follows the logic of a country of fishermen who turned into bankers and money men overnight. How, |he wonders, does a wife not question the radical change in their world?
Probably, he answers, because her man knew what he was doing when fishing and it follows that he’d know what to do when turning to another profession. Not so?
He puts us in that space and you have to wonder when all this is going on, what would you have done? Watched, or perhaps also run with the greed?
Take Iceland, for example, a country that was valued for always getting things right.
In 2008, writes Lewis, it was No 1 in the UN Human Development Index.
“They were regarded as a nation of extremely well-to-do, well educated, historically rational human beings who had organised themselves to commit one of the single greatest acts of madness in financial history.”
“You have to under-|stand,” said a man from the International Monetary Fund, “Iceland is no longer a country. It is a hedge fund.”
How, wondered Lewis, does a country without any immediate experience of high finance look at Wall Street and think: “We can |do that!”
Even more incredulous is that many believed them.
Greece, on the other hand, is a different country and culture. One of the first things Lewis stumbled on was the scale of Greek tax cheating. An estimated two-thirds of Greek doctors reported incomes under E12 000 (R120 600) a year which meant they weren’t taxable – and the problem wasn’t the law. It was the enforcement.
Speaking to two tax collectors, he discovered that between 30 and 40 percent of the activity in Greek economy went unreported.
In the past 12 years, Lewis explains, the wage bill of the Greek public sector has doubled. The railroad, for example, has an annual revenue of E100 million against a wage bill of E400m plus E300m in other expenses.
“Twenty years ago a successful businessman turned minister of finance pointed out that it would be cheaper to put all Greece’s rail passengers into taxis: it’s still true.”
And so it goes on. The Greek public school system is one of the lowest ranked in Europe and still they employ four times as many teachers per pupil as Finland, which is the highest-ranked country. Greek parents assume when their kids go to these public schools, that private tutoring will be required.
The retirement age for a Greek in a job described as “arduous” is as early as 55 for men and 50 for women.
This is when the Greek government begins to pay generous pensions, which means that more than 600 Greek professions managed to get themselves classified in this category: hairdressers, radio announcers, waiters and musicians, for example.
It goes on and their miseries mount, none of which they seem willing to concede. In fact, if the latest wranglings are anything to go by, they’re willing to fight for this unimaginable lifestyle.
Ireland is yet again something different. Lewis makes the following analogy: where the Icelandic male used foreign money to conquer foreign places – trophy companies in Britain, chunks of Scandinavia – the Irish male used foreign money |to conquer Ireland. What they did, he points out, is to buy Ireland from one another.
Because their losses were so enormous (that means the banks, which are all owned by the government), Irish bank losses alone will absorb every cent of Irish taxes |for the next four years. The entire Irish economy has since collapsed.
“When you fly into Dublin you are travelling, for the first time in 15 years, against the traffic. |The Irish are once again leaving Ireland.”
He then goes on to explain, painstakingly, what brought about these terrifying circumstances in |a country that, from the outside, seemed to be experiencing the most marvellous economic boom.
It’s rivetting stuff and will keep you spellbound as Lewis takes you through a world of greed and, as he points out time and time again, mostly caused by men.
All of this is still ongoing as Europe battles to save the euro while Germans complain because they have to give their hard-earned cash to save the Greeks, while they in turn begrudge the fact that austerity measures are foisted on them from outside. And if the Americans think they’re unaffected, he tackles California, their most prosperous state – and that really scares us.
All we can do from afar, is watch. But with the knowledge gained by this entertaining read, everything is so much clearer.
• The book was ordered through www.loot.co.za at R219.