The Economy of Place

All around us are the effects of what everyone calls simply “the crisis.”  As we listen to our Greek friends discuss economic perspectives, I have begun to understand that we (Americans) think about money, ownership, and financial arrangements in fundamentally different ways than they do.  With no background in economic theory, I can’t assess the relative merits of these perspectives.  Nor do I know how representative is the small sample of people with whom I have had these discussions.  With those caveats, here is what I think I am coming to appreciate.

Mind-set may not be everything, but it’s a lot.  (Gee, who would have thought that people’s socio-cultural frameworks and life experiences might contribute to their world-views—which, in turn, would direct their activities?  Whaddaya know!)  

Facts/surmises in evidence: After its well-known period as the illustrious home of the great classical philosophers, Greece was overrun in every direction by conquerors and occupiers.  I have little detailed knowledge, but the last 400 years of Turkish/Ottoman oppression ended only 175 years ago, give or take.  During that period, as blogged earlier, the core values of society were “family first, religion always, and screw the Man whenever possible.”  (“The Man” being the term for those who tell you what to do and over whom you can exert little direct control—or as it is known in modern times, the “government.”)

[Granted that my understanding of American history is also full of holes, I nevertheless contrast that with the early American values of “freedom first, individual effort is (often) rewarded, and government is (more or less) in our control.” (Though this last deserves deeper analysis, in the U.S. periodic “elections” have over the centuries brought new people and ideas into prominence. Government was not an unrelentless “them” to be mistrusted and countered in whatever ways one could manage.)]

So here is an illustrative example of how things work in Greece in light of the sociological imperatives just described.  It condenses aspects of several stories we have heard.  How do Greeks who appear to be “middle-class” come to own new, well-situated flats outright, with no mortgage?  Apparently, somewhere in recent history there was an older house that might be dilapidated and outdated (no indoor plumbing, for example) or where the owners died, leaving (more or less useless) property to family members.  But the house was situated on property that could be developed into apartment blocks.   (And with the coming of the European Union, there was both more money available for such development and more people wanting to own.)  

The “arrangement”: The developer got to build; the old owners got some number of square meters of the finished building—which might be more than one flat; or some additional money might change hands for extra amenities, and so on.  (We didn’t follow all the details but there it seemed there were also tax advantages in such property exchanges.) 

   

When we described to our friends what we considered the “normal” approach in the U.S., where the old house and property would be bought outright and developed and then all the apartments would be sold on the open market, one friend said emphatically “we [i.e. Greeks] never sell property!—our dream is to own property."

This in turn leads to the following peculiar (to us, but not unusual here) phenomenon. Given the crisis, many developers ran out of money before their project could be completed.  But—because construction here is stone or concrete/plaster, as compared to ours which is largely wood-frame—it is possible for them to leave the building unfinished for years and come back to it later. (To be clear, “unfinished” means that it has all the walls, ceilings, and roof.  

Note: first floor is occupied; above is "skeleton."

See photo on left.)  By comparison, we in the US can’t leave the framework of the upper levels of a wood frame house unfinished for years. And commercial buildings can be left unfinished, but if so are unusable.

Here in Greece, we have seen many apartment blocks that are obviously only partially completed, yet people live on the completed lower floors!  (One such building had a taverna on the ground floor, presumably the owners of that business occupied the floor above, and two additional floors were unfinished.)  Our friends say of these incomplete buildings, “they will finish it when they have more money.”   

Again, the idea of cutting one’s losses, selling the property to someone who does have the money to go forward, and then starting a new project when one has the needed funds—this is anathema!  (I asked one friend about the “time value of money.”  She said, “yes, we know this concept”—but didn’t seem to think it was relevant.)

A related phenomenon occurs even in commercial buildings.  (See photos below.) When we asked our friends why some industrial-looking buildings seemed to have a forest of rebar above the top floor (usually at the corners of the buildings or above weight-bearing columns) we were told, “they had a permit to build higher than they had money at the time.  They are prepared to add another level when they can.” 

(Note "forest" of rebar at corners and above structural columns.)

   

 In the apartment buildings, as noted above, the person who owns the property and outdated or derelict house negotiates with the builder (who may occasionally be a distant member of the family, but that is not an essential factor) for some percentage of the finished project.   In one case, several family members inherited from an aunt who had no children.  Their family decided who should benefit from the windfall.  The sibling in another country and the well-established sibling in another city in Greece “didn’t need” it.  So each of the two remaining siblings got an apartment in the new building.  One was married with kids and got the larger flat (and even paid more for an extra bedroom).  The other wasn’t married and so was given the smaller apartment—even though he didn’t live in that city.  The idea was that by renting it out, he would off-set the costs of his rent where he actually lived.

At one level it’s quite brilliant.  From our perspective, though, it seems oddly convoluted.