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Entrepreneurship - BLOG

On a Tax Scandal in Greece, and How to Get a Diverse and Free Press

Henrich Greve |

Along with its bond payment troubles, austerity measures, unemployment, and protests, Greece is experiencing a scandal over possibly undeclared income and unpaid taxes among its elite. The story is interesting and confusing, and it involves the press as a key actor.

Some facts (omitting lots of details) are: In 2010 France handed over to Greece’s finance ministry a list of Swiss accounts held by Greek citizens. Italy and Spain also received similar lists. Because the money could be undeclared income hidden from tax authorities, France, Italy, and Spain started investigating whether the owners of the accounts could show that they had paid tax on it. Greece’s list held 2,062 names. The head of the Greece’s tax police testified that he received 10 names to investigate. The rest of the names were not acted on, but the successor of the finance minister allegedly received a list of 2,059 names. No further action was taken, until the press started applying pressure. The existence of the list was published. Then, and this is important, the small magazine Hot Doc published the names of the individuals on the list.

What happened? First, the journalist behind Hot Doc, Kostas Vaxevanis, was arrested for violating privacy laws. He was found not guilty and released. Second, many members of the business and political elite of Greece have been shown or alleged to be on the list. The most recent revelation involves the difference between the 2,062 names held by the first finance minister and the 2,059 (allegedly) passed on to the second: the three missing names are relatives of the first finance minister. So the scandal rolls on, and is likely to strengthen the anti-austerity protestors, as well as the tax police’s ability to pursue tax cheats with political connections.

We have come to think of the press in many different ways: idealist journalists pursued by the government, big corporations who restructure everything from newsroom to printing operations, and paparazzi photographers who ambush celebrities’ private occasions and parts. But what is the origin of all this diversity? To answer that question, it is necessary to go back to the beginning of publishing, as Heather Haveman, Jacob Habinek, and Leo Goodman have done in a recent article in Administrative Science Quarterly. They looked at the background of the people starting magazines in the US in the 18thand 19th century (magazines are a good site to investigate because they are easier to start than newspapers, and are still – like Hot Doc – an influential part of the press).

What did they find? As in many industries, many early founders of magazines were from a related industry, in this case printers or other publishing professionals. But the origin of the press as an outlet for opinion as much as a profit-making enterprise was clear from the background of other early founders. They were intellectuals and professionals, a social background that also matched many of the writers, who were hobbyist writers expressing opinion in essays or writing poetry and prose. They used professional writers for getting content, but very few magazine founders were professional writers.

Did the magazine industry become more professional? In content and presentation it no doubt did. But in ownership the opposite happened. The proportion of industry professionals among founders declined dramatically, and the proportion of individuals in other professions (priests and doctors) as well as writers increased. But more remarkably, they came from much more modest means. Whereas the typical early magazine founder was highly educated and often wealthy and well-known before starting the magazine, the later founders were more likely to be common people – and this is even though access to education improved between the 18th and 19thcentury. Haveman and coauthors conclude that the elite background of the early magazine founders helped making magazine founding easier, paving the way for the later ones with fewer resources. It likely also helped usher in some of the protections that the US press currently enjoys, but did not have when the magazine industry started. As a result, the press became a place with broad diversity in founder background and magazine mission.

In the US, as in many other places, the press isn’t just seen as being a complex mixture of idealists, profit makers, and celebrity hunters – it really is all of those things. And the current state of the press is a direct result of its origins.

Haveman, Heather A., Habinek, Jacob,and Goodman, Leo A. 2012. How Entrepreneurship Evolves: The Founders of New Magazines in America, 1741–1860. Administrative Science Quarterly,57(4): 585-624.

Pangalos, Philip and Nektaria Stamouli. 2012.Scandal Deepens Over Greece’s ‘Lagarde List.’ Wall Street Journal, December 292012. 

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