\n<\/p>\n
It\u2019s a warm December day when we meet Elias Papaioannou for lunch at a popular restaurant in the downtown Athens district of Pangrati. The multi-award-winning professor of economics at the London Business School and recently named fellow of the British Academy is one of the stars of Greece\u2019s academic diaspora. At the same time, though \u2013 and perhaps because of his background as the son of former minister Miltiadis Papaioannou \u2013 he has always taken a keen interest in the practical applications of economic theories and ideas. He also hasn\u2019t shied away from taking a public stand on critical issues, as he did in the summer of 2015 when he spoke out for the \u201cyes\u201d side at a rally before the referendum over Greece\u2019s third bailout agreement.<\/p>\n
\n\u2018The Greek crisis contributed to the rise of populist parties, which peddled quick fixes and tried to divide society\u2026 These parties attempted to influence institutions too, but I do not believe that they were inherently undemocratic\u2019<\/p>\n<\/blockquote>\n
Papaioannou started out studying law at Athens University and did a brief stint as an intern at a law firm but was not drawn to the profession. His immersion into economics came with his master\u2019s degree at Columbia University, while his doctoral dissertation at the London Business School focused on the relationship between democratization and development.<\/p>\n
\u201cThere are people who believe that democracy has a negative impact on economic growth; it is an unfortunate misconception that fuels authoritarian populism,\u201d he says. \u201cIn reality, the wealthiest countries are democratic \u2013 and they became wealthy as they democratized. This is not a coincidence.\u201d<\/p>\n
How resilient is the democratic culture in times of economic hardship, though? Papaioannou refers to a recent paper by Daron Acemoglu, in which, he says, the Turkish-American economist \u201cdemonstrates that a democracy where there is a widespread perception of corruption or where there is no intergenerational social mobility will gradually lose public support.\u201d That said, he adds, \u201ceconomic crises are particularly destabilizing for dictatorships. They also affect democracies, but democracies have the significant advantage of allowing citizens to remove those they hold responsible for the crisis from power.\u201d<\/p>\n
Our conversation turns to Greece and to the belief of many Western Europeans that had they experienced what Greece went through in the crisis, they would have had a dictatorship or a revolution. Yet democracy withstood the economic shock here. How does he explain that?<\/p>\n
\u201cThe Greek crisis contributed to the rise of populist parties, which peddled quick fixes and tried to divide society. When they found themselves in power, these parties attempted to influence institutions too, but I do not believe that they were inherently undemocratic. Golden Dawn, which was undemocratic, never got within reach of power. The parties that governed had no intention of changing the political system or making major institutional changes \u2013 even though, of course, being ousted from the eurozone would indeed have been a massive institutional shift.\u201d<\/p>\n
The populist wave in Greece subsided in 2015 and the country \u201chas definitely changed for the better,\u201d says Papaioannou, though he goes on to note a seeming lack of ambitious targets and a vision for the future.<\/p>\n
Internationally, though, the surge of authoritarian populism has been gathering speed. I asked Papaioannou why the systemic parties and media seem to be constantly on the defensive in recent years and why the elites of liberal democracies appear helpless in addressing the burgeoning anger of the masses.<\/p>\n
\u201cThere\u2019s no need to be pessimistic. The crucial thing is to get a sense of the scale of the problem \u2013 and to have politicians with a vision and an applicable plan,\u201d he says. The conversation about inequality 40 years ago, he observes, was about the chasm between developed and developing countries. \u201cThat chasm has been greatly reduced now \u2013 thanks to globalization. But this also came with a massive increase in inequality, especially in the United States and the United Kingdom, from the extraordinary accumulation of income and wealth in the top 1% of the top 1% of the population,\u201d says Papaioannou.<\/p>\n
This, he adds, has made a lot of people \u201cincredibly skeptical\u201d of globalization in all of its forms \u2013 and also of the elites who have benefited from it. This is not just about billionaires either, he adds, but also all kinds of experts and insiders, from economists and epidemiologists (during the Covid pandemic) to journalists. I remind him of former UK justice secretary Michael Gove\u2019s memorable comment during the Brexit campaign, that Britain had \u201chad enough of experts.\u201d<\/p>\n
\u201cYes, and what was the result of Brexit? Economic growth slowed down, investments stopped, productivity dropped and immigration to the UK \u2013 which Brexit was ostensibly aimed at limiting \u2013 hit record levels last year.\u201d He notes that the success of the \u201cLeave\u201d campaign was due to a combination of misinformation and outright lies from politicians. Which brings us back to the question: Where does his optimism stem from, in an era in which technology, which is evolving at an increasingly rapid pace, is exacerbating the inequalities that breed populism and creating weapons of mass communication destruction that are crushing the notion of objective truth and accountability.<\/p>\n
\u201cI believe that the demand for truth will make a comeback and that either the existing tech giants will respond to this or new players will emerge who will,\u201d says Papaioannou.<\/p>\n
\u201cAmerica was probably in worse condition before the Sherman [Antitrust] Act and Teddy Roosevelt\u2019s major reforms, which broke up the big monopolies of the Gilded Age,\u201d he notes. \u201cThere is a sense of pessimism [in the US] today regarding rights and institutions because of Trump\u2019s re-election. But I believe society will move towards greater oversight and regulation [of Big Tech] now that the harmful impacts of their practices \u2013 for both competition and social relations, as well as democracy \u2013 are increasingly evident.\u201d<\/p>\n
Athens Global Experience<\/h3>\n
Papaioannou was in the Greek capital for the Athens Global Experience, a program for London Business School MBA students. \u201cIt\u2019s a very innovative program that we started 11 years ago, where students are required to visit one of 15-20 cities for a week, engage with the local business community and learn about the unique characteristics of doing business in that location.\u201d<\/p>\n
The initial goal of the Athens program was \u201cto document the transformation of Greek businesses during the crisis \u2013 how they survived by shifting from the domestic market to outward-looking strategies [\u2026] I don\u2019t know if we\u2019ve reached critical mass, but we\u2019re seeing more and more very positive stories,\u201d he says.<\/p>\n
Beyond Athens, he speaks extensively about visits to Johannesburg, where his students interact with microenterprises in the Alexandra township. \u201cMore than a billion people live in slums or favelas today, and their purchasing power is increasing,\u201d he says. \u201cA good business school shouldn\u2019t only prepare its students to become executives at McKinsey or Goldman.\u201d\u00a0<\/p>\n
Two special projects<\/h3>\n
There are two projects that stand out from Elias Papaioannou\u2019s rich body of research in recent years, both collaborations with his colleague, Professor Stelios Michalopoulos of Brown University. The first examines the impact of European colonialism on Africa\u2019s economic evolution.<\/p>\n
\u201cInfluenced by the findings of Acemoglu, Robinson and Johnson, we set out with the goal of measuring what role national institutions played in growth,\u201d says Papaioannou, referring to this year\u2019s Nobel laureates in economics.<\/p>\n
One key finding was that in instances where colonial powers drew borders that divided ethnic groups across multiple states, national institutions had minimal influence on development. Instead, it was the institutions of these ethnic groups that proved to be more significant. \u201cThe traditional approach of economics to regions like Africa was deeply flawed \u2013 it was entirely Western-centric,\u201d he notes.<\/p>\n
There are a lot more African and, especially, Latin American academic economists around today, but that is only a partial solution: \u201cThe global elite has become far more representative in terms of ethnic origin, but the problem of a homogeneous, undifferentiated worldview persists,\u201d says Papaioannou.\u00a0<\/p>\n
The other fascinating project he\u2019s working on with Michalopoulos is \u201cAnatolia Imprints,\u201d which seeks to chart the social and economic development of refugees from Asia Minor after they came to Greece in 1912-1922.<\/p>\n
\u201cThere\u2019s an enormous amount of interest in the international academic community [\u2026] about what this will tell us about the so-called uprootedness hypothesis. This is the idea that refugees, as people who lose their capital, put a lot more emphasis on human capital, on becoming educated, which is something no one can take away from them,\u201d he explains.<\/p>\n
\u201cIn the Greek case, we see that refugees had a higher illiteracy rate than the native population when they first arrived. They achieved convergence almost immediately and, by the next generation, those born in the 1930s and 40s, they had already surpassed the educational level of the native population,\u201d says Papaioannou.<\/p>\n<\/p><\/div>\n