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Watching the Greek drama unfold is fascinating People in Greece are rioting against ‘austerity’ (which is the term used to describe the state spending less of other people’s money).
Troika. IMF. Democracy. blah blah blah…
Yet what is all really boils down to is this…
Hardly surprising so many Latvians, Lithuanians and Slovaks are utterly unmoved by the ‘plight’ of Greece.
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OR the moralizing posturing of Germany, which hasn’t ever repaid squat AND whose banks are due a richly-deserved haircut along with their French peers for knowingly financing deadbeats just to create a mercantilist ponzi scheme inside the eurozone.
Not seeing a single actor in the whole mess who seems anything but a rogue or villain.
For sure. There are no good guys whatsoever in this mess.
One of the best cartoons I’ve ever seen. Would that it were only Greece.
Would that most of the world’s population, did not sit at Table Two.
While there is undoubtedly a large element of chickens coming home to roost, a complete loss of national sovereignty coupled with seizure by outside interests of everything of value seems to me rather excessive. On the plus side the EU‘s Stavro Blofeld tendencies are now out in the open for all to see. When you have EU delegates openly talking of punishing Greece for disobedience, the notion that the EU is a warm cuddly champion of democracy ceases to be tenable.
Except that holding on to untenable notions in the face of the evidence is the human condition.
“a complete loss of national sovereignty coupled with seizure by outside interests of everything of value seems to me rather excessive”
Excessive how? If you’re crying to me that you’re dying of hunger, but want to keep that gold watch your grandfather gave you, you’re not dying of hunger, but of greed, and I’d have zero sympathy. Moreover, the loss is voluntary. The Greeks can say “nope” and leave the whole ill-conceived project right away. It will be better for them in the long run. The problem for them is that then they’ll get REAL austerity right away – of the we-don’t-have-foreign-currency-to-import-drugs-and-fuel kind. And of the semi-reasonable-governments-get-replaced-by-populists-who-hyperinflate kind. What Greeks is living through is cognitive dissonance – they cannot wrap their minds around some facts, for example:
– that the Keynesian long run, in which we’re supposed to be all dead has arrived, but they are not dead, just dead broke;
– that they are much poorer that they thought they were;
– that it is their own politicians’ fault – once they hang a few of those on lampposts, they may get a little sympathy from me;
– that the fact that they’re poor and suffering does not make it incumbent on anyone to give them (any more) money, especially since they have demonstrated repeatedly that the money they continue borrowing is not bridge financing until they reach a sustainable state;
– that you cannot have a Northern-European-style welfare state without paying taxes as Northern Europeans do (mind you, I’d rather have neither, but you can’t have one without the other indefinitely – cue Herb Stein);
– that when you elect populist Marxists, you may not exactly get what you were promised.
The sooner they accept the above, the sooner they might see light at the end of the tunnel, and start crawling toward it. They have been told what they need to do. They don’t want to. Fuck them.
From what I have read, Greece does not have any sort of Northern European style welfare state. Unemployment benefits are minimal, and there is no NHS style taxpayer funded health system. The poor and unemployed in Greece are effectively on their own.
The Greek political class is largely made up of nepotists, cronies and crooks. What money that has not been syphoned off into their offshore bank accounts was used to gain support by hiring unnecessary civil servants, who do get unemployment cover, health cover and pensions. The ordinary Greek in the street, who is not a made man in the political cosa nostra, gets the bill, but never got the benefits.
Dear Plamus, what if the light at the end of the tunnel is the afterlife, because your austerity diet has killed you? When taking junkies off welfare diets, I don’t think we want the patient to die, even if only to prove to ourselves that we are fantastic surgeons and doctors. Whilst rightfully insisting on reform, let’s keep it at a level that keeps them able to pay back, and not cause chaos.
JohnK: “From what I have read, Greece does not have any sort of Northern European style welfare state.” – I was stretching the analogy a bit, but… They do retire ridiculously early, particularly for gov’t employees, with pensions that are very generous for the local standard of living, and levels of tax evasion that are incomprehensible to a westerner. In Athens, you have people living in 1.5 mln Euro houses swearing that they make 45K Euro a year, and it flies.
Nicholas (Self-sovereignty) Gray: I understand your analogy, I really do, but there is no alternative. There are only so many times the Greeks can go to the Germans and pinky-swear they’ll change *this time* in exchange for the next fix. The more cynical among us could even argue that the situation getting worse each time is a feature, not a bug – “they can’t cut me off NOW, can they?” This is triage time – is the patient salvageable at all, and if so, what limbs need to be amputated? Some junkies die in spite of all the support provided.
If Greece slides back to third-world status (like Argentina did, for example), it will not be because of austerity, but because austerity was delayed for too long – which is NOT a reason to delay it further. “Austerity-hit” is a creative bit of blame-shifting. It’s like calling a sick person “antibiotic-hit”.
[CSB] I grew up a couple of hundred miles north of Greece, in Bulgaria. After communism came down, it was like Greece redux. A couple of short lived governments, IMF austerity, “we hate this + starving pensioners”, elect communists, hyperinflation (600% in 1996, debt/GDP over 100%), banking crisis, REAL austerity, currency board, long slow recovery… Now inflation is in line with EU (fixed exchange rate), debt/GDP is about 18%, real incomes keep rising, taxes are low. The Balkan mentality has not changed, but what is absent – because of the currency board – is the government’s ability to inflate or over-borrow to buy votes. [/CSB]
There is a way out. It’s not fast, easy, or glamorous. The Greeks are poor, this is a fact. No amount of sugarcoating will change that. They will only change when they are forced to, and it will be painful – by choice.
She was also bang on the money when it came to calling Russia for what it is. I’m beginning to like this lady (and I can tell you just by looking at her name that she’s unmarried…)
Well aren’t you a charmer Plamus? However much I disagree with the politics of Greece as a whole I can’t bring myself to cheer as their nation burns to the ground. I’ve got some Greek friends and I can only imagine how their hearts are breaking right now. They didn’t cause this, but they’re going to pay for it.
The Greek nation has not “been told what they need to do”. They’re actively being prevented from doing what they need to do. The EU is not a stern schoolmarm dollin out unpopular but needed advice. It is a mobster firebombing a shop for not paying protection money. They’re making an example out of Greece so the rest of the EU doesn’t get any funny ideas.
Neutering Greece’s government and selling off every remaining state owned business to non-Greeks will simply ensure that the Greek economy never recovers and the debt is never repaid. If they really cared about Greece they’d suggest returning to a massively devaued Drachma and having an absolutely stonking tourist season as a result. But they wont do that, because then they’ll have to admit their thousand-year-reich EU dream was an unsustainable fantasy. And they’ll let Greece burn before they do that.
Agreed Perry.
Although higher taxes in Greece will not help.
Greece is bankrupt and should admit it is bankrupt.
The diners should be kicked out of the restaurant and told they can never come back (as they can not pay the bill).
And the owner of the restaurant should get on the telephone to other business people warning them about not to do business with the diners.
By the way……
Some of the comments are bizarre.
Greece has vast government spending – a bigger share of the economy there anywhere else in the E.U. (including Sweden and even France) – so “it is not a Welfare State” is false.
Nor has “austerity” undermined growth – that is Keynesian nonsense (what “austerity”? the “public sector” is bigger than ever).
As for the E.U. being a “protection racket” and threatening violence.
That is just not true.
Your “Greek friends” are filling your head with nonsense J.V.
I despise the E.U. but it is not doing anything you are saying it is doing.
All they have said is – if you do not want to be a member of our club that is fine, but do not expect us to carry on sending you money.
I repeat that I despise the E.U. – but there is nothing wrong with that response.
To say they are threatening violence or have harmed Greece, is stark-staring-bonkers.
On the contrary – the orgy of government spending in Greece would have ended long ago without the E.U. (the low interest rates and so on).
Most likely the wild spending Greek government (all political parties have thrown money about) would have driven the place into bankruptcy (again – years ago) and some form of military government would have taken over.
Now most “Progressive” people say that this would be a bad thing.
So they should be praising the E.U. – not attacking it (at least not over Greece).
I repeat my own view that Greece should declare bankruptcy.
All the banks and so on would close and NOT reopen, and the people would lose their “deposits” (which do not really exist anyway).
The Greek people would then start again.
Building from the ground up.
Sadly they no longer have the strong families and socially conservative society they had in the 1950s.
For example, there are few children these days – so old people depend on government pensions that can not possibly be afforded.
Germany itself will soon face this problem.
It is disturbing to read comments on Samizdata that are very similar to the stuff I just heard on Mr Putin’s “RT”.
Nonsense Paul. The EU is split between the Germans who kinda-but-not-really want to kick the Greeks out, and the French who desperately want to keep them in. Much of the dialogue has revolved around how to save face for the EU project and avoid undermining the “inevitability” of total European monetary union. The interests of the Greek people are very much a secondary concern.
Many Greeks voted no because they believed it would precipitate an exit from the Euro. If I was Greek, I would certainly have done so for exactly that reason.
@personfromporlock: ” the notion that the EU is a warm cuddly champion of democracy ceases to be tenable ”
Who in the world ever had such a notion, ever?
The EU is openly and obviously anti-democratic, and always has been.
If you read what the “colleagues” say, and have always said, this has never been a secret.
“Well aren’t you a charmer Plamus?” – Yes, I tend to be even more polite than usual when people vote to take my money.
“…I can’t bring myself to cheer as their nation burns to the ground.” – Good for you. I can.
“I’ve got some Greek friends and I can only imagine how their hearts are breaking right now. They didn’t cause this, but they’re going to pay for it.” – Appeal to emotion. They do not have to pay for (almost) any of this. They can leave. They are not in Cuba or North Korea (yet).
“The EU is not a stern schoolmarm dollin out unpopular but needed advice. It is a mobster firebombing a shop for not paying protection money.” – Nonsense on stilts. The EU is not invading Greece, bombing its cities, or seizing its assets abroad. Greece is a store-owner fire-bombing the shop (literally last night), because the bank has the temerity to expect them to pay back what they borrowed, and asked them to put the Cadillac in escrow.
“Neutering Greece’s government and selling off every remaining state owned business to non-Greeks will simply ensure that the Greek economy never recovers and the debt is never repaid.” – Wrong. Not reforming, and remaining in the Euro will ensure that. Neutering Greece’s gov’t is the only hope the Greeks have.
There are some robust judgements here, understandable, but I feel rather more sympathetic. The Greek people seem rather like most folk today, they want all the benefits with little concept of how it will be paid for. Britain has its share, you know, the ones against austerity. Although what austerity we have experienced here is beyond me. What saddens is this is not going to end here, Greece should have abandoned the Euro for the Drachma, starting from scratch to rebuild its economy.
I have to say I am with Plamus on this.
But pleaaaaase stop calling less state spending of other people’s money “austerity”. Taxing you less and borrowing less money that you and your children are underwriting is not “austere”.
Every time you get the urge to write “austerity”, remember that is it a term the other side want you to use. Might I suggest substituting “less profligacy” or some such for an equally ideologically loaded term that they would not like you to use.
Not sure I totally agree with either side here, but +1 to our generous host for pointing out the ways that the terms used in the debate have been pre-loaded to influence the thinking of those who only read headlines. Describing what is being imposed on Greece as ‘austerity’ only if you consider ‘austerity’ to consist of spending SLIGHTLY-less-than-usual of the money set aside for your mortgage payment on hookers and blow.
Another point often-overlooked (or deliberately-misrepresented, depending on your POV) is that Greece does not, in fact, have a vast welfare state that throws unwarranted benefits at all its citizens – and yet it does have vast government spending. This alone should alert the alert reader to the fact that their problem is equal parts corruption and featherbedding in government – whose workers do get generous benefits and pensions. Much is made of the Greek national sport of tax evasion, but this is a result, not a cause, of their woeful situation – if you saw all your taxes being eaten up by a vast government Leviathan, with no benefits to you, you might be inclined to fiddle your taxes too. The real problem is the gigantic excesses of state spending, none of which is really doing the state much good.
llater,
llamas
Llamas:
Very well put. The Greek state is bloated by civil servants given jobs by political parties. When one party gets into government, they reward their supporters with jobs, but never got rid of the deadbeats given jobs by the previous government. Any private sector taxpayer who did not want to pay as little tax as possible to support this graft must have the patience of a saint.
Anyway, the IMF is well versed in dealing with bust countries like Greece: You write off unpayable debts, cut government spending, let the currency depreciate, and allow the country to recover. But in the Eurozone, you cannot depreciate your currency, and the Germans refuse to recognise that the debts are unpayable and should be written off. If Greece stays in the Eurozone, it will never recover.
JV:
Sorry but that is delusional: if they wanted to leave the eurozone, they would not have voted for Tsipras, who most emphatically does not want to.
JohnK:
Sorry about that but you’ve heard wrong.
This has already been said by Paul Marks, and Plamus remarked about the pensions.
As for the health system, you have got it the wrong way around: when i had an accident in Norway, i was billed for an emergency consultation; when i had an accident in Greece, i wasn’t. (Also, it took less time to see a doctor in Greece, possibly because nobody seemed to spend much time on paperwork.)
Further, i read recently that Greece has 4 times as many teachers per student as Finland, in spite of much worse student scores in PISA.
I don’t know about Greek unemployment benefits and it would not surprise me if they are minimal; it also would not surprise me if there is a much larger number of people on benefits, meaning a large total amount of welfare spending on the unemployed.
PS: the American “left” seems to have a narrative that, contrary to evidence, Singapore is actually a Northern-European-style welfare state. (Never mind that actual Northern-European welfare states, such as Denmark and Finland, score higher than the US and UK in some of the latest rankings of economic freedom.)
The other side of this narrative is that any failing welfare state, such as Greece, is not a welfare state at all. As Paul remarked, one would not expect to hear this sort of things here at Samizdata.
I believe that is the case, hence Greece does not have a welfare state in the accepted sense. What it does have is a client state, where connected people get public sector jobs which shelter them from the harsh realities of life, or at least did, until the Euros ran out.
That includes private contractors, such as defence and consultancy and insurance, who suck on the public teat like hungry pigs.
John, I have no problem with Greeks wanting to pay as little tax as possible. I do have a big problem when the Greeks want other EU people to pay taxes so that they don’t have to. I do have an even bigger problem when the Greeks go the full gamut of outraged, “humiliated”, passive aggressive, to open threats when the tax-paying people are somewhat less than thrilled about the prospect.
The Greeks also have a relatively large military for the size of the country. They’ve been at war with Turkey enough times they think it’s necessary.
Now if Greece would break away from the Euro, then the Eurines could invade the country, having a Lincoln-like United forever moment, and the resulting struggle would give Europe a war it could be fully behind!
Nicholas, in WW2 the RAF started its bombing rather sedately, often dropping nasty leaflets over Germany. When the RAF has its Lancaster back flying, perhaps it could drop Euro notes over hostile territory? It might bypass the Greek politicians and make the current scheme a bit more obvious.
Mister Ed,
Drop Ponzi notes.
A quote from the great Dalrymple seems appropriate here:
“The idea that living within your means is a form of austerity, and not…the elementary moral duty of people of honour, shows that, underlying the economic crisis is a profound moral crisis in western society.”
Plamus:
The only reason Euro zone taxpayers are on the hook is because that is what France and Germany wanted. Greece did not borrow from France and Germany, but from French and German banks. They were willing to lend to Greece on almost the same terms as they would lend to Germany, because of the inherent stupidity which lies at the heart of the Euro. The governments of France and Germany took the debts over from their banks, because otherwise the banks would have crashed, which they thoroughly deserved to do for their reckless lending. I have as much sympathy for them as I would have for anyone who lent money to Argentina and expected ever to see it again.
Needless to say, the French and German governments did not ask their people if they wanted to be on the hook for the debts of their banks, just as the Irish government did not ask its people if they wanted to assume the debts of Anglo-Irish Bank. The whole thing is a nonsense, compounded by the fact that the German government refuses to admit what is obvious to everyone, even the IMF: the money is gone, it is never going to be paid back. Greece is broke. Move on.
JohnK: it seems to me that you are being too hard on the French & German bankers, and also on the German government.
The bankers are in it for the money, and they certainly underestimated the risk of lending to Greece, but they did not overestimate the likelihood that they’d be bailed out, directly or via a Greek bailout; so the fault lies primarily with the governments that decided to bail out Greece.
As for the German government, i understand that Merkel was bullied by Sarkozy into the 1st bailout. Considering that many Germans, even in government, tend to take a harder line than Merkel does, i am inclined to blame primarily the French government…
AND Anglosphere Keynesians:
http://www.wsj.com/articles/in-greek-talks-why-its-18-versus-one-1426800979
I can’t in my heart blame the Greeks for eagerly believing Keynesians who tell them that they are entitled to money with no strings attached: who wouldn’t?
Though i do blame the Greeks, or some of them, for the tone of the debate, and the violence in the streets.
And yet you can’t blame Plamus, or me for that matter, for not wanting to give to Tsipras money that Anglo Keynesians (with no stake in this game) tell us the Greeks are entitled to.
Snorri:
As far as Plamus was saying that Greece has a north European style welfare state, he was just wrong, and it needed to be pointed out.
As to Greece, it is simply a fact of life that money should not have been lent to Greece on the scale and terms it was. The money is gone, it is not going to be paid back, the country is bankrupt, and any attempt to sort the Greek mess out which does not acknowledge this obvious truth is doomed to failure.
If “North European style welfare state” means a welfare state where the ruling class has learned the lessons of the Weimar republic, so that spending does not exceed actual revenue (as opposed to fantastical projections about revenue) then you are correct. Greece has an Anglo-Keynesian style welfare state, and that needs to be pointed out.
Seriously Snorri, Greece just does not have a welfare state in the way one would ordinarily use the phrase, can you not just accept that?
Greece has a corrupt crony state, it does not have a welfare state. Why is this such a problem for you to deal with?
No.
Snorri:
Good for you, feel free to take pride in your ignorance.
For the record the modern Greek government health law dates from 1983 and the modern Greek government “social insurance” law dates from 1981.
And there was plenty of government stuff in health, education and welfare in Greece even before 1981.
The left LIE.
This is a fundamental point that people must keep in mind.
Some nice person in the conservative “Daily Telegraph” may indeed be nice – but if they repeat what the university crowd (the academics and so on) tell them, they will (unintentionally) spread disinformation.
Such as “Greece did not establish a Welfare State” or “Greece does not have a Welfare State”.
I repeat – the basic point that the left LIE must always be kept in mind.
It is never just an honest debate about opinions – the “facts” presented by the left (and passed on by unwary and well meaning non leftists) are LIES.
Whether it is “whether President Ronald Reagan’s support for the right wing government in El Salvador was right or wrong” (the government of El Salvador was actually by the leftist Christian Democrat Duarte – who spent money on the “public services” like crazy, and nationalised or broke up everything in sight) or anything else.
Never (never) accept any “fact” that has a leftist source (even indirectly) on trust.
The left (the university crowd and so on) LIE.
“The Greeks have a powerful military”.
Actually the Greeks HAD a powerful military – this department is one that has seen cuts (real ones – savage actually).
“Greece has been at war with Turkey three times”.
The last important war between Greece and Turkey occurred more than 90 years ago.
Blaming the military for out of control government spending in Greece is nonsense.
The actual thing that is to blame is the thing that the left (and those who unwittingly follow what the left spread) say Greece does not have.
See above.
Can we have some facts on this? e.g. a budget figure for the relevant Greek government departments, or a description of what ‘a welfare state in the way one would ordinarily use the phrase’ means? Who is the ‘one’? When is ‘ordinarily’? It is disappointing when threads become shadow boxing rather than posting of facts and comment.
It may well be that in Greece, welfare benefits are nominally low, but then there may well be many people in Greece on ‘ill-health retirement’ early pensions that more than pay for gym membership and mountain bikes for the infirm pensioners. I have read of hairdressing being classed as an arduous occupation for pension purposes, as well as lecturing. There are many ways to skin a taxpayer.
Pensions gobbled up 17.5 percent of Greece’s GDP in 2012, according to Eurostat, more than any other EU country. Despite subsequent cuts, the country still spends 16 percent of its GDP on pensions
The proposition was that Greece cannot enjoy a north European style welfare state without paying north European style taxes. The proposition is wrong inasmuch as Greece does not enjoy (if that is the word) a north European style welfare state.
There is a sort of National Health Service which provides second rate care (as if we are surprised), and very limited unemployment insurance. Most unemployed people rely on dole via trade unions or private associations, state aid is very limited. The option of living a “Shameless” lifestyle off the welfare state is not an option in Greece (and that is no bad thing).
The problems of public spending in Greece relate far more to a corrupt system of nepotism and cronyism than they do to a mythical north European welfare state. If you are shooting at the wrong target, you are wasting your ammunition.
Not quite right John, a disproportionate number of Greek people of working age are retired, and if that is not ‘on welfare’ then what is it?
I come back to the point that Greece does not have a north European style welfare state. That is a fact, however much people may wish it were not so.
To ask the question again, how would you describe all these working age retired people then, if not ‘on welfare’?
JohnK, if Greek people who live an uneconomic, parasitical existence (when capable of working, regulation aside) are able to (eventually) take an early pension or live off, e.g. a parent’s parasitical pension, have not Greece arrived at pretty much the same situation as Shameless? Is it not just that the welfare distribution model differs, having a bias towards the old, and it may give the appearance of there not being a welfare state. And then there are the scam public sector jobs where real work may be done, but to little, no or harmful economic effect.
Speaking of harmful economic effects of public sector jobs: what about requiring, for the registration of a company, that all shareholders provide chest X-rays **and stool samples**?
https://danieljmitchell.wordpress.com/2012/02/24/i-always-suspected-greek-bureaucrats-were-useless-pieces-of-st-but-even-im-surprised-to-learn-that-theyre-actually-collecting-the-stuff/
(Sorry if i already commented about this on Samizdata.)
Remember, it’s taxpayers who pay for the analysis and storage of the X-rays and stool samples. Previously, Greek taxpayers; now, if the rules are still in effect, eurozone taxpayers.
Here again one can see the difference wrt real Nordic welfare states: in Denmark, you can start a one-person company (enkelmandfirma) by filling in a form over the internet.
Mr Ed:
I am tired of pointing out that Greece does not have a north European style welfare state, and cannot be bothered to discuss it any more. People can argue the point as much as they like, but it does not exist.
However the point you make about public sector non-jobs is of course valid, and goes to the heart of the problem of the Greek public sector, which is nepotism and cronyism.