Going Greek

How to collapse in bankruptcy and anarchy.

Modern European crises have a consistent tendency to move at the speed of a particularly lazy glacier.

In the grand sweep of human history, this is probably an improvement: the 20th Century would have been very different, in a good way, if the Great Powers of 1914 hadn't been so all-fired eager to mobilize after a two-bit revolutionary shot a second-rate princeling in a Third World country.

Still and all, just how long is it possible for any human endeavor to be totally bankrupt and yet still not, quite, shut down?  For nearly this whole millennium we've been hearing about the Greek fiscal crisis and how it's just about to explode.  For all these years, it keeps getting worse, but somehow stays more or less the same.

That's sad, because what's happening in Greece ought to be an object lesson showing us all where we'll eventually end up.

Greeks Bearing Grift

For the entire modern era, the nation of Greece has operated more or less as a Communist country without the violence or oppression.

No, Greece does not have concentration camps.  You're allowed to say what you please and vote for who you will.

Economically, though, Greece's workplaces bear a striking similarity to those of the old Soviet Union: "We pretend to work and the government pretends to pay us."  Around a quarter of the Greek population works for the government, though that number is a little soft because there are so many government-owned corporations whose employees may not be counted in the total.

We have the same problem in America - Amtrak and the USPS are "private" corporations which we all know the government backs when needed.  But on a percentage basis, there's much less of this here than in Greece.

In America, most (though not all) postal workers actually do useful work, as do most Amtrak workers albeit with woefully low efficiency.  In contrast, comparing economic statistics between countries suggests that the Greek public sector produces nothing of any value whatsoever.

Part of the problem is how short Grecian careers tend to be: their average retirement age is almost the lowest in Europe.  Even if you work hard for the years you do work - and with 50% youth unemployment, Greeks tend to get a late start -  being retired for 30 years can't help but drag down the economic efficiency and productivity of the nation.

Things Which Can't Go On, Won't

In absolute numbers, it doesn't so much matter how late people start working or how early they retire as long as they are economically productive enough during their working years to cover the expense of the rest of their lives with something left over to cover the cost of criminals and other people who can't work.

You might assume that this means that you have to save enough money or acquire a decent pension before you retire.  For sure, the Greeks pay close attention to this: as a nation, they spend 5% more on pensions than the European average.  Alas, fully 50% of that amount comes straight from the national budget.

That's all very well if you are a retiree, but where does the money come from in the first place?  Therein lies the problem: As a nation, Greece collectively doesn't earn enough money to pay even the current bills, to say nothing of promised pensions down the road.

In the 1980s, Margaret Thatcher pointed out that "The problem with socialism is that eventually you run out of other people's money."  She meant that there's a limit to how much revenue taxing the rich can raise.

The Greeks came up with a better plan: Forget ripping off their own rich people, they'd simply blackmail other countries into footing their bills!  Sure enough, the rest of Europe has "loaned" Greece hundreds of billions of eurosevery single one of which has been spent and then some.

As the richest country in Europe, Germany provided the lion's share of this money.  It was booked as loans, but German voters have seen through the fraud and are furious at their own national leadership which dumped their money down the Greek rathole.  As one German housefrau put it:

“I really don’t know how much longer we should keep patting their backs and telling them everything’s going to be alright – here’s an extra 100m,” she says. “If my son kept coming to me for money to get himself out of trouble, I’d help him immediately, but I’d want to see that he was trying to get out of any mess he’d got himself into, wouldn’t I? I couldn’t afford to keep tossing banknotes in his direction.”

Yet Greek voters refuse to stop giving themselves money they don't have.  At the last election, they voted in an extreme populist government on the specific platform of no cuts to anything and, above all, refusing to cooperate with the demands of the European countries which are paying their bills.  In other words: to bite the hand that's feeding them, hard.

Is it any wonder that hand is no longer proffering Gravy Train?  So this week, Greece prepares for a situation in which there is literally no money around for anyone to use for anything.

Unless, of course, the blackmail works yet again, and the rest of the Europeans come up with more "other people's money" for Greece to waste.  In that case, the merry-go-round crisis will continue until the next time.

It's All Greek Over Here, Too

The truly frightening fact is that, where Greece is today, most of America will be tomorrow.  Of course we all know about our insanely massive, mathematically unpayable national debt, but since it's in our own currency, when worst comes to the worst we can wave a magic wand and vanish it all.

That doesn't work at the state level, let alone the local.  Yet a clear majority of American states are insolvent right now; like Greece, they've been kept going by the largesse of Big Brother.  An ever-growing list of cities is in the same boat, as is Puerto Rico.

This, too, is like Europe.  Greece is a fairly small country and it's possible, barely, for the rest of Europe to keep it on as a charity case.  Italy is a whole lot bigger and it's in nearly as deep a hole.  There's no way Europe can bail out Italy; they aren't even talking about trying.  We could save Puerto Rico; we cannot save Chicago, much less California.

How does this end?  We're not really sure.  Countries amd states don't go bust the way people and companies do because there's no sheriff to kick the entire citizenry out of the country and auction the place off to the Chinese.

The closest historical example is Weimar Germany, where hyperinflation famously led to people needing an entire wheelbarrow-full of banknotes to buy a loaf of bread.  Most alarmingly, though, this economic disaster directly led to political turmoil which led to the rise of Adolf Hitler.  All of Europe wants to avoid this horrific outcome, but nobody has any idea how.

For now, it looks like the land where democracy was invented won't just be going Greek - they'll be stark naked, like in ancient times.  Not for fun and games, though, but because spending too much means they'll have lost their shirts along with everything else.

Petrarch is a contributing editor for Scragged.  Read other Scragged.com articles by Petrarch or other articles on Foreign Affairs.
Reader Comments

You might want to reread your history. The Weimar hyperinflation lasted at most two years and ended in 1923. The Nazis didn't achieve much success until after the global Depression, with associated deflation, hit in 1929-30.

July 7, 2015 7:13 AM

Yes, there was a ten year gap between the hyperinflation and Hitler coming to power. It is generally considered though, that in combination with the Treaty of Versailles (which largely led to the hyperinflation), the economic ruin paved the way to dictatorship which turned out to be Hitler.

July 7, 2015 7:45 AM

Sorry, "generally considered" is not sufficient documentation. Try reading this: http://www.economist.com/blogs/freeexchange/2013/11/economic-history-1

Or consider the fact that "1924 to 1929 is known as the Golden Age of Weimar. Berlin became the city to go to if you had money, the Nazis were a small, noisy but unimportant party. Above all, Stresemann gave Germany strong leadership." (http://www.historylearningsite.co.uk/modern-world-history-1918-to-1980/weimar-germany/hyperinflation-and-weimar-germany/)

Somehow after a period of almost 10 years, people suddenly remembered how hard they had it in 1923 and started voting for the Nazis? It seems much more plausible that the Great Depression that they were in the midst of had much more effect.

July 7, 2015 9:38 AM
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