By Christiaan van Huyssteen (@cvh23)
Greece has been pushed to the brink by the mounting debt the government has to deal with. Despite
It should be the Greek people that are reeling by another, even greater stunner, just spoken by the Greek PM during his TV interview: an admission from the chosen Greek “leader” that Greece, as a
sovereign nation, no longer exists:
- GREEK PM TSIPRAS SAYS LENDERS GIVE A MESSAGE THAT IN COUNTRIES UNDER A BAILOUT THERE IS NO POINT IN HOLDING ELECTIONS
So the Troika makes it clear that countries under a bailout, such as a Greece was and is about to be indefinitely again, democracy is finished and the country becomes a sovereign ward of a few unelected bureaucrats, and the Greek “prime minister” who also just admitted he is now nothing but a puppet of Greece’s new unelected leaders, is Ok with this.
When a business or an individual has debt problems, they can negotiate new terms with their creditors, or simply default and surrender their assets to their creditors. With governments, this procedure is a little less obvious. Are the Greek people responsible for the debt, or is the Greek government? Are the people not the government? Should the government (or thepeople who voted for the government) which so liberally racked up the debt be punished? How can they? Under a democratic government there is rarely any meaningful accountability. This is why debt can become such a demon and result in a loss of democracy.
Most ‘austerity’ measures are merely bringing Greek retirement ages, pension payments and taxes (we aren’t justifying additional taxes) etc. in line with international standards. Old people aren’t being kicked out of their homes as some in the mainstream media may have you believe.
Austerity measures include (but is not limited to):
- Raising VAT by 10%
- Public sector workers will no longer receive 13th and 14th salary payments
- A tax of 10-40% on luxury cars based on cost price
Greek GDP is down roughly 20% since 2010, despite government debt increasing by about 7% over the same period (despite the austerity, the Greek economy is still not breaking even). This shows how unsustainably dependent the Greek economy has been on government spending, and how slow the economy has been to adapt to one which places more responsibility on the private sector. This leads to the next section.
From Mises (by Russel Lamberti):
It’s considered politically incorrect to criticize culture these days, but whether using euros or drachmas, in or out of the European Union, Greece really has to, somehow, sort out its cultural dysfunction. I’m not talking about its customs, traditions, architecture or music, and I’m definitely not talking about its food. I’m talking about its cultural anti-capitalism. The negotiations, deals, counter-deals, referenda, protests and everything in between all mean very little if Greeks, by and large, don’t ditch their statist zeitgeist and rediscover Greek capitalistic exceptionalism.
The biggest risk to Greece is not austerity or fauxsterity or default or the euro or the drachma. And it’s certainly not the bogeyman of being frozen out of sovereign credit markets — it’s that Greek culture remains antagonistic to free, unfettered markets and is chronically state-dependent.
The Greek state is the biggest part of the Greek economy, this is an economy which is very deeply in debt and quite frankly being run by schoolboy socialists. It is a recipe for disaster, and the reality is that unless the entrepreneurship and the private sector steps up to fill the vacuum, the conditions in Greece will only continue to deteriorate. Maybe they should try and copy South African Greeks, who are truly a very entrepreneurial and driven bunch of people.