Thirty years ago this fall, on October 18, 1981, a charismatic academic with rather limited government experience and with a one-word slogan, “Change,” was elected prime minister of Greece. His name was Andreas Papandreou. Greeks may now wish that 30 years ago they had had a Tea Party movement. Things could have turned out differently.
Thirty years ago, Greece was in an enviable position on the matter of national debt, with its debt just 28.6 percent of GDP. Few advanced countries can manage that kind of debt-to-GDP ratio. By the end of Papandreou’s first term in office, that ratio had nearly doubled, with debt at 54.7 percent of GDP. By the end of his second term, the figure was in the mid 80s.
Advertisement
The 1980s in Greece were a time of dramatic expansion of government. Papandreou and his Socialist party created a new government-run health-care system, dramatically expanded employment in the public sector, nationalized failing companies, and increased government handouts of every shape and form.
It was a government expansion so large and many-sided that in the end it generated a revolution of expectations and attitudes about the role of government in society. No government since then has been able to reverse that revolution, no matter how willing it was or how pressing the circumstances.
It is in this detrimental position that the current prime minister, George Papandreou, son of Andreas, finds himself. A sorry state of affairs created by one generation to be dealt with by another, the sins of the father to be paid for by the son — this is the material that Greek tragedies are made of.
The statism of the Eighties got another boost when subsidies from the European Union started to pour in, and yet another boost in 2001 when Greece adopted the euro and discovered that she could borrow at very cheap rates. The euro and the subsidies played the same role in Greece that oil has played in the Middle East: the lifeline of an unsustainable economic system, the enabler of a demagogic political class.
Now the Greek government finds itself with a debt-to-GDP ratio somewhere north of 140 percent and quickly rising. Since May of 2010, that problem has also become the European Union’s problem. Because Greece is a member of the EU and the eurozone, it is feared that her instability will lead to the destabilization of other weak members of the EU. Greece cannot go out to the markets to service her debt and finance her new deficits; that has become the care now of other nations’ taxpayers across the continent.
The agreement between the EU and Greece stipulated that Greece would drastically reduce her deficits in return for European aid. That was to be achieved by budget cuts and tax increases. The Greek government since then has mostly intended budget cuts and vigorously pursued tax increases.
Such an approach is not surprising considering the political clout that government employees enjoy in Greece. One of every four working adults is a government employee. The government at the beginning made some across-the-board cuts in salaries and pensions, but since then it has basically tried to address the issue of public finance with tax increases.
The absolutely dismal results of those tax increases have not persuaded the younger Papandreou and his colleagues to reduce the size of government and its tax, regulatory, and corruption burden on the economy. The Greek government employs lots of people, even by European standards; the increase in unemployment since the crisis started has come exclusively from the private sector. Finland may have the best educational system in Europe, but its ratio of students to teachers is double that of Greece, which has one of the worst educational systems. In area after area of governmental activity, Greece has the most people employed per population but also the worst results: a way-above-average number of tax collectors but very poor tax collection; an above-average number of policemen but dismal public order; a record number of local courts but perhaps the slowest justice system on the continent; a record number of hospitals but one of the worst systems of health care.
I cringe every time Krugman opens his (mal)economics-hole.
Contrast Greece/France/Spain/UK(a little bit) to Germany.
The former 4 had riots in the streets at the possibility of any reduction in the government dole ("It's a human rights crisis).
The Germans (and I know quite a few) were pensively asking "Are we cutting enough?"
Germany's fiscal recovery could be scuttled by the rest of the Eurozone. It seems doubtful they will let that happen. Maybe they'll come to their senses and exercise their ability to withdraw before they bail out the spendthrift Mediterranean states.
Over the past two days, I have read the articles here about the NY gay marriage bill. Each of those articles have comments that number up to the 300s.
On this article, not one comment until mine. Is it that we have been so lulled to sleep over so many tangential issues that we fail to grasp the seriousness of the issues raised by Mr. Linardatos. Our country is being led down the same path as Greece while we allow the MSM and others to distract us with less important issues than our survival as a nation!
If I were a Republican presidential candidate, I would use the Greek situation as my campaign call to action.
copperknob, if it's any consolation, I shared this article with family and friends. I didn't share any of the GM articles (even though there were plenty good ones).
Also consider that most conservatives are on the same page with the issue of public debt, whereas there is a very vocal minority among republicans and conservatives that favors gay marriage. You're always gonna get more comments on the divisive issues.
I wonder how long it will take the liberals to unleash the politics of personal destruction on this man, Linardatos.
He has provided the test tube results for our dear leader and his nitwit minions to see along with the rest of us.
The irony will be that Mr. Obama will attempt to insist the problems in Greece, despite being very nearly identical, will not occur here because we are different.
Kind of goes back to his statement on American exceptionalism doesn't it? After all didn't he say the Greeks probably believed in Greek exceptionalism in the same way we believe in American exceptionalism?
The problem is that being on a free ride for your entire life means you do not know anything other than a free ride. How do you make a person voluntarily give up an entitlement? This is what the liberal Democrats in this country want to see, a country of Lotus-Eaters.
This was interesting. I did not know that Greece had changed so much in just 30 years. I had assumed that these characteristics were persistent, dating from at least midcentury if not before.
I was also in primary school in the mid-1980's, so this hits home a bit.
I had thought that the U.S., though it might have problems, would be unlikely to transform to completely as to resemble Greece (even if we do somehow blow the election in 2012). But now I am not so sure. The peoples' attitudes there apparently changed drastically very quickly, and I have always believed that people are the same everywhere.
Maybe it could happen here, and in my lifetime, Tea Party or not. This isn't about 2012. It is about the attitudes and personalities of our fellow citizens. If those go down the wrong path, it won't matter who we elect.
What can we do about that? That's a much harder question than who we should nominate in 2012, or how best to criticize Obama.
"There stands Greece today, a year after it was bailed out by the taxpayers of other countries, facing the choice of reforming itself or going to utter ruin, and it cannot make up its mind."
We are not so unlike I'm afraid. Next November's election results will determine which path we want to take. And if we fall the rest of the free market economies will too. Like I said, terrifying.
DawnPatrol, I pretty much agree with one exception. There are no more free market economies left. All suffer from the disease of socialism, only the degree differs.
MarkW, agreed. But the U.S. is the keystone to the global economy and any free markets that might still exist. If the collapse of lowly Greece can shake up global markets, what would the collapse of the U.S. economy cause other than unimaginable chaos?
Makes one wonder if we really won the Cold War or not.
I felt your pain while reading your heartfelt article. I know how you feel as I live in California and witness our continuing decline everyday. Victor David Hanson writes about it better than I can ever express it.
My family has traveled regularly to Greece for the past sixty years. It is heartbreaking to watch a nation consume itself from within. I can't imagine a more telling demonstration of the ultimate evil that socialism/statism inflicts on a self indulgent nation. Equally telling is our media elites' total failure to point out that only the private sector has suffered in Greece, while the politically all-powerful public sector skates free of any pain. Gosh, what a surprise!
I wish I found this surprising, but I have seen this coming since the '60's. Politicians will never willingly defang themselves.
When people ask me why, if I had a magic wand, I would announce that Herman Cain was hereby pronounced President of the United States of America, it is because he is not a politician. Every job he has had, he has done well. He knows when his time is being wasted, like the Fed and the other commissions he's served on, where he realized they were not serious, and resigned.
When King George heard that George Washington was made president, his opinion was that the Americans had just changed kings. When they told him that he would only serve for the length of his term, he noted that he would like to be informed the day he left office, because he really wanted to believe in miracles. He held that, in order to be a political animal, one needed to be dragged out of office by one's heels. Voluntary removal made no sense to him.
Herman has done many jobs, and when his work was done, he left. Like GW, he did not become less. He is still Herman Cain. We should be glad he is available.
Thank you for an eye-opening, moving article and warning. Much of what you said was news to me. Hopefully, your article will be well-circulated and taken to heart.
=====
Nonetheless, I have to reply (with bitter sarcasm):
Unfortunately, although you *are* Greek, and witnessed the decline of the Greek economy firsthand, your observations will fall on deaf ears.
American bi-coastal, Ivy-League-educated liberals *always* know better than the ignorant, parochial locals inhabiting any and every country on earth. The fact that you don't acknowledge this (and dare to criticize Krugman, who is a Nobel Laureate, and, like all Nobel Laureates, a superior being) shows just how non-progressive and ignorant you are.
Oh, Greek food and art history are wonderful, but you Greeks really don't know anything.
No one knows anything that didn't spring originally from Chomsky or Sontag.
Only privileged Americans with terminal degrees from Ivy League institutions know how everyone should live.
=====
An article several months ago in _Yale Magazine_ talked about Yale's opening of a Singapore campus. I wish I'd saved that article.
Recall that Singapore ranks #2 after Hong Kong in the list of the world's freest economies. The article asked an unbelievably arrogant question, words to the effect, "Will Yale Yale-ize Singapore and open it to international intellectual ideas, or will Singapore's stultifying, dictatorial regime Singapore-ize its Yale campus?"
I don't know where to begin about the harm wrought by the Ivy League mentality upon the world, and not least upon many of its pitiful, grandiose graduates (Sorry, Bill).
