Greece: The Problem With Socialism

“70,000 Greeks Protest Cuts, Clash With Police”

The above is the Bloomberg headline for Greece today as the unions called for massive, countrywide strikes to shut down the country in protest of further austerity cuts by the government. The Wall Street Journal is reporting that there are 100,000 protesters. The parliament has to vote on further austerity measures and a preliminary vote on it came up today and was passed. These measures are a condition precedent to the next round of bailouts from Greece’s fellow eurozone members.

“This policy has no future, and those who express this policy have no future,” Yiannis Panagopoulos, the head of GSEE, Greece’s biggest private-sector union, said in a statement. “Those who are voting through these measures need to think again, and again, what they’re about to do, against a people undergoing conditions of social barbarity.” …

GSEE said that strike participation was 100 percent today at refiners, shipyards, on transport, ships and at ports, and 90 percent in the construction industry, commerce, banks, the power company, phone company, postal service and water companies. Municipal garbage collection workers were ordered back to work yesterday by an executive decree to clear more than a week’s worth of refuse piled up in the streets. Hospitals, schools and courts were hit, shops shuttered and newspapers absent.

This is the problem with socialism. I don’t mean to flog Mrs. Thatcher’s famous statement again about running out of other people’s money, but that is exactly what has happened with Greece under the stewardship of the socialists lead by the Papandreou family. That is, they spent all the capital they could steal from their fellow Greeks, and when that ran out they started borrowing, and that has run out as well.

The new austerity steps include mass layoffs of public-sector workers, more taxes and reduced pensions. At stake is an €8 billion tranche of aid from the EU and the IMF that Greece needs in the next few weeks. Without it, the government has said it will run out of money by mid-November.

Now they are faced with chaos because the powerful unions are the beneficiaries of the socialists’ policies. They are overpaid, underworked, and have their nests feathered by their fellow Greeks when they retire. They are way over the tipping point I mentioned earlier this month whereby you have a powerful voting bloc voting benefits for themselves. And they are flexing their muscles, literally. (“In Greece’s second city of Thessaloniki, protesters smashed the facades of about 10 shops that defied the strike to remain open, as well as five banks and cash machines.”) 

It is almost following the script that Friedrich von Hayek wrote in The Road To Serfdom 67 years ago. The next step for the cradle of democracy will be martial law. At some point elections will be “temporarily” suspended in order to “stabilize the economy.”

There is no real solution for Greece. They are bankrupt and their economic foundation is rotten. They have bred a society that wants generous benefits on the one hand, and on the other, cynical producers who don’t want to pay taxes. They are similar to Eastern Bloc countries post-Soviet collapse. My guess is that they need a similar revolution to shake off the socialists and forge a new government based on free market principles. Perhaps they could look to Estonia, Lithuania, or the Czech Republic as an example. 

The policies demanded by the Troika to bail them out won’t work. They need a complete reformation of their economy. Anything else will just delay the inevitable. The eurozone would be better off by jettisoning Greece and letting them fail. The money spent to save them will be wasted. One can only hope that they will re-emerge without their social burdens and with a free market economy.

EmailPrintFriendlyShare

6 comments to Greece: The Problem With Socialism

  • Keith Weiner

    I agree, Jeff, I see it getting a lot worse in Greece before it gets better. :(

  • Tibor Silber

    “They have bred a society that wants generous benefits on the one hand, and on the other, cynical producers who don’t want to pay taxes.” Can we not find some way to differentiate between the moral position of the producer and the looter?

  • Barry

    It really isn’t the problem with socialism. The problem is that French/German banks lent money to the Greek government knowing that the Greek government couldn’t repay. And now these banks want to be repaid at 100% plus interest for their folly by essentially seizing the assets of the Greeks.

    The Greek government(s) surely were at fault. But what of these banks? They knew the economy of Greece and its history. They also knew that, in the end, they would be bailed out.

  • Tibor Silber

    Well, if the banks knew “that, in the end, they would be bailed out” by their governments, then, it ‘is’ a problem with socialism. Not necessarily socialism in Greece only, but, also in France and Germany. Let capitalism reign. That is, no bailouts for anyone, ever. Then, let’s see how quickly the surviving bankers will learn to behave responsibly.

  • Steven

    “They are bankrupt and their economic foundation is rotten. They have bred a society that wants generous benefits on the one hand, and on the other, cynical producers who don’t want to pay taxes.”

    How is this any different than the large banks the US?

  • Disappointed Greek

    I was born and raised in Greece (thankfully I moved out 12 years ago). I have to say that the author hit the nail on the head with this:
    “They have bred a society that wants generous benefits on the one hand, and on the other, cynical producers who don’t want to pay taxes.” A scary fact is that, in the last 130 years (since the country’s independence from the Ottoman empire, Greece’s economy was at its best during the coup of 1967-1973 which was overrun by the socialists. Economy, education, infrastructure as well as the work ethic of its people have been in a downward spiral since. From my vantage point, there is no end in sight…….
    The notion of a revolution is scary but may unfortunately prove necessary.