Austerity and Reality in Greece

from The Wall Street Journal, Greece and the Flight From Reality by Bret Stephens


But maybe rules isn’t quite the right word. The larger issue is reality—and Greece’s flight from it. Greece’s debt-to-GDP ratio is 177%, which sounds like an abstraction but means that this year Greece will produce barely half as much as it owes. This is what the Greek government and its fellow travelers call austerity.

As of 2008, on the eve of the meltdown, Greece had no fewer than 133 public-pension funds, each administered by its own little bureaucracy. (Under pressure from creditors, the number was supposed to come down to 13.) Greeks retire earlier and live longer than most of their eurozone peers, which means they spend close to 18% of GDP on public pensions, compared with about 7% in Ireland and 5% in the U.S. Pension fraud is pervasive, but nobody can put an exact figure on it because record-keeping is notoriously, and probably deliberately, spotty.

Privatization of state-owned companies was supposed to bring in €50 billion. Five years into the crisis, successive governments have only sold off €2.5 billion of assets. Greece has more lawyers per capita than the United States. As of 2010, Greek labor costs were 25% higher than in Germany. A liter of milk in Greece costs 30% more than elsewhere in Europe, thanks to regulations that allow it to remain on the shelf for no more than a week. Pharmaceuticals are also more expensive, thanks to the cartelization of the economy.

Illusions of Grandeur


from The Wall Street Journal, Greece and the Flight From Reality by Bret Stephens


What’s more remarkable is how Greece’s flight from reality persists. Since Athens defaulted on its IMF loan last week, the Greeks have gotten a taste of what their future holds: shuttered banks, ATM withdrawal limits, pensioners lining up for their €134 weekly allowance. And yet they voted overwhelmingly for a government that is leading them, almost inevitably, to a swift exit from the euro and possibly the European Union, their only lifelines. Pride goeth before destruction, goes the proverb. So does stupidity.

Perhaps in a few weeks, the Greeks may notice that their vote has put them at the mercy of Mrs. Merkel and other European overlords as never before. Or they might not. If the demagoguery of the Syriza government has worked, it’s because the Greeks were a people who wanted to be demagogued.

The conceit of democracy is that people will eventually learn from their mistakes—even if they must first make those mistakes—and that experience is the ultimate teacher. But suppose it is not? Argentina shows that people can get it wrong generation after generation; that illusions of grandeur can sustain a politics of failure.

Wealth Without Work


from The Wall Street Journal, Greece and the Flight From Reality by Bret Stephens


These and other details give the lie to the claim that Athens’s woes are somehow the product of powerful and indifferent economic forces beyond its control: the value of the euro, or the machinations of high finance, or the mood swings of Angela Merkel. Greece wanted to be prosperous without being competitive. It wanted to run a five-star welfare state with a two-star economy. It wanted modernity without efficiency or transparency, and wealth without work. It wanted control over its own destiny—while someone else picked up the check.

Consensus and Reality


from The National Review, Beggars and Choosers by Kevin Williamson:

The presence of Greece in the Eurozone is the result of a lie: The Greeks pretended to get their deficits and debt under control, and the Europeans pretended to believe them. That was the first act. In the second act, after the advent of the current crisis, the Greeks pretended to enact fiscal reforms, and the Europeans pretended to believe them. Political logic is, not coincidentally, lawyer logic — which is to say, it substitutes consensus for reality. If enough people (jurors, voters) are convinced that your position is the correct one, then you “win.” Maybe the election turns out your way, as with Tsipras and the referendum. Maybe political consensus prevents your opponents from enacting their favored policies, just as conservatives have for decades been frustrated in their efforts to enact entitlement reform by cheap and dishonest images of grandmothers being pushed over cliffs. Maybe O. J. Simpson walks.

Politics is negotiation. Reality is non-negotiable. The Greeks were not one euro (or drachma!) better off after their weekend temper tantrum; if anything, they were worse off, as attested to by the spectacle of the citizens of a civilized, high-income, European country stockpiling sugar and flour like denizens of some backward war zone. In the homeland of political philosophy, political discourse has been reduced to an infantile bawl on the part of the people — the eternal “I Want!” — and the parental version from the leadership: “Because I Said So!”

The Greek people spent part of the weekend in the streets celebrating their status as international deadbeat. They spent the rest of the weekend hoarding food, fuel, and medicine in preparation for the manmade disaster they have inflicted upon themselves.

Democracy’s Delusions


George Will in The Washington Post, So what if Greece leaves the European Union?

Now come Greeks bearing the gift of confirmation that Margaret Thatcher was right about socialist governments: “They always run out of other people’s money.” Greece, from whose ancient playwrights Western drama descends, is in an absurdist melodrama about securing yet another cash infusion from international creditors. This would add another boulder to a mountain of debt almost twice the size of Greece’s gross domestic product. This protracted dispute will result in desirable carnage if Greece defaults, thereby becoming a constructively frightening example to all democracies doling out unsustainable, growth-suppressing entitlements.

It cannot be said too often: There cannot be too many socialist smashups. The best of these punish reckless creditors whose lending enables socialists to live, for a while, off of other people’s money. The world, which owes much to ancient Athens’ legacy, including the idea of democracy, is indebted to today’s Athens for the reminder that reality does not respect a democracy’s delusions.