Greece’s Only Cure Is The Free Market
Debt Crises: What a sorry spectacle to watch Greeks rioting in the streets in reaction to austerity measures. As if tantrums can change reality. It's Exhibit A of how socialism infantilizes citizens. The only cure is free markets.
As Greece's legislature heads for a vote Wednesday to cut the size of its government by $40 billion in exchange for the last $17 billion of a $156 billion International Monetary Fund bailout on July 3, the world's television screens are flooded with images of young "indignantes" calling a riotous 48 hour-strike in Athens.
Steeped in socialism for decades, these Greeks see no connection between their economic circumstance and the expanded state that is at the root of their troubles.
The IMF bailout — and a new scheme to extend maturities of bonds to 30 years — will in fact keep the current system in place without providing new avenues for growth. That in turn will merely delay another crash if there's no move toward changing Greece's system.
Like any socialized society on the rocks, Greece needs to reestablish the link between effort and reward. That's the observation of one of Chile's great market reformers, Jose Pinera, who has said that's the key to ending unsustainable welfare states and enacting free market systems that can stand on their own.
With no such reforms in sight, and only an austerity program ahead, it's no surprise Greece's protesters blame bankers, foreigners, the IMF and of course Americans — some even accusing their president, George Papandreou, of being a U.S. embassy stooge.
As childish as these acts are, they show how society is infantilized by socialism, unable to see how its spending affects future prospects.
When government makes every decision for its citizens, it's no wonder citizens forget where money comes from and can no longer make informed connections between what they earn, what they save and what they can legitimately spend.
Maybe it started when Greece joined the European Union and politicians concluded they had a sugar-daddy with endless subsidies to propel them along.
But inside Greece, the connection between work and reward was dissolved too. With the state taking over more than half the labor market, workers used political pressure to get paid more than they earned.
Pensions were also politicized, with the best-connected workers taking home enormous pensions at age 45 while others got less.
With such disconnects, it's no wonder many Greeks would rather turn down the IMF bailout and, wittingly or not, let the whole system crash. Hitting rock bottom would at least force the Greeks to wake up to economic reality. The IMF bailout will only put off that day of reckoning.