Greecing the Skids

Greece is in an uproar over “austerity” cuts. The issue is critical because the European Union has made passage of the latest bill a requirement to receive the last installment of a bailout package. Without it, Greece would become the first sovereign default of the EU.

The austerity package includes both tax increases (about a month’s income for the average Greek household) and budget cuts, but it appears to be the cuts that have prompted unrest. Greeks are massively unprepared to deal with this kind of change, at least psychologically. Why?

The general problem is exactly the same one we will face in the US–a lot sooner than we think. Big government does any number of horrible things to a country, but the worst is disconnecting citizens from reality. When our efforts are not directly connected to our rewards in life, we become soft. Well, that is the diplomatic way to put it. We actually become sniveling cowards. Worse, we become sniveling cowards with an excuse.

If I have been forced to pay for something, I am sure to be hacked off when I don’t get it. In a sense, I am perfectly justified. State pensions are a great example. If I have been forced to contribute to a plan and then find out there is not enough money to pay out what I was promised, I jolly well should be mad.

Retirement plans that relieve us of the responsibility of thinking reward us in kind. When we manage our own affairs, we may make mistakes, or even become victimized by fraud and deception. Yet we also know that we carry the responsibility for managing as best we can. We are motivated to diversify, learn, grow our investments, watch our budgets, and increase our income in anticipation of old age. No one realistically expects to just sit back and let it all happen. That is, unless the government or our employer does it for us.

When that happens, we lull ourselves into a deadly passivity that is suddenly and rudely interrupted by the terror of it all coming apart. This is Greece today. Is it us tomorrow? The Greeks cannot have what was promised. It is not there. Come mid-July, salaries and pensions will not be paid. The nation will default. The comfortable bed of big government will become a thorny pallet of briars.

The Greeks have a choice. They can bring their country down completely, tear each other apart, and suffer in the aftermath. Or, they can find out what capitalism really is. They can resurrect whatever self-reliance and initiative they have left and build a country worth its ancient heritage. Greece was the birthplace of the idea that human beings are noble creatures destined for greatness. Their art, their sports, their politics all reflected, if sometimes imperfectly, the idea that we featherless bipeds are a special lot. Let us too remember that heritage as we slide toward the same precipice the Greeks teeter on now.

About Terry Noel

I am an Associate Professor of Management and Quantitative Methods at Illinois State University. My specialty is entrepreneurship.
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2 Responses to Greecing the Skids

  1. Diane Benjamin says:

    Are you on my email list? Part 1 of the financial situation in Bloomington went out today. It will have at least 3 parts


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