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Foreign Affairs

Greek Tragedy

New York Times:

[Greece's] Parliament passed a confidence vote on Prime Minister George Papandreou's new cabinet, formed last week to push through a fresh package of austerity measures required to receive international financing to stave off default.

The passage averts early elections and a stalled government at a critical moment. Now, Mr. Papandreou must face an even bigger challenge next week, when Parliament votes on the new slate of measures, including tax hikes, wage cuts and state privatization, that are required by the European Union, the European Central Bank and the International Monetary Fund before it releases the next segment of aid that Greece needs to meet expenses through the summer.


The vote came days after protests over new government cutbacks shook Greece's political establishment and touched off a revolt within the ruling Socialist party. Mr. Papandreou shuffled his cabinet on Friday, sacking his finance minister, who was seen as the architect of the austerity measures....

It's important to understand that there is rioting and massive public protest in Greece because they feel the austerity measures required to have someone else continue to pay their bills are too great a burden on their quality of life. The alternative would be a national default - bankruptcy. But everyone - particularly state employees - insist that someone else, even if they be foreigners, must pay more. There is no accountability, responsibility or deference to economic reality. Greece is the picture of modern, liberal socialism - it doesn't work any better than the old varieties, but is even more culturally pathetic and politically ridiculous.

America has seen the blooming bud of this infestation in Wisconsin, and the vine has stretched across the entire nation. Greece is the natural conclusion of this progressive ideology. The sooner it is plucked from American soil and burnt at the root, the better for our national fortune and prosperity.  

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Discussions - 3 Comments

There is no accountability, responsibility or deference to economic reality. Greece is the picture of modern, liberal socialism

The situation in Greece is deplorable. Please note, however, that the government which cooked the country's books was run by the parties not affiliated with Socialist International. In our own country, vigorous advocates of the notion that reality is merely optional in the realm of fiscal policy have included Arthur Laffer, Ronald Reagan, Timothy Pawlenty (with his fantasies of 5% real growth sustained over two business cycles), and John Boehner ('tax increases are off the table'). We all need to zone back in here before our own government goes into receivership.

But didn't PASOK do some book-cooking of its own? IIRC it got in trouble w/ EU authorities a couple of times for failing to accurately report deficit spending on its watch.

And Mr. Deco, what in your view is a nonfantasy growth target? Sure, 5% (the target set in the Democratic Party's 1960 platform as well as more recently by Gov. Pawlenty), may be unrealistic, but can we do better than our current 1.8%, and if so, how?

Macroeconomic policy can act to moderate the economy's cyclical flux. A business cycle is typically about six years in length. Improvements in output measurable over the longer term are a consequence of growth in factors of production and in joint-factor productivity. The last is not readily manipulable with obtrusive results. Given the experience of the last 40 years and given the current rate at which the potential labor force is growing, I think a realistic target might be 2.4% per annum, and less than that until the overhang of debt is paid off or written down.

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