Socialism - the cause of the Greek economic melt-down?

The following write-up (with emphasis added by me by highlighting where I felt it appropriate) on the subject reached me through a whatsapp group, yesterday, along-with a question as to whether I was the author, knowing me to be talking a similar language all along:

What is happening in Greece is the result of socialism playing out in the city square. But you won’t know that by reading papers or watching TV.

Greece has enacted entitlements which assure the citizens a royal life just because they are born in Greece. For example everybody gets pension. Everybody, means everybody. At the age of 57, you as a private or self employed person retire with full State pension. But there is another catch. If you work in a hazardous profession, you can retire with full pension at the age of 50. There are about 450 professions classified as hazardous. One of them is hairdresser. Yep, you read that right, in Greece, hairdresser is a hazardous profession.

So if you are a hairdresser, you can retire with full state pension at the age of 50.

All other entitlements- healthcare, education, unemployment benefits, housing, etc., of course are there. With these securities in place, Greeks did what all other Europeans have done: They stopped having babies. If government is there to take care of you from cradle to grave, why go to the trouble of maintaining families and having babies? Its fertility rate is just 1.41. (World Bank in fact put the figure at 1.29 in 2013.) So there are not enough Greek nephews to take care of the old age pensions and medical care of Greek uncles. Greeks are discovering the hard way two inescapable facts of life:

1. government doesn’t have infinite money.

2. Government has no money of its own.

If there are no taxpayers around, government earns nothing.

But Greek uncles say,”We don’t give a damn. We don’t care how you arrange the money. Just keep our Welfare cheques coming. Otherwise we will burn down our own cities.” The dispute right now is that Greeks want their entitlements to continue, to be paid by the rest of Europe, whereas rest of Europeans are not ready to pick up the tab. How cruel of them, those Europeans. They all profess to be socialists but are not ready to take care their poor brethren in Greece.

What is happening in Greece, and in the rest of Europe as well, is that the latest avatar of Socialism-the Welfare State- has also bombed big time. Socialists through their control of media may put any spin to it, but the fact is that their latest project of collectivising only incomes (and not means of production or property) has also ended up destroying some of the richest and most advanced countries on the planet- the Welfare States of Europe.

“The problem with socialism is that you eventually run out of other people’s money,” Margaret Thatcher famously observed. As long as other people still have money, socialists will find a way to take it, and when push comes to shove, they won’t be shy about using their own bankruptcy as a weapon. They won’t tell you today that their goal is to build a government that cannot be reformed when tomorrow doesn’t live up to their predictions.

Well, while I am no expert on Greece, or global economics, I dare say that, if the write-up reflects the overall approach of the majority of the population of Greece, or, in fact, any country, this is where they could land up.

While most others on the whatsapp group too seemed to endorse this criticism of the overall Greek outlook, one member raised a querry as to "how come the Scandinavian countries seem to get along well with Socialism". My answer to that would be that "Scandinavian countries levy very high levels of taxes, even with which the compliance levels are fairly high (which is largely impossible for a country like India, because of its huge population), providing for adequate funding of public services." But, I would still think it is unsustainable in the long run.

Whatever, I looked for contrary views, and I was forwarded this article by Paul Krugman in New York Times, where he generally says that the Greeks have already tightened their belts considerably, and that the answer could lie in reverting to their own currency allowing for flexibility in valuation in tune with the state of the economy.

There was another comment that "all they need is US$ 1.7 billion - just 0.25% of the bail-out given to the US banks", implying in general that EU biggies were being unreasonable, and holding Greeks to ransom. My answer would be that "Greece is a much smaller country, perhaps smaller than the smallest of the states comprising the US, and as such, such comparisons are not quite valid. Besides, the bail-out of the US banks was by the US itself, whereas the bail-out of Greece has necessarily to be by the EU, which poses a different problem altogether".

All in all, even with my limited knowledge, I would largely blame Socialism for the state of affairs. And, it should be a lesson for other countries too.

Muralidhar Rao