The newest oxymoron: Greek discipline
“Freedom is not procured by a full enjoyment of what is desired, but by controlling the desire.”
You could call the Greek voters the Oxi morons. The electorate of Greece voted overwhelmingly to reject a European Union bailout package that included strict austerity measures. They celebrated their vote with dancing in the streets, waving banners emblazoned with the word “Oxi” ¬– Greek for “No.”
Days later, their prime minister accepted an EU bailout proposal that was stricter than the one it had asked the people to reject as being too strict.
Greece built its economic system on the ideals from the old joke that ends, “I can’t be overdrawn, I still have checks left!”
The Greeks invented organized sport, but that has given way to the country’s new national pastime – tax evasion. A government cannot borrow, then borrow some more, then keep borrowing, if it is lax in collecting the revenues to pay back the debt. To call the Greek system of tax collection lax is like calling the Olympics a track meet. Theirs has not merely been a tax-and-spend economy. It has been a tax-but-don’t-bother-to-
Alongside all that borrowing and all that non-collection of taxes, the Greeks also have one of the most generous pension systems on the planet at a time when pensions worldwide are disappearing out of economic necessity.
And this did not sneak up on anyone. It was more than five years ago that credit rating agencies downgraded the Greek government’s debt to junk status. That pushed the cost of borrowing in traditional markets so high that the country essentially had its overdraft protection cancelled. To avoid bankruptcy then, Greece borrowed from the EU and the International Monetary Fund. For countries, going to the IMF for funds is the equivalent of going to see a guy with the middle name “the” for a loan – Barry the Blade, for instance. It’s the loan of last resort. Again, that was in 2010.
Yet somehow, Greece continued on its merry path of reckless spending and haphazard fiscal management, pretending tomorrowwould never come.
Finally, on July 13, 2015, in Brussels, tomorrow came. Negotiators for the EU and the Greek government agreed on what would become the third Greek bailout package, after a day of meetings that one official called “a day of mental waterboarding” for Greek Prime Minister Alexis Tsipras at the hands of European creditors. As of this writing, the full Greek government had not agreed to the plan, but failure to do so would result in Greece’s expulsion from the EU, which would, in short order, likely lead to the collapse of the Greek banking system.
And now Tsipras, who has led the Greek government to this point by eschewing austerity, is charged with selling the idea of a radical austerity package to his people, and then making it work.
With everything that’s going on in America, it’s easy sometimes to ignore the rest of the world’s news. But Greece is teaching us more now than it has since the days of Epictetus, Plato and Socrates, if we care to listen.
No country, no matter how proud, can continue a cycle of borrowing, spending, and failing to collect the revenues necessary to pay down the debt forever. Tomorrow always comes.