|15A043 Elephtheria? by Jim Davies, 7/11/2014
Probably not, alas; not yet. The Greek national anthem is called the Hymn to Freedom, but the word doesn't mean there what it means in the ZGBlog, ie liberty from the stranglehold of government. The present mess in that part of the world would indeed be solved wonderfully well if the country's government went clean out of business, but that will happen, there as here, only after everyone has learned enough about the nature of freedom and government to decide to leave the latter's employ. Since TOLFA has not yet even been translated into Greek (offers, anyone?) that happy day lies in the future.
It takes a while to peer through the fog of media reports about what is going on, and events are moving so fast that it may all be settled by the time you read this; but the core of the problem is the nature of government. Over several decades, Greek ones have done what they all do, though with greater abandon; they spent borrowed money on goodies for voters. Of course; democracy was invented there. What else is to be expected?
They did that so much as to run up debts that can never be repaid. The reason why they can't is that the cost of debt service (interest plus principal repayment, as in a mortgage) would, if paid as promised, form such a large slice of total government spend as to provoke refusal by voting taxpayers to bear the burden. Democracy means people-rule; and when people vote, they may not do their sums at all well, but if they're only getting 65 cents in goodies for every 100 cents in taxes, they will notice. And stop paying. So the government is stuck.
The lenders are bankers worldwide, and the IMF, which is funded by taxpayers in many countries including the US. It looks as if they are out by $260 billion, quite a hit. The fixes proposed are (a) pour another $60 billion into the sink hole to keep the country inside the Euro Zone (in hopes that eventually, somehow, there will come some repayments) or (b) kick it out, thereby abandoning the debt and leaving Greeks to use money created inside the country.
The infinitely better alternative is for Greeks to leave the EZ and let the market choose its supply of money - presumably, gold and silver - and discontinue the use of government; but as above, that isn't likely yet awhile. Were that done - a declaration of state bankruptcy - there would be turmoil for a while as with every bankruptcy, with large numbers of people having to make a living who were formerly living off the State, but after a year or two the society would stabilize and prosper as never before, all the parasites having disappeared.
But this variant of (b) above won't happen, this time around, and that fact is a valuable object-lesson for those who mistakenly suppose that a free society will somehow emerge here, when the government's finances melt down into an insoluble mess. Not true, no more here than in Greece. Government will vanish only when its workers quit, and they will do that only after learning why.
There's another most valuable lesson from this débâcle: when government is in a tight spot, it will grab whatever resources it wants, placing its own survival well ahead of that of anyone else. This lesson was taught also in Cyprus in 2013; when that one's government ran short, it grabbed some of what depositors had entrusted to banks it licensed. Like any other bank robbers, they took it because that's where the money was. Very similar theft is occurring right now in Greece; ordinary folk are being denied access to their own money, on deposit in government-licensed banks. I wonder who's using it instead.
Obvious lesson: don't trust money to banks. Mattresses are much safer.
Yet another clear lesson: don't lend it, either, to governments; not directly, not indirectly. That should be clear anyway on ethical grounds; it's wrong to help finance murder, tyranny and theft. Eventually, they will all run short and fail to repay, just as Greece's is doing now; hard to say when, but it's certain to happen, because all the incentives on governments are to spend more than they take in. Spending (usually) gains votes, taxing loses votes. Do the math.
Ben Franklin said it well: "When the people find that they can vote themselves money, that will herald the end of the republic." He thought highly of the new republic, unlike me; but this is the nature of democracy, which Greeks invented, and recently they more than anyone have made that discovery. It would be poetic if the system were to die right where it was born.