My Big Fat Greek Bailout

This is your country on socialism...any questions?

Former British Prime Minister Margaret Thatcher once said “The problem with Socialism is that eventually you run out of other people’s money.” No matter how benevolent Socialism may appear, it is ultimately an unsustainable system of economics that relies upon mounting levels of debt that eventually devalue the nation’s currency laying waste to the entire economic infrastructure. This reality has played itself out every time any nation embraces a socialist model of economic management. Those who oppose socialistic philosophies often cite the downfall of the Soviet Union as a prime example of why Socialism doesn’t work. Those who favor Socialism often repeat the customary refrain of “Socialism works in Europe.” The events of this week however indicate that those who say that may have spoke too soon.

Greece is in trouble, big trouble. The nation’s public debt, expensive social programs, and floundering industries have put it on an inevitable course of economic ruin. The E.U. is going to lend even more money to Greece as a stop gap to give the Greek government a chance to address their economic issues. Taxes in Greece are on the rise as public services are beginning to dwindle. This is causing certain elements their dependent citizenry to riot in the face of diminishing services and escalating taxes. The international markets are in a tailspin due to rising concerns of not only Greece’s insolvency, but the insolvency of other European Union nations such as Spain and Portugal. The vaunted “soft socialism” of Europe which is often used as a shining example by progressives to advocate the implementation of such a system here in the U.S. is headed for the inevitable disaster that socialism of any stripe always brings.

Many can attribute Greece’s economic woes to corrupt politicians but I feel that’s more a symptom of the problem rather than the underlying cause. Politicians become corrupt once they are given power. It’s nearly unavoidable. When problems arise people look to government for solutions. To implement these solutions the government usurps power. Once this power falls into the hands of some bureaucratic functionary it is either misused by said functionary or it goes up for sale to the highest bidder (usually a major corporation of some kind). Marxists often argue that the only reason their visions of a worker’s utopia has never been realized is that the wrong people are always put in charge of socialist regimes. The truth is however, that even the right people can eventually be transformed into the wrong people once they have a taste for real power and can convince themselves and others that they wield this power for the common good. Lord Acton was quite correct about the corrupting influence of power.

Once government functionaries are given broad sweeping powers over a nation’s economic health, waste, fraud and abuse become the norm. When the public becomes aware of this situation politicians always promise to end the waste, fraud, and abuse. They do this by allocating even more power to government functionaries. This is the equivalent of throwing gasoline on an already massive inferno. At this point the social “safety net” erected as a temporary measure to help people who fall on hard times becomes a hammock where those who feel entitled take up permanent residence.

Those who pay into the system to support it’s massive failures and corruption soon get wise to the scheme and find a way to opt out by either finding a way to shelter their earnings or withdraw from the system altogether. Suddenly the “eat the rich” approach that Marxists espouse becomes a recipe for starvation as those who don’t benefit from the system find a way to circumvent it. The only option left for government is to borrow the money they need to pay for the ever increasing entitlement programs. This racks up public debt and undermines the nation’s currency as the treasury starts printing more and more money to cover the interest on the debt. This causes industries to cut their losses, pack up and leave for greener pastures. As a result of this unemployment soars which puts more people on the entitlement rolls. This increases the expense of the already overburdened entitlement programs which forces those who no longer have the ability or inclination to be self-sufficient to get by with less. This is the part of the story where riots begin.

Greece is at this point now. Riots are breaking out as the entire socialist house of cards collapses around the feet of those who built it. It’s unlikely the bailout from the E.U. will help in the long term. Greece needs  a fundamental economic restructuring, but it’s unlikely there will be any meaningful reforms. With thousands of citizens being dependent upon the state, the soil for economic growth has been sown with salt. If anyone tries to dismantle the entitlement juggernaut they will likely be met with profound resistance. The entire Greek economy will fall on it’s sword to preserve the political careers of the Greek ruling class. What’s happening in Greece is a preview of things to come in other European countries. This is why the DJIA plummeted nearly a thousand points at one point of trading today and closed at nearly -350 points. The writing is on the wall and the investors on Wall Street know it. The economy of Greece may be unsalvageable and hopefully it will serve as a warning to other nations dabbling in European-style “soft” socialism.  Socialism doesn’t work. It didn’t work in the U.S.S.R., it’s not working in Europe, and it won’t work here. The Marxists out there just need finally accept reality.