Greece: You Cannot Fix Stupid — or Morally Wrong

Protestors hold banner that reads Austerity = Nazism

Default, bankruptcy, Grexit, crash: If you feel you’ve read before that these things were about to happen in Greece, that’s because you have. Every debate about Greece’s financial crisis deteriorates rapidly into a discussion of deadlines: repayments, refinancings, meetings of the International Monetary Fund or the European Central Bank. Until now, these deadlines have always resulted in further delay. Another one is coming on June 30. That’s when Greece owes another $1.7 billion it doesn’t have. [Source: Anne Applebaum, “It’s the Greek politics, stupid,” 6/23/15]

Yesterday, Greece’s debt crisis created uncertainty and anxiety in worldwide markets, including the United States, driving U.S. stocks to their worst day of the year so far.

Applebaum writes: The crisis in Greece is not, at base, an economic story: It is a political story, a story about the promises that governments make to their citizens and about the ability of any state to guarantee a particular standard of living to its citizens, not only in Greece but also all over Europe.

The welfare state is based on some faulty premises. One major faulty premise? That’s it’s moral, and therefore economically practical, for everyone to take care of everyone else.

The numbers show that such a principle is unsustainable. And that if you raise those numbers enough, combined with a resulting stagnation or decline in economic growth, you get Greece. But you do not just get Greece in Greece; you get it anywhere.

Writes Applebaum:

The current Greek government was elected on a completely false premise: that Greece could continue to run one of the most expensive pension systems and one of the largest bureaucracies in Europe, relatively speaking — and that other countries would pay for it. Not all Greeks believe this fairy tale, but there were enough of them to elect a governing coalition of the far left and far right, both of which have publicly stated that they will not abide by the rules set by financial institutions, that they don’t like the European Union, which has been bailing them out for years, and that they might just prefer an alliance with Russia instead.

You see this kind of thing not just with countries, but within some families. It makes sense, because countries — while not a “family” — do consist of people, just like families.

In a dysfunctional family, you will sometimes see one family member paying for another economically. Not just in situations where the family member suffers through no fault of his or her own; but instead on the faulty premise of, “If you need something, and I have it, then I owe it to you.” The result? The family member who has the money ends up bailing out the family member who does not have the money for all kinds of reasons, even if it ends up rewarding, encouraging, aiding and abetting all kinds of problems ranging from drug abuse to laziness to repeated errors in judgment from which the “victim” making those errors never seems to learn.

The person making all the bailouts may have plenty of money, but usually does not. Nevertheless, the constant bailing out leads the person being assisted to feel a sense of fear — masked by resentment — that the bailouts will eventually stop or run out. Witness the rioters and protesters carrying signs in Europe that state, “Austerity equals Nazism.” What this really means is: “I am scared to death you will cut me off, and I don’t know how to live without my freebies. So I’m going to call you awful names to intimidate you into not cutting me off.” It happens every day in many families.

The loved one providing the bailouts clings to the premise, “But I have the money, and this loved one needs it — so I must continue helping.” Yet that same family member wonders why the demands for dependence and assistance keep growing and expanding.

The unstated, faulty assumption? The person doing the bailing out assumes it’s a “hand up, not a hand out.” In other words, that the handouts should be treated by everyone involved as temporary and minimal “hand ups.” But you cannot change the nature of something. It is what it is. When you reward people for their dependence on those bailouts, you have no business expecting them to grow independent. Because what you’re doing makes them only more dependent, by the nature of what you’re actually doing.

The question the bailing out person usually asks themselves (or others) is: “But if I cut this person off, what happens?”

Here’s what happened in other European countries, aside from Greece:

After the financial crash of 2008, the IMF also bailed out the Irish economy. But Ireland stuck to the plan, did what was agreed, and by 2014 was the fastest-growing economy in Europe. Latvia went through an economic crisis every bit as deep as the one in Greece after 2009 — losing more than a fifth of its gross domestic product — but it, too, recovered and began to grow. Why should Irish or Latvian voters feel sympathy for Greece’s demand to take another path at their expense?

So the answer to that question, “What happens when I cut the person in need off?” is: They will make different choices, and better choices, if they so desire.

Yes, on the surface, you might say, “Greece has been lucky.” Or spoiled, or supposedly selfish. But when you contrast Greece with, say, Ireland, how lucky is that country? Would you rather be Greece — or Ireland? Handouts are not even in the interest of the beneficiary, not most of the time. And handouts are never morally justifiable by force, which is what government uses to attain them.

Applebaum at states that Greece’s fiscal collapse is not an economic story, but a political one. Actually, it’s a moral one. Morality — rationally speaking — refers to the branch of philosophy which provides principles on how human beings should live if they wish to survive and flourish.

The moral principle that made the Greece disaster possible is the very same moral principle that brings other nations and also many families to the brink: The idea or principle that “He who has must pay the one who has not — merely because he has it.” Some call it altruism, which in philosophy does not mean kindness or benevolence, but giving as a moral duty, simply because another claims to need something and you have that something. I also call it indiscriminate giving. When you operate on that moral principle, and you apply it to a social and an economic level, you get — worst case — Greece.

But when you examine the numbers on welfare programs like Medicare and Social Security in America, you see similar unsustainability. Medicare and Social Security spend way more than anyone “pays into” those systems, and those programs are paid for by present-day workers for the benefit of present-day retirees. While nothing is inevitable and course reversals are always possible, sooner or later any country that spends more than it earns — based on ethical altruism and indiscriminate giving — will end up in the same place. America is not immune, and as political candidates scream and fight over the gender of marital spouses, our national debt skyrockets and these programs become more unsustainable every day.

The enormous difference is that America — unlike Greece — would not have other more prosperous and fiscally responsible nations upon which to rely, in its hour of need. Ultimately, the most dependent nations rely on the more independent, prosperous, fiscally responsible ones who — while they engage in debt and deficits, and America surely does — still have economic growth.

It’s important to understand that the economic sustainability of a welfare state cannot be “fixed” or repaired by someone who moves the right numbers around, or who does the correct manipulations using government interference in the economy. You cannot fix stupid; and you cannot fix morally wrong.

Greece, like the rest of Europe and like the United States itself, is based on an unfixable moral premise: That he who earns must be morally required to pay for others. Marx put it more succinctly when he said, “From each according to his ability, to each according to his need.”

The thinking behind the welfare state and ethical altruism or indiscriminate giving is ultimately unfair to all involved. It creates unearned guilt in those who have, and it creates fear, panic and child-like resentment in those who are bailed out not for temporary or innocent situations, but who are bailed out merely for having less than the one doing the bailing out. In practice, this moral inversion leads to bankruptcy, it leads to what you have in Greece and what we’ll eventually have in America, absent a course reversal which involves privatizing and getting the government out of the economy — that is, out of the bailout business.

You cannot fix stupid. You cannot fix wrong. Consider Greece a cautionary tale. It’s ironic. Greece — ancient Greece, not the current nation — was the founding culture, literally the cradle of Western civilization. It gave us Aristotle and, as a result, modern science. Ancient Greece provided the basis for what was later the cultural Renaissance (after the Dark Ages) and ultimately the birth of capitalism, individual rights and the United States.

How ironic, yet in a way fitting, that Greece — whose ancestors gave us the quality of life on earth as we know it — provides us with the lesson we now need to avert fiscal catastrophe in our own great nation.


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