Thursday, August 19, 2010

Greece Heads Toward Third World Status; Is an Economic Miracle Possible?

The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment continues to climb, reports Germany's Speigel Online.

In the district of Perama, unemployment is between 60 and 70 percent, according to a study conducted by the University of Piraeus.

Curiously, 77 percent of Greek shipping companies indicate they are satisfied with the quality of work done in Perama, but nearly 50 percent still send their ships to be repaired in Turkey, Korea or China, according to Speigel. Costs are too high in Greece, they say. This tells you one thing, Greeks are somehow supported in their unemployment by the Greek government. Otherwise, don't you think the Greek's might lower their wage demands below their competitors in Turkey, Korea or China?

Indeed, Speigel reports that Greek shippers say that Greece "has too much bureaucracy and too many strikes, with labor disputes often delaying delivery times."

But the problems in Greece extend far beyond Perma. Speigel again:
A short jaunt through Athens' shopping streets reveals the scale of the decline. Fully a quarter of the store windows on Stadiou Street bear red signs reading "Enoikiazetai" -- for rent. The National Confederation of Hellenic Commerce (ESEE) calculates that 17 percent of all shops in Athens have had to file for bankruptcy.

Things aren't any better in the smaller towns. Chalkidona was, until just a few years ago, a hub for trucking traffic in the area around Thessaloniki. Two main streets, lined with fast food restaurants and stores catering to truckers, intersect in the small, dismal town. Maria Lialiambidou's house sits directly on the main trucking route. Rent from a pastry shop on the ground floor of the building used to provide her with €350 per month, an amount that helped considerably in supplementing her widow's pension of €320.

These days, though, Kostas, the man who ran the pastry shop, who people used to call a "penny-pincher," can no longer afford the rent. Here too, a huge "Enoikiazetai" banner stretches across the shopfront. No one wants to rent the store. Neither are there any takers for an empty butcher's shop a few meters further on.
Overall unemployment appears to be in the range of 20%, but "Menelaos Givalos, a professor of political science at Athens University, has appeared on television, warning viewers that the worst times are still to come. He predicts a large wave of layoffs starting in September, with 'extreme social consequences.'"

What is really behind all this?

The austerity measures were all about sucking every penny possible out of the country to pay the global banksters.  That is now complete and the Greek people are flirting with Third World status.  The Greeks still continue to hold too much belief that government is the answer.This thinking better change or it will crush them. The Greeks need to end public subsidies for corporations, the unemployed and the vast government bureaucracy. The government is for all practical purposes bankrupt. The Greek people should stop turning their hard earned money over to the Greek government and the global banksters.

The only hope they have is to open up the markets, eliminate the bureaucracy and allow businessmen to operate. Businessmen, when they are unencumbered by bureaucratic red tape, are incredibly creative about finding ways to employ the unemployed.  Ground zero right now for the battle between the state versus a private property society is Greece.

If the Greeks continue believing in their bureaucratic government, then Third World status is their next stop. Friedrich Hayek called the belief that governments can solve all problems through micro management a fatal conceit. The Greeks are suffering heavily under the delusion of this conceit. Government micro-management always ends up distorting a society. Never mind getting micro-management correct, governments rarely even balance their own budgets, which are much easier to see and anticipate.

The Greeks are now suffering terribly because of this belief in government solutions.

The Greeks may look upon Germans at the present time and despise them, but it should be understood that the wealth of Germany was not created by the German bankster set that now controls Germany. Germany is the power it is today because at one time, following World War II, Germany faced a desperate economy, torn apart by the war and also a great inflation. At that time many wanted to choose the micro-management route for Germany, but one man understood the importance of a private property society as opposed to government micro-manangement. That man, Ludwig Erhard, through incredible wisdom and strength of personality saved Germany (West Germany ) from the fatal conceit and allowed economic freedom to reign. His belief in economic freedom  resulted in what is still taught in economic history books as the great "Economic Miracle".

The Greeks have a serious choice in front of them. Most of them I am sure understand the propaganda of the state and the argument as to why the state must be involved in all sorts of decisions. I am also sure that few have been exposed to the argument for economic freedom. It is this argument that thoughtful Greeks must urgently study, learn and contrast  with the argument for micro-management by government. There is no better way to understand this debate then to turn to the writing of Ludwig Erhard, himself

The Greeks only have a short time before the death spiral makes their suffering even more dramatic. It can only be stopped by those who are willing to take the time to understand that an alternative does exist--- an alternative which once created an economic miracle, and because that alternative is based on sound economic principles can create the same type miracle for Greece, which desperately needs one.

And the rest of the world, should watch closely the developments in Greece. We have all moved to far down the road of government micro-manangement. We are not on a different road then Greece, they are just a few steps ahead of us. It is perhaps time we all read Ludwig Erhard, before long we are all going to need an economic miracle.



  1. Ground zero right now for the battle between the state versus a private property society is Greece.

    Has it ever not been? Since the earliest Greek philosophers first proposed communistic dictatorships as the ideal organization for society, Greece has been a private property battlezone for centuries.

  2. Is not the Greek military budget a secret ?
    I like how they talk austerity all the time but hardly mention the hideous VAT increases.
    19% raised to 21% raised to 23%.
    And our buddy Krugman thinks a VAT in US will have no effect on consumer spending.