Greek protestors: clueless in Athens
Greek protestors don't get it. They're still trapped in Bastiat's old illusion.
One of the most bizarre aspects of the Greek mess is how completely out of touch with reality the Greeks who protest the reductions in government spending are. There is simply put no other option when you have a large primary (excluding interest payments) deficits and no one wants to lend to you unless you agree to cut spending.Skip to next paragraph
Stefan is an economist currently working in Sweden.
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Defaulting is not a solution because that doesn't reduce the primary deficit (indeed, given the havoc it would create it would probably increase it).
Leaving the euro and re-impose the drachma wouldn't eliminate the deficit either, unless you start to directly finance it with "the printing presses", but that would create a massive inflation that would bring about the very reductions in real wages that the protestors are protesting against.
Raising taxes on the rich can at most cover only a very small part of the deficit, especially considering that the rich are likely to take measures to avoid these tax increases.
And the strikes and protest themselves only increase the need for spending cuts because they by weakening the economy reduces tax revenues. The Greek unions strikes are therefore as stupid as expressing dissatisfaction with the fact that you freeze by reducing heating further or taking off your shirt
So how could people be so unbelievably clueless like the Greek protestors? I think this is really a case of them being under Frederic Bastiat's old dictum "the State is the great illusion where everyone thinks they can live at the expense of everyone else". The Greeks have for years wanted and gotten from the politicians lavish social benefits but have refused to pay the taxes needed to finance these benefits, creating the large budget deficits.
Everyone saw the state as simply a means to live off others. In reality, it is of course impossible for everyone to live at expense of everyone else. And for limited groups to be able to live at the expense of others is only possible if there is someone willing and able to provide for them. And the rest of Europe is simply not willing to allow the Greeks to live at their expense for much .
The Greek protestors are thus a group of people who still cling to Bastiat's illusion that the state must continue to be a means for them to live at the expense of others, even as it is obvious that it is not possible any longer.
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