Greece Explained

Greece Over The Brink
A Primer On The Greek Crisis
Some Stuff You Should Know About Greece Before You Lose Your Shit
12 Charts & Maps That Explain The Greek Crisis
The Forgotten Origins Of The Greek Crisis Will Make You Think Twice About Who's To Blame
A Very Short History Of The Crisis
Argentina Shows There May Be Life After Default
Bernie Sanders Blasts Greece's Creditors
Grisis
What Makes The IMF Think It's Right About Greece?
The Greek Crisis, Austerity And A Post-Capitalist Future
When Greece Forgave Germany's Debt
9 Myths About The Greek Crisis

Weekend Reading

Bernanke Was Clear, Fed's Crystal Ball Is Cloudy
The Strange Life Of John Menard
Citigroup Agrees To Pay $968 To Fannie Mae
EU Suspects 13 Banks Of Collusion In Swaps Trading
Labor's Declining Share Is An International Problem

The IRS Scandal Unwinds
America Doesn't Have The Richest Middle Class...We're 27th

10 Brilliant Pieces Of Bike Infrastructure
Why We Trail America In Jobs Growth

Whose Worse Off? U.S. or Europe?

Conservative Americans love to drone on and on about how the European welfare state is bankrupting them. As the story goes, their too-generous "entitlement" policies are dragging down the entire economy. Thus, we here in the U.S. must also eviscerate our "entitlements" and welfare policies, or we shall face the shame dire consequences.

As usual, with Republicans, nuance, context, and the better part of reality are left out the analysis.

"There's a strong tendency to think of it as having a lot to do with the fundamental inequalities in overall productivity and economic development between euro members — backward, semideveloped countries like Greece or Portugal (not my view, but what you often hear) awkwardly tied to powerhouses like Germany. So it comes as something of a shock to look at Eurostat data on real gross domestic product per capita (or productivity, which look similar). Sure, Greece and Portugal are relatively poor, with G.D.P. per capita of 82 and 77 percent, respectively, of the European Union average; this means roughly 76 and 71 percent of the euro zone average, since the euro countries are a bit richer than the E.U. as a whole. Meanwhile, Germany is at 120 percent of the E.U. average, or 112 percent of the euro zone average. But it's no different, really, than the situation in the United States. According to data from the Bureau of Economic Analysis, Alabama is at 74 percent of the average, Mississippi at 67 percent, with New England and the Middle Atlantic States at 118 and 116 percent. In other words, as far as underlying economic inequalities are concerned, the euro zone is no worse than the United States," as Paul Krugman details.

Times are tough all around. These "worse off" hysterics are counterproductive and miss the point. We should be focusing on putting people back to work and not pointing fingers or worrying about whom is better off. A high debt as a percentage of GDP is nothing new. It's not optimal, but it's nothing new. We got ourselves out of this situation before by investing and putting people back to work. That same prescription will work again.

Out-Of-Control Excuses

Lest the media be able to rewrite the causes and dictate the outcomes of Greece's problems, I need to squash some misinformation and falsehoods. This latest writing was motivated by the Journal Sentinel's "Lessons from Greece" editorial. In which, they fabricate or ignore the causes, and deduce the completely wrong conclusions.

They proclaim, "The central problem in Greece was out-of-control spending on government programs for aging populations." They talk of Greece's budget deficit and their debt, but no evidence backs up the claim of "out-of-control spending" and there is no mention of the numbers concerning these programs for the aging. If that is what actually caused their fiscal worries, some data corroborating such should be presented.

In reality, average annual government expenditures in Greece totaled 50.4 percent of GDP. Total spending for the European Union as a whole equaled 50. 7 percent of GDP. As Michael Linden and Sabina Dewan state, "Over the past 10 years, Greece has consistently spent less, as a share of GDP, than the European Union as a whole."

The Journal then, typically, brings the "over spending" meme back around to gutting American programs - like Medicare, Medicaid, and Social Security. And, of course, they use the Peter G. Peterson Foundation to support such claims. Dean Baker has more on the true intentions of Mr. Peterson. [Whenever a Journal article cites the Peterson Foundation, the Wisconsin Policy Research Institute, or the Tax Foundation be very skeptical.]

The Journal creates false reasons for Greece's troubles, they then compare the U.S. to Greece. Investors will not have faith in Greece's ability to pay its debt, the U.S. has debt too, therefore, investors will soon have no faith in the U.S.. Paul Krugman explained why this connection is ridiculous and a red herring.

From here the Journal jumps ahead to an whole austerity program for the U.S. Yes, with aggregate demand stifled and the private sector neither spending nor hiring, the editors believe now would be a great time tighten our belts. WTF?! We need "prudent budgeting" to solve out debt. Whatever that nebulous statement means.

Governments must continue to spend now: repair and improve infrastructure - bridges, roads, electric grids, sewer systems, water ways, etc.. Without this necessary (and overdue) maintenance and government spending the economy would grind to a halt and unemployment would skyrocket. Spending more now to ensure growth (which enables us to pay off debt) is better than allowing unemployment to ravage a generation.

The lesson we should learn from Greece is that the neoliberal age of tax cuts and deregulation has left all nations vulnerable to the whims of bond traders.

For Further Reading:
A Principled Europe Would Not Leave Greece To Bleed
Being Rude to the Deficit Hawks
Clinton's Bequest
Deficit or Depression?
Economy Needs More Big Government
From Keynesianism to Neoliberalism
Greece's Spending Cuts Are Making The Crisis Worse
Paranoia Overdose
Social Security: The Phony Crisis
The Bubble Economy
The Debt Delusion
The Liability Con
This Time, Don't Buy What Rubin's Selling
Where Have All the Keynesians Gone?

Gyro Meat

The Right, never missing an opportunity to take the low-road, is trying to give inertia to a "talking point" connecting a nanny state and the debt/insolvency problems of Greece (along with some other European countries: Italy, Ireland, Portugal, and Spain). As usual, reality doesn't support this privatized, market-humping meme.

The problem primarily stems from these countries following a laissez-faire, highly speculative, highly leveraged, American economic model. A consumption-based growth, fueled by easy credit. Buy now, pay later. And, of course, Wall Street was pulling strings behind the curtain.

With easy money allowing everyone to live beyond their means, purchasing an unsustainable lifestyle, on credit. Thus, giving the illusion of prosperity. The whole global system is in jeopardy. We have spent the last few decades spending on iPhones and SUVs, rather than on sewage systems, public transportation, and energy alternatives. This is a problem of priorities and tax avoidance, not of overly compensated public workers.

As Peter Boone and Simon Johnson assert, "The main problem that Portugal faces, like Greece, Ireland and Spain, is that it is stuck with a highly overvalued exchange rate when it is in need of massive fiscal adjustment." Doug Henwood saw the 'EU problem' in 1998 when the European Union, and a single currency among its member countries, was being created.

Unemployment in the EU's highly indebted countries is: Spain 20%; Ireland 14%; Greece 10%, Portugal 9%; and Italy 8.7%. As of this writing U.S. unemployment is 9.9%.

Public debt as a percent of GDP is: Greece 124.9; Italy 116.7; Portugal 84.6; Ireland 82.9; Spain 66.3. Presently, the U.S. public debt is 67.1 % of GDP. (In Japan it's 105%; Germany 70%; and France 67%.)

Luckily, as Paul Krugman explains, the U.S. is not Greece. He also, like Boone and Johnson, concludes that, "If Greece still had its own currency, it could restore competitiveness through devaluation."

Concerning other talking points regarding Greece, some data needs to be introduced into the discussion. The average Greek worker logs the second highest hours per year among 33 OECD countries. The average age of retirement in Greece is 61.4 years, slightly higher than the European average of 61.1 years. And, the average Greek pension is $990 per month. The average pension in other EU countries: Spain $1,176; Ireland $2,105; Belgium $3,466; and the Netherlands $3,962. Civil servants in Greece represent 22.3% of the total workforce, in France its 30%, in Sweden 34%, and in the Netherlands 27%. "As a result of cuts carried out since 1990...the total real income of civil servants has fallen by 30%."

Those numbers don't indicate Greece is a bunch of lazy, spoiled loafers.

Class warfare, as always, is alive and well.