Tuesday, September 21, 2010

Do Y'All Know How Bad Things Are in Greece?

Michael Lewis does. He’s the author of Liar’s Poker, Moneyball, and, most recently, a great book on the Wall Street meltdown awhile back, The Big Short. He’s got an article in the recent Vanity Fair on the destruction of the Greek economy called "Beware of Greeks Bearing Bonds."  

I recommend that you read the whole astounding article. Here is an excerpt:

In addition to its roughly $400 billion (and growing) of outstanding government debt, the Greek number crunchers had just figured out that their government owed another $800 billion or more in pensions. Add it all up and you got about $1.2 trillion, or more than a quarter-million dollars for every working Greek. Against $1.2 trillion in debts, a $145 billion bailout was clearly more of a gesture than a solution. And those were just the official numbers; the truth is surely worse. “Our people went in and couldn’t believe what they found,” a senior I.M.F. official told me, not long after he’d returned from the I.M.F.’s first Greek mission. “The way they were keeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn’t even what you would call an emerging economy. It was a Third World country.”

As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.” The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses. The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.

The Trojan Horse -- beware of gifts bearing Greeks

I do not wish to suggest that the United States is likely to become like Greece anytime soon. I do suggest that democracies who wish to remain democracies pay some heed to the growth of the public sector. Which is set to explode under the policies of the current President. The last couple of Republican presidents didn’t do us any favors in this regard, either, so there is plenty of blame to go around.

I have nothing against the Greek. I thank him for much of what has become Western Civilization, which is really an excellent civilization. A first-rate civilization, and much of it started with the ancestors of this beautiful people.

But I am telling you, Cool Hot Centrists, there is something in the human condition that inspires its constituents to say to themselves, if we are promised something, we are entitled to it even if the keeping of that promise is devastating not only to our countrymen, but to the world into which our descendants will be born. You see it here in the demands of unions and all groups benefiting from the federal dole, which numbers are alarmingly large (although, thanks to a startlingly principled Republican Congress during the Clinton Administration, and Bill Clinton’s shrewd read of the American gestalt, is smaller than it could be).  You see it in the truly desperate condition of the California state government.

I don’t wish to be wearisome on the topic of our unsatisfactory President, I truly don’t. But Greece is the ultimate endpoint of the European Model of the role of government. It is a model that our President admires, at least if you take his advocacy of the present version – that is, the enacted version – of healthcare reform as evidence. The percentage of our economy accounted for by governmental activity – and that means persons employed by the federal government, and the taxes needed to support them and their benefits – is set to grow markedly under him.

The Democrats also seek to expand the influence of labor unions, as well as their ability to organize employees in businesses where their effect is unlikely to be any less baleful than their effect on the auto industry and local and state governments.

Florida Senate candidate Marco Rubio said this the other day:  "This election is nothing less than a referendum of our identity as a nation and as a people."  I have misgivings about the Tea Party, but this much they have absolutely right.

Think about it. Just think about it.

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