A lesson from Greece

"Beware of Greeks bearing Gifts" - regarding the Trojan Horse from the Iliad

The nation of Greece is teetering on bankruptcy and Europe is wondering what to do. Bail them out or cut the strings that bind so Greece does not pull down the entire European Union.

Three articles today caught my eye:

Super-wealthy investors move billions out of Greece

One way to "balance" the budget is to raise taxes, and in particular to tax the wealthy. The rich are no fools and are pulling their money out of the country while they can.

Greece ‘Dress Rehearsal’ for U.S., Deutsche Bank Says

What is happening in Greece is similar to California and soon perhaps the US itself.

Maybe Greece Should Go Bankrupt

I like this article. Capitalism is based upon survival of the fittest. When there is no penalty for failure there is no incentive for progress and efficiency. Everyone gets fat and lazy.

"Bailing out Greece will reward over-spending politicians and make future fiscal crises more likely. In a four-year period between 2005 and 2009, Greek politicians expanded the burden of government spending from an already excessive level of 43.8 percent of GDP to an even more excessive level of 51.3 percent of GDP. Subsidies are rampant, the public sector is bloated, civil service pay is way too high, and entitlements are wildly unsustainable. A fiscal crisis – with no escape options – is probably the only hope of reversing these disastrous policies. So why, then, would it make sense for Germany and other nations to provide an escape option?"

"Bailing out Greece will reward greedy and short-sighted interest groups, particularly overpaid government workers. Greece is in trouble because the the people riding in society’s wagon assumed that there would always be enough chumps to pull the wagon. In reality, Greece is turning into a real-world version of Atlas Shrugged. Government has become such a burden that the job creators and wealth generators have given up and/or moved their money out of the country. Should taxpayers in other nations reward the greed and narcissism of Greece’s interest groups by being forced to pull the wagon instead?"

Bottom Line

Maybe Greece Should Go Bankrupt provides an apt conclusion:

I have sometimes warned audiences of what will happen when a majority of voters in a country or a state become dependent on government. In such an environment, it obviously becomes much more difficult to put together an electoral coalition that will lead to fiscal changes that shrink the burden of government and curtail the predatory state. This is what has happened to Greece, and what is soon going to happen in other European nations (and, barring reform, what will eventually happen in the United States).