Saturday, July 04, 2015

Vote appears close as Greek referendum nears

The brief but intense campaign in Greece's critical bailout referendum ends Friday, and opinion polls suggest the vote will be very close.

Socialism doesn't work. Big government doesn't work. Welfare states are unsustainable.

What does work? Liberty and free markets. The former create human misery. The latter create wealth and prosperity. History makes all this amply and irrefutably clear.

Anyone who doesn't get this at this point is just lying to himself.

It's clear that Europe has had it and is prepared emotionally for a default (which has happened) and for Greece's exit from the euro -- indeed, I suspect that northern Euro countries are jostling in line to be the first to wish them good riddance and don't let the door hit you on the way out.

A debacle on Tuesday, failing a cave by one or the other party, should mean the political end of Syriza. Nobody likes a loser. But the Greeks have more than flirted with Communism before, and Syriza is pretty close: they might weather the catastrophe.

The five people in Greece who haven't already shipped their euros abroad will have them taken in return for drastically marked-down new drachmas, destroying their savings, and Greece will simply … start over. Basically as an emerging economy. But one without the means to afford the subsidies that have been so much a part of their lives for the past decades.

The irony, of course, is that impact of the requested reforms would have been lighter than the destruction that will visit them for a generation as a consequence of an exit from the euro and repudiation of their debt. But some prefer to go down swinging … even when they lack arms.

At this point it is hard to see that handing more money to Greece does anything other than increasing the lenders loss. There will be suffering with the austerity moves suggested by the EU, but it seems to me that there will be more suffering with the moves suggested by the current Greek administration.

Perhaps the referendum should include a question on whether or not to keep Tsipras in office.

My main interest in this is not about Greece, but rather about what happens when politicians promise too much and the bill comes due.  These politicians are buying their friends with IOU's.

The lessons of socialism are in plain view and have been for decades. The 20th century is one giant cautionary tale against socialism, and Venezuela is already a 21st century affirmation.

Anyone who does not already see is lying to himself.  Because of that lie, politicians are able to promise unicorns and pixie dust and get elected.

The core solution to Greece's problems is to create more wealth.  This requires two things:  a major revamping of its business laws and regulations in the direction of economic liberty (especially in labor freedom - where Greece ranks very low) and Greeks working more (including  retiring later in life).

Living standards are tied to economic productivity.  The latter will not be fixed by a socialist government, and until Greeks realize that and stop voting for leftists, they're going to continue waiting vainly for the impossible.

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