Posted by Diogenes Sarcastica
Wednesday May 12th, 2010
While the ancient Greeks made marvelous contributions to culture, literature, philosophy and science, and gave us democratic government, the modern Greeks provide an unsatisfactory economic model.Greece has spent itself into a crisis of immense proportions, with some observers predicting a depression not unlike the Great Depression of the 30s. The Greek government has subsidized everything from health care to vacations to pensions, and has a public sector comprising 20 percent of all workers, the vast majority of whom hold constitutionally protected jobs from which they cannot be fired. Some workers can retire with pensions at 45 years of age. Furthermore, tax evasion is rampant, depriving the government of needed revenue.
The Greek economy is tanking, and some observers believe Greece’s collapse signals the end of European-style socialist economies in general, with Portugal and Spain following not far behind Greece. Athens rang up an outrageous and unsustainable debt, and the bill has come due. The government can’t pay it, so it has adopted an austerity program that includes cuts in government spending, reductions in the size of the public sector, decreases in tax evasion, reforms to the health care and pension systems, and improvements in competitiveness through reforms to the labor and product markets.
None of this sits well with the citizenry. When you have come to depend on the government to support you, as the Greeks have, and then it no longer can, that creates a crisis and the Greek people are in revolt. Violence has broken out across the country, resulting in deaths and anarchy.
We don’t want to become Greece, but we’re on the same path. Consider:
• Estimated receipts for fiscal year 2010 are $2.381 trillion, an estimated decrease of 11percent from 2009. The President's budget for 2010 totals $3.55 trillion.
• The U.S. public debt is 94.27 percent of GDP
• Unemployment rose in April to 9.9 percent
• 17 percent of American workers are employed by government
Federal employees make an average annual salary exceeding $79,197 and the average total annual federal workers compensation in 2008, including pay plus benefits, was $119,982 compared to just $59,909 for the private sector, according to the United States Bureau of Economic Analysis. Continued high unemployment, the growth in public sector jobs, the high level of union membership among public sector workers, the dangerously high budget deficits and national debt are ominous signs for the United States.
Our tax receipts are dropping, we have spent more than we have collected, we owe nearly as much as we produce in a year, one-in-ten of us is unemployed, and nearly one-in-five of us is paid by taxes collected from the other four. We have not taken the right steps to speed the economic recovery, but have made the same mistakes that were made in the 1930s, when money circulated more slowly and banks lent only a little of the money available. Anti-business rhetoric and anti-business policies emanated from Washington, creating a lack of confidence.
Unless a good dose of common sense overcomes Washington, we are likely to replay the 1930s and follow Greece into a depression.
