It may well be true that Greece will
never pay back its debts, as Greek Finance Minister ‘Aussie’ Yanis Varoufakis claims. Varoufakis uses this argument to
condemn the troika (the IMF, the European commission and the European Central Bank) for providing handouts to Greece in 2010 when it was ‘bankrupt’.
It seems bizarre to start the accounting for the Greek economic collapse at that point. Of course it would be highly inconvenient for the Greek government to admit the truth: that the Greeks themselves spent decades borrowing money to support their welfare habit, and avoiding paying taxes.
To portray the crisis in Greece as simply a case of austerity killing demand, and propose the Keynesian solution of more spending, requires plastering ideological paper over the cracks in the economic foundations.
Forget austerity, what has ruined the Greek economy is uncompetitiveness and the debt burden of the unfunded Greek welfare system. The Greek people do not accept this fact, hence the churn of prime ministers and parties in Greece since 2009, culminating in the election of the socialist Syriza basically on the platform of rejecting economic reality.
A country with no money cannot increase pension payments. A country with no functioning private sector economy cannot raise the minimum wage. A country with no credit cannot demand more money.
The kind of reforms Greece needs to make their government spending sustainable and their economy competitive would require fundamentally changing the attitude of Greeks towards their government and their entitlements. The first step is accepting that the Greek crisis is not the fault of the Germans or the troika but of the Greeks themselves.
It is not always helpful to rake over the past looking for blame, but in this case without a change in Greek expectations of government, no amount of debt relief or bailout funds will generate a long term functioning economy in Greece.
The Germans should not accept further demands for free taxpayers’ money to be handed out to Greece until there is evidence the Greeks have come to terms with the past.
Home > Commentary > Opinion > Greece must deal with its past before its creditors
Greece must deal with its past before its creditors
It seems bizarre to start the accounting for the Greek economic collapse at that point. Of course it would be highly inconvenient for the Greek government to admit the truth: that the Greeks themselves spent decades borrowing money to support their welfare habit, and avoiding paying taxes.
To portray the crisis in Greece as simply a case of austerity killing demand, and propose the Keynesian solution of more spending, requires plastering ideological paper over the cracks in the economic foundations.
Forget austerity, what has ruined the Greek economy is uncompetitiveness and the debt burden of the unfunded Greek welfare system. The Greek people do not accept this fact, hence the churn of prime ministers and parties in Greece since 2009, culminating in the election of the socialist Syriza basically on the platform of rejecting economic reality.
A country with no money cannot increase pension payments. A country with no functioning private sector economy cannot raise the minimum wage. A country with no credit cannot demand more money.
The kind of reforms Greece needs to make their government spending sustainable and their economy competitive would require fundamentally changing the attitude of Greeks towards their government and their entitlements. The first step is accepting that the Greek crisis is not the fault of the Germans or the troika but of the Greeks themselves.
It is not always helpful to rake over the past looking for blame, but in this case without a change in Greek expectations of government, no amount of debt relief or bailout funds will generate a long term functioning economy in Greece.
The Germans should not accept further demands for free taxpayers’ money to be handed out to Greece until there is evidence the Greeks have come to terms with the past.
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