Quick Notes About Greece


I’m learning a lot about Greece reading about reactions to the recent “fiscal austerity” measures taken up under the auspice of the EU/IMF $145bn bailout. Case in point:

And there is a hotheaded minority, at least, that does not believe the government when it says it had no choice. Mikis Theodorakis, Greece’s most famous composer, expressed the visceral reaction of many when he said the crisis was probably a plot by dark forces in America and other capitalist centres to subdue proud, independent nations. Crazy as such talk may sound to euro-zone governments that believe they have strained every muscle to save Greece from collapse, it will convince some people in a country where conspiracy theories (and, indeed, conspiracies) have a long history.

and

Greek politics still includes a Communist Party that is rigorously Stalinist (it damns Khrushchev as a liberal backslider) and commands some 8% of the vote.

The riots are instructive as to the future path of the United States in particular, and other countries in general. The US may, indeed, have a mechanism by which it can devalue and avoid the worst of a crushing public debt problem…and as I have said previously, I think inflation is more likely an outcome than outright deflation in the US. However, if the need for strong, meaningful cuts (or even restructuring of public programs) comes, are we willing to face the backlash from populists? I doubt it. That is the reason we have such an bafflingly complex tax code.

If Arnold Kling is to be believed, then these are very serious questions. Despite the fact that Greece has a much stronger strain of left-wing populism, we still have a very strong strain of ultra nationalism, and even xenophobia in our country — not to mention the lingering inertia of entitlement.

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For more on my view of US public finance, see here.

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