Wednesday, March 4, 2015

Greece's Problem Isn't Socialism, It's Politics

It's easy to say that the problem with Greece is socialism. Or that the problem with President Obama is Alinskyism.

But look, socialism is just another apology for big government, and every ruling class has an ideology like that. In socialism the idea is that the working class is the biggest class and so they ought to rule -- through their evolved and educated leaders, of course. This is no different than kings talking about Divine Right or landed aristocrats talking about the rule of the best people.

The fact is that governments get into power by offering their supporters loot and plunder. It doesn't matter whether you are talking about Charlemagne looting and plundering eastward from Trier into the German lands, or whether you are offering the workers a bite of corporate profits. It still amounts to a promise of loot and plunder in return for support.

The problem is that loot and plunder eventually results in a wasteland. If people are licensed to go around stealing stuff, then less stuff will be produced, and there will be less stuff to go around. So every society must rail against thieves and robbers or go out of business.

Now the truth is that all governments, from a band of insurgent guerrillas to a mighty nation state, occupy territory, defend it with a armed force, and tax the inhabitants for the right to go about their daily business of producing and consuming. The question is: How much? How much expropriation of peoples' livelihood is enough? The answer is simple. A government will stop taking more to give to its supporters when: a) it runs out of money, or b) it provokes a head of rebellion.

That is the way to understand the Greek situation. Governments in Greece have bought the support of ordinary voters for decades with the promise of free stuff. But now the money is running out. Under pressure from other European governments the Greek government has implemented a policy of "austerity," meaning it has eased off on some of the free stuff. But austerity is very unpopular with the government's supporters and so a new party, Syriza, has arisen and obtained the support of the voters by asserting that all the cutbacks are unnecessary and a cruel trick of the Germans.

No doubt. But here is what a McKinsey report had to say in 2012.
Large scale business operations had been discouraged by hostile regulations. The generally small scale of businesses that remained, combined with over regulation, complex and restrictive licensing, and a highly volatile tax framework, has deprived the Country of an industrial base sufficient to support its spending.

The public sector had become too expensive and offered low quality output.

A framework of collective, inflexible, and binding labor agreements had led to a disconnection between education and the job market, which led to reduced innovation and under representation of women and young adults in the workforce.

A cumbersome legal and judicial system led to an over abundance of vague and sometimes conflicting laws, which discouraged economic activity.

Widespread tax evasion, which had become endemic in Greek culture, had led to substantial wealth creation outside the formal economy, and had led to a seemingly permanent fiscal shortfall.
Apart from the "widespread tax evasion" you could say the same thing about the US economy, unless you count the widespread use of illegal alien labor and general off-the-books work, condoned by our liberal masters, as "widespread tax evasion."

In my Story So Far about the last half century, I like to say that, in 1980, the liberal consensus had failed, and that made it possible for a right-wing extremist like Ronald Reagan to get elected as president. Reagan implemented a bunch of supply-side reforms, including hard money, that created a 20 year boom. The ruling philosophy of Reaganism was that there is a limited set of things that government can do; it's best for it to stay out of the economy as much as possible and let the people get on with it. The liberal ruling class was flummoxed by this, because it knew that such a thing could not work. Still, after three successive Republican wins they had to do something, and they got it in Bill Clinton, who ran for president as a moderate and then nearly self-destructed with HillaryCare. As time went on, Democrats reverted to the norm, forgetting the lesson of Reagan and the faux moderate tone of Clintonism, and we ended up with Barack Obama who is clearly a left-wing president that believes that everything begins and ends with government dangling free stuff in front of the people while liberals march through the institutions to implement their social agenda and gentry liberal environmental policies.

The problem with Obama-style politics is that it ends up at Greece, because the whole economy gets to be seized up in high friction politics and bureaucracy, crony capitalism and Chicago-style thuggery, and wasteful pet projects for gentry liberals from bike paths to biofuels.

The point is that government is force, and there is only a limited set of things you can do with force, because government force tends to destroy things, to loot the economy for the benefit of its supporters. With big government you get a lot of people sitting around on government pensions and not contributing to the economy. You get a lot of government bureaucrats sitting around and not doing anything to contribute to the economy while they compile regulations to benefit the supporters of the government. You get crony capitalists capitalizing on the governments fashionable enthusiasms, from wind and solar power. And of course you get left-wing activist groups interfering in everything.

Eventually the whole thing goes down the tubes.

My guess is that ordinary middle-class Americans are probably pretty confused and upset by the Obama years. But as yet, they don't really know what to do about it.

In my view the ordinary American middle-class is composed of people that believe, more or less, in responsible individualism. They will respond to a politics that celebrates responsible individualism as a way out of our current malaise.

Because politics isn't the solution to our problem. Politics is just civil war by other means. The solution is for people to go out into the world every morning as a responsible individual asking how they can give to the world.

Politics is all about how much to take, and eventually you run out of things to take.

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