2015 July 03 Friday
If I Was A Greek Voter

I would vote Yes on the referendum on the EU bail-out negotiations.

I argue this for 2 reasons. The first reason is that the northern Europeans are really ready to shaft you badly if you do not give in to their demands. The second reason is that some of their demands would work in the favor of many productive Greeks in the private sector because their demands would shrink the public sector.

What do we know about Greece? It has widespread tax evasion. People do not want to pay their taxes. Okay, lets treat that as a revealed preference. If people do not want to pay much in taxes then their government employees should get less in the way of retirement benefits from government. They should expect to work longer longer. Those who go to work for the government should expect to work until age 69.

Hey, Greek government workers, if you want a better deal then don't work for the Greek government. Your own populace doesn't want to pay you much. Live within your means or go to work in the private sector.

Why is that a reason to vote Yes on the referendum? Because Angela Merkel will make the Greek government change their laws to make people work longer. Only Angela Merkel has the power to do it. You can't expect Greek leaders to do it unless the pressure on them is enormous. That enormous pressure can only come from Germany. The Greeks are lucky that the Germans are willing to play this role. Otherwise they'd have precious little working against restraining their spendthrift government.

So I'm arguing that Greeks in the private sector should see forced government entitlements reform as a feature of this financial crisis. Make the best of this crisis and turn the full force of German fiscal rectitude on your government. Its your only option for putting Greece on a sustainable fiscal path.

Furthermore, pressure from Angela Merkel has got the Greek government talking about making it easy for businesses to deal with the government. That's got to be a plus if you are in the Greek private sector.

I do not mean to suggest that the northern Europeans are being fair. If they were being fair they won't have lent your government so much money years ago. The northern European banks and governments were enablers if your government's irresponsible ways from the time your country entered the Euro zone.

Suppose you emerge from this disaster still in the Euro zone. What does the future hold? Alas, you can't even count on the northern European banks to refrain in the future from lending your government money once it is in better fiscal shape in some future year. You would be better off in the long run if the German government decided to get the EU to ban European banks from lending your government money. Only then would you be protected from a repeat of all the irresponsible acts in Greece and elsewhere in the EU that led you to this tragic state.

So my advice is to vote Yes. Then if you are involved in a business spend your time learning about ways to work around the capital controls that are strangling your country and find ways to do business internationally in spite of the Greek government and other EU governments.

Share |      By Randall Parker at 2015 July 03 10:19 PM 

bob sykes said at July 4, 2015 4:44 AM:

Greece and the other PIIGS would be better off outside the euro zone, but it won't happen. The rest of the European governments (and the US) will not permit anyone to leave either the euro zone or the EU itself, because that would portend the unravelling of the whole EU system. I doubt (but am not certain) that the EU Commissioners would fight a shooting war to prevent Greece leaving the euro zone, but they might stage a Ukrainian style coup d'etat to prevent it. So the PIIGS are barbeque.

Jim said at July 4, 2015 8:13 AM:

The attempt to turn Greeks into Germans will fail. If Greece stays in the euro zone under a Merkel type regime then I would not be surprised if in the long run Greece becomes a source of terrorism within Europe. Unless the Northern Europeans are willing to be as tough as the Ottomans their attempt to rule Greece will fail.

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