The Failure of Big Government and the Public Patronage Piñata!
Welcome to Capital Account. With the Greek elections taking place this past weekend, we have decided to devote a bit more time to the subject of Europe’s debt crisis, and specifically, the case of Greece than other finance shows. This is in large part because we feel that the mainstream media produce…well…a lot of nonsense on the subject, and we feel it our duty to clarify some of that on this show.
It is true that, in part, Greece’s problems are reflective of a wider crisis that touches not just its European neighbors, but the entire world. There is a debt crisis, a crisis of overspending, and of malinvestment going on in the world today. This economic crisis has fueled a political one, in countries throughout the world. Europe stands as the poster child for this crisis in the developed world, but the United States, with its tremendous trade and current account deficits, and its burgeoning public and private debt, is not far behind.
But every country is unique, as is every household and every individual. The crisis in Europe has simply acted as a catalytic agent, exacerbating and bringing to light the weaknesses of the member countries. In Greece, these weaknesses stretch back generations, but in many ways, their historical roots remain etched in living memory as Greeks seem caught in a cycle of reliving past moments of national and social import. The dictatorship of the late 60s and early 70s is only one of those periods. There are many others.
Greece, of course, is also burdened by a gargantuan public sector, and patronage system that has used elections as a bidding platform for the perks of a government that resembles more a piggy bank than an organ of social progress. Viewed from this perspective, the low voter turnout is not just about disillusionment, but also a breakdown in the system of government itself, as parties can no longer offer promises of more carrots, but rather, of less sticks.
But understanding the unique case that is Greece, its government and its people is more than just an academic exercise. It represents a case study of what happens when government becomes the mechanism for the redistribution of not just wealth, but also privilege in a society whose people are arguably anarchic at their core. It is an exercise in bad governance at its worst, and it has cost the society and in particular its youngest citizens, those who never had the opportunity to participate in the patronage system, who never had the chance of taking a whack at the public piñata, greatly.