There are pundits who use Greece as an example of how not to run a country. I’ll use Germany on how not to make lasting unions.
Germany’s financial institutions – the lenders, investors, regulators, negotiators, and politicos – are the ones driving the lesson of austerity. It’s been a hard lesson for Greek politicians. But it’s been a painful one for the common Greek people.
The Greek economy has gone through the shredder – contracting by a stunning 25% since austerity measures have been put into place seven years ago. This has not helped Greeks repay their debt and it has actually made things a lot worse. It’s true that Greeks have a poor record on tax collection and that tax reform is probably long overdue, but at this point of the game, how do you squeeze water out of a rock?
Yet, even as the pain of poverty laps up around the legs of the common Greek worker, the Germans have demanded even more austerity measures than before – and this was during earlier negotiations. This is why we’re at the Grexit scenario – a full or partial departure of a valuable NATO partner.
What does a “Grexit” mean to us? According to some folks who keep eyes on global strategy issues, Greece is already sliding closer to Russia, which is bad for NATO. If you care at all about global military strategy – something bad for NATO means that it’s probably bad for US.
Americans should also take heed that austerity doesn’t work, trickle-down economics doesn’t work (period), and unrest follows when things get bad enough.
What does austerity do? It shrinks payrolls, reduces worker benefits, and in the case such as Greece – it tends to eliminate good paying jobs. And what happens when you shrink payrolls, reduce worker benefits, and eliminate jobs? Economies tend to not grow.
What does trickle-down economics do? For the common worker – nothing. But it does ensure steady cash flows to the wealthy. Do the wealthy spend money? Sure. But as our own experience has shown us, the outflows are no nearly enough to bolster real economic growth.
Is it any surprise that Greeks have revolted over the thought of handing over BILLIONS of Euros to creditors in the form of interest payments? The Greeks have rejected Euro bank polices that would chain common workers to decades of debt repayment. More power to the Grecian people – they’ve figured it out. And they’ve put a name to their suffering and it is German Chancellor Angela Merkel. The list of credits should also include the cadre of heartless “profit at any cost” financiers who are squarely responsible for everything that happens next.
In the U.S., we have a name to put to our lackluster economy and horribly distorted distribution of wealth and it is every Republican, Tea Partier, and Libertarian who has put their name of government shutdowns and forced budget sequestration. Like the Germans, the GOP has repelled civil policy-making and, thus, repelled civil negotiations with the workers of America.
Americans have learned, as have the Greeks, that the ideology of austerity and trickle-down economics is bad for economies, bad for workers, and bad for civil society. Austerity and trickle down economics do not work – they’ve never worked. It’s time that we stop believing that they ever will.