The public discussion of Greek troubles may sometimes create an impression that something extraordinary is happening there. “An experiment of austerity” and “blackmailing” are just a few of the many fanciful epithets employed by the members of SYRIZA and socialists to create a “syrizophrenic” picture of what is going on. However, the true reasons of and solutions for the crisis have already been known for a long time.
The banality of Greek troubles is evident. Billions of people, millions of enterprises and hundreds of countries face similar problems every day. Everyone would like to live better, but it is not for everyone to afford it. Of course, the invention of lending and borrowing facilitated the access to otherwise illusory better life as well as made it even more tempting. As a result, quite a few of us are in debt.
The Greek desire to live better dates back to the overthrow of military dictatorship in 1974. Greece’s expenditure has been higher than its income for as long as five decades. In fact, the difference between the two accumulated as a debt until it has reached almost 200% of gross domestic product (GDP). Therefore, there was no case of force majeure. The debt is nothing else than a logical consequence of irresponsible use of the taxpayer’s money. The present and the former governments are the culprits here.
What are the signs of this better life? A perpetual state employment, high salaries combined with a low workload, as well as premiums for the simulation of work. A perfect illustration would be a recently discovered working group of the Greek Ministry of Environment responsible for a lake which dried up back in 1930. Furthermore, public sector workers receive thirteenth and fourteenth monthly salaries at Easter and Christmas.
A generous, but operating beyond its means pension system is another indication of a “better life”. Over 90% of Greeks retire prior to attaining the official age of retirement. Virtually everyone, from public servants who retire at the age of 45 to hairdressers who enjoy their pension from the age of 50 due to “dangerous working conditions”, make use of exceptions and benefits. I find it incomprehensible for a healthy individual to retire at 45. But is it my failure to apprehend the Greek recipe for “living better”?
Moreover, empty talks that austerity is ineffective and a heavily indebted nation should increase its expenditure are no less shocking. Ironically, such considerations are sometimes taken seriously and even develop into a “syrizophrenic” conspiracy theory. It is alleged that a failure of Greece and SYRIZA is what the creditors seek for.
However, austerity or, at the very least, a responsible use of taxpayers’ money would help to balance the budget. Greece is desperate for that. Of course, we should not delude ourselves into thinking that a few years of austerity will solve the problems accumulated for half a century. Given that, the objective, rather than on a “syrizophrenic” discussion on austerity, should focus on two important factors.
Firstly, there are two reasons why austerity may result in short-term economic disturbances or even a temporary reduction in GDP. The first reason is purely statistical as state expenditure (including the salaries of public sector workers) also counts into GDP. Thus, for example, a loan of €10 million borrowed to pay salaries would increase GDP by the same amount while the opposite process would result in a statistical reduction of €10 million.
Secondly, a reduction in public wages is an actual decrease in consumption (and GDP). A dismissed official does not create GDP as long as he is unemployed or works illegally. Moreover, GDP diminishes further as pessimistic future perspectives hinder investments. However, it is nothing new for an economist, as well as it is not the proof of the inefficiency of austerity. Idle for half a century, one cannot solve all problems in a week. Nevertheless, economic changes are vital even though they may not be palatable.
To overcome this, dismissed officials should find a new job. A job that pays money into the state budget rather than spending it is the best option. Furthermore, those aged forty cannot be pensioners. They must work instead of living from the taxpayers’ money. Finally, austerity should be followed by reforms of the public sector no matter the reluctance of the government.
Although it is not an easy period for an ordinary Greek citizen, Lithuania has also faced difficulties. However, we have managed to avoid “syrizophrenia”. We’ve made a choice not to follow charlatans who claim that economic well-being can be achieved through protests and strikes. We should feel sorry for the Greeks, but not their government populists who are blaming rescuers for their problems.