There is a passage in Isaiah that goes something like this: “For the Spirit of Becoming has bidden me, Go, post a watchman, let him declare what he observes.”
Greece is set to get another punitive Austerity clad memorandum… under the guise of getting €7 billion as a “bridge loan” from the EU, towards a negotiation for a new round of a series of sovereignty threatening concessions in the form of “German Bailouts.”
Beware Argives Bearing Gifts…
Surely Europe is blundering towards Versailles all over again.
But one asks why?
Stringing along the mice to the trap of Slavery has never been more visible.
And maybe never has been this easy either.
Inexplicable how this train-wreck keeps on coming … ever so slowly, creeping on top of all of us.
Killing the “passengers” onboard is almost certain.
Yet it will surely affect all of us too.
Echoes of the “Peace Treaty of Versailles” are ringing in my ears…
You need to know some History to understand my point though.
Or you can be daft and believe that History never repeats itself.
There is of course the middle point where History gets repeated always and every time it gets lighter and lighter like a humorous version of the first instance.
And whether this Greek Drama unfolding still is a drama, a comedy, or an outright farce — depends on where you live, if you are involved, and how you feel about the people suffering through it.
Greeks being perennially dramatic creatures are of course not above the understanding of the thin line between Drama and Comedy…
And as you probably know their Olympian Gods reflected all that human drama and it’s intercourse with comedy, quite well.
Yet today modern Greeks, have replaced their faith from the Gods of Mt Olympus, to the Gods of the Banks and the Creditors, and their Masters have become the Banker-wankers, and the funny Germans, straight out of the Ministry of Silly Walks and Silly Talks.
And the European Leaders are full of “Silly Talks” too — having endless bureaucratic talks, meetings, and discussions. Life in Europe has become a constant painful bore, and an austerity crisis with no end, and a Dramatic performance of Theatrical Brinkmanship of unimaginable proportions and stupidity — ad infinitum.
And with all other things being equal, this situation resembles whatever happened in 1919 that resulted into bringing the German Nazis and Hitler to power. And fat lots of good that did to all of us. All of the world ended pear shaped and not just old bureaucratic Europe. Yet one has to admit that today’s German Leaders although emulating their generally well dressed National Socialists of the 1930’s — they don’t have the sartorial finishes, nor the fashion dimension of the Third Reich, and they certainly don’t share their decisive inhumanity. And that last one, might be a really really bad thing…
Because One can recognize undisguised Evil for what it is, but one can’t see the corrupt and “pseudo-compassionate” serially backstabbing bureaucratic evil and it’s bearers as such a threat. Yet most countries die by a thousand little cuts that hemorrhage them to death — rather than by a single decisive blow to the head, or a single stitch to the very heart of a nation. So the later type of Evil is surely far more effective than the first.
Therefore one can’t take the German negotiators very seriously today, when watching their overall transparent insincerity, or their humiliating stupidity — but one can be invariably entertained as they enact their “Silly Walks” and “Silly Talks” as prescribed by the relevant “Ministries of Silly Walks” & the “Ministry of Silly Talks” — enshrined in the German Reichstag administration of today same as in the Brussels bureaucracy.
Unfortunately, these daft people don’t know Humour even if it spit in their face — but they also don’t know Magnanimity even if she were to bite their arses, like the Gadfly of history always does to those that forget her…
And as Herodotus the Father of History gave us the vibe to know that potent Leaders Last for Ever, whereas the Nimbys are forgotten in the sands of history — so has Thucydides and Xenophon admonished us to be magnanimous in Victory and Defeat because History is long and Karma is a bitch…
But if you think of these sources of History as too old … or too Greek — then take your que from Lao Zhu and Adam Smith, to get your fix on Economic History and State Leadership.
Or go straight to the First World War of 1915, and it’s aftermath when Lord Maynard Keynes was the only voice of Reason, who said that Economic Chaos will follow the punitive and humiliating Treaty of Versailles. He saw that the Treaty of Versailles is the tool that will send Germany back to the absolutist leadership of the Hun Nazis — essentially relegating the nation and the whole of Europe back to the time of the Roman conquest after Julius Caesar and the widespread wars that brought down “Pax-Romana” and spelled the end of the Roman Empire itself…
Back in 1919 fresh from the First World War, John Maynard Keynes went to the Palace of Versailles outside Paris, where Germany signed the Treaty of Versailles with the Allies, officially ending World War I. The English economist John Maynard Keynes, who had attended the peace conference but then left in protest of the suggested “Treaty of Versailles” was one of the most outspoken critics of the punitive agreement set to humiliate Germany fully. In his book “The Economic Consequences of the Peace” published in December 1919, Keynes predicted that the stiff war reparations and other harsh terms imposed on Germany by the treaty, would not only lead to the financial collapse of the country, but in turn it would have serious economic and political repercussions for Europe and the world, resulting in another major conflagration to engulf all of Europe and more…
He was proven right sooner than even himself thought of…
By the fall of 1918, it was apparent to the leaders of Germany that defeat was inevitable in World War I. After four years of terrible attrition, Germany no longer had the men or resources to resist the Allies, who had been given a tremendous boost by the infusion of American manpower and supplies. In order to avert an Allied invasion of Germany, the German government contacted U.S. President Woodrow Wilson in October 1918 and asked him to arrange a general armistice. Earlier that year, Wilson had proclaimed his “Fourteen Points,” which proposed terms for a “just and stable peace” between Germany and its enemies. The Germans asked that the armistice be established along these terms, and the Allies more or less complied, assuring Germany of a fair and unselfish final peace treaty. On November 11, 1918, the “Armistice” was signed and went into effect, whereby all fighting in the bloody World War One, came to a crawling end in the trenches of Europe and all beyond…
In January 1919, John Maynard Keynes traveled to the Paris Peace Conference as the chief representative of the British Treasury. The brilliant 35-year-old economist had previously won acclaim for his work with the Indian currency and his management of British finances during the war. In Paris, he sat on an economic council and advised British Prime Minister David Lloyd George, but the important peacemaking decisions were out of his hands, and President Wilson, Prime Minister Lloyd George, and French Prime Minister Georges Clemenceau wielded the real authority.
Sadly, Germany had no real role, or significant contribution in the negotiations deciding its fate, and leading to the Treaty of Versailles, whereas the lesser Allied powers also had little responsibility in the drafting or the enforcement of the final Treaty of Versailles.
And it soon became apparent that the proposed treaty would bear only a faint resemblance to the “Fourteen Points” that had been proposed by U.S. President Wilson and that were initially embraced by the German leaders and public consensus alike.
The then U.S. President Wilson, a great idealist, similarly had very few negotiating skills, and he soon buckled under the pressure of French leader George Clemenceau, who hoped to punish Germany as severely as the Germans had punished France, in the Treaty of Frankfurt that ended the Franco-Prussian War in 1871. Tit of Tat was how the French leader saw Life of Leadership…
Very French indeed.
Yet the British leader Lloyd George, took the middle ground between the two men, but unfortunately — he backed the French plan to force Germany to pay reparations for damages inflicted on Allied civilians and their property. Since the treaty officially held Germany responsible for the outbreak of World War I, whereas in reality it was only partially responsible — the Allies would not have to pay reparations for damages they inflicted on German civilians, and they stood to make a windfall profit from the First World War and the resultant Treaty of Versailles.
That selfish psychology of the Victors who wanted to become “Creditors” was basically totally WRONG, and in retrospect it proved to be the Most Important Cause of the Second World War and the undoing of the Peace to End All Wars…
Still back in 1919 — the Peace Treaty that began to emerge was a thinly veiled “Carthaginian Peace” an agreement that accomplished only the French Leader Clemenceau’ hopes to crush France’s old rival Germany and extract a heavy tribute for decades to come… According to the Peace Treaty’s terms, Germany was to be humiliated fully. First it was tasked to relinquish 10 percent of its territory. Second, it was to be disarmed fully. And third, it was to turn all of its overseas empire over to the Allies.
However, most detrimental to Germany’s immediate future, was the complete confiscation of all of its foreign financial holdings and its merchant carrier fleet.
Echoes of that can be seen today with Germany and the Creditors of Greece demanding all of these thinly veiled conditions, as guarantees of the Third bailout the country is set to receive. Today Creditors’ conditions, include the heavy taxation of Greece’s merchant carrier fleet — in effect robbing the country of it’s only competitive advantage and turning its only industrial asset of worldwide importance — over to the “Creditors.”
But back in 1919 and the subsequent years — the German economy, already devastated by the war, was further crippled, as the stiff war reparations demanded; and ensured, that it would not return to its feet any time soon…
Soon enough this brought Hitler to power and the ultra Nationalist NAZI party through the Democratic means the Peace Treaty of Versailles was meant to promote in Germany and in the rest of Europe.
We all know how well this worked out…
In 1919 a final reparations figure was not agreed upon in the Treaty of Versailles, but estimates placed the amount in excess of $30 billion, far beyond Germany’s capacity to pay in 1919 or even in 1940.
To ascertain the terms of the 1919 “Bailout” the Treaty of Versailles insisted that Germany would be subject to full scale invasion and occupation by the Allies — if it were to fall behind on her payments.
Awfully smart eh?
John Keynes, however was the only negotiating man from the side of the Victors, taking part in the Peace Treaty team; that was horrified, and utterly enraged, by the terms of the emerging treaty. And thus he rushed into action and presented a plan to the Allied leaders in which the German government would be given a substantial loan, thus allowing it to buy food and materials while beginning reparations payments immediately. Lloyd George approved the “Keynes Plan,” but President Wilson turned it down, because he feared it would not receive congressional approval. In a private letter to a friend, Keynes called the idealistic American president “the greatest fraud on earth.”
So exactly 96 years ago on this July 28th Keynes erupted in protest against the stupidity of the formulation of the incoming Treaty of Versailles.
Thus the principal representative of the British Treasury at the Paris Peace Conference, John Maynard Keynes, resigned under duress on July 28th of 1919, in protest at the scale of the demands, warning correctly that it was stoking the fires for another war in the near future.
‘Germany will not be able to formulate correct policy if it cannot finance itself,’ Keynes presciently warned.
On June 5, 1919, Keynes wrote a note to Lloyd George informing the prime minister that he was resigning his post in protest of the impending “devastation of Europe.” http://www.en.wikipedia.org/wiki/Paris_Peace_Conference,_1919
The Germans initially refused to sign the Treaty of Versailles, and it took an ultimatum from the Allies to bring the German delegation back to Paris on June 28. It was five years to the day since the assassination of Archduke Francis Ferdinand, which began the chain of events that led to the outbreak of World War I. Clemenceau chose the location for the signing of the treaty: the Hall of Mirrors in Versailles Palace, site of the signing of the Treaty of Frankfurt that ended the Franco-Prussian War. At the ceremony, General Jan Christiaan Smuts, soon to be president of South Africa, was the only Allied leader to protest formally the Treaty of Versailles, saying it would do grave injury to the industrial revival of Europe.
At Smuts’ urging, Keynes began work on “The Economic Consequences of the Peace.” It was published in December 1919 and was widely read in Leadership circles. In his book, Keynes made a grim prophecy that would have particular relevance to the next generation of Europeans: “If we aim at the impoverishment of Central Europe, vengeance, I dare say, will not limp. Nothing can then delay for very long the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the later German war will fade into nothing, and which will destroy, whoever is victor, the civilisation and the progress of our generation.”
Germany soon fell hopelessly behind in its reparations payments, and in 1923 France and Belgium occupied the industrial Ruhr region as a means of forcing payment. In protest, workers and employers closed down the factories in the region. Catastrophic inflation ensued, and Germany’s fragile economy began quickly to collapse. By the time the crash came in November 1923, a lifetime of savings could not buy a loaf of bread. That month, the Nazi Party led by Adolf Hitler launched an abortive coup against Germany’s government. The Nazis were crushed and Hitler was imprisoned, but many resentful Germans sympathized with the Nazis and their hatred of the Treaty of Versailles.
When the Wall Street Crash came in 1929, the German nascent Democracy known as the “Weimar Republic” spiraled into economic chaos, through the unsustainable and job killing sovereign debt, resulting from the enforced Austerity and the resultant poverty, that the Treaty of Versailles guaranteed to set upon Germany — thereby mortgaging it’s whole economic future to her past errors, and continuing her losses of the war…
You can imagine what the Bank of England calls ‘quantitative easing’ today, and what we experience through the Federal Reserve’s Monetary Policy largesse now, that was started in Germany in 1929, with the printing of abundant money to pay off the first world war sovereign debt. However the Money supply “M1” was not managed properly, as both the Bank Of England and the U.S. Federal Reserve are doing diligently today — thus the Monetary Easing in Germany came to be uncontrolled, thereby triggering “Runaway Inflation” to the point where ten billion Deutsche Marks, would not even buy a loaf of bread, a pack of cigarettes, or even a coffee.
This caused the economic collapse of the “Weimar Republic” and much disruption in the ordinary Germans and it made the country a pariah like Zimbabwe is today. Less than a decade later, Hitler would exploit the unemployed people, the austerity and the continued bitterness among ordinary Germans, in order to seize control of the German state, and declare himself Chancellor. Under his tutelage and force, during the 1930s, the Treaty of Versailles was significantly revised, and altered in Germany’s favor, but by then it was too late for all of Europe. The belated amendment could not stop the rise of German militarism, and the subsequent outbreak of World War II, and soon enough the Victors of the First World War, found themselves crying in their cups…
In the late 1930s, John Maynard Keynes had already gained a reputation as the world’s foremost economist by advocating large-scale government economic planning to keep unemployment low and markets healthy. It did help that his predictions came true with increasing and unfailing alacrity. Today, all major capitalist nations adhere to the key principles of Keynesian economics, but the lessons are lost on Germany amongst others in the European leadership…
Keynes, died in 1946… having seen all his terrible predictions come fully and finally true — through the nightmare of the bloodiest war of history — the Second World War.
Just as Keynes legacy was validated by Reason and Experience of History — the Victorious Allies, this time around didn’t seek to punish Germany and the other Losers of the Second World War, but instead instituted the “Marshal Plan” in order to rebuild all of the shattered economies of Europe, with major emphasis on the belligerent and fully destroyed Germany.
This was a first time in Europe since the Carthaginian Peace Treaties of 509 BC, and of 279 BC, that the Victors chose to not punish the Losers with extreme punitive damages after the End of the Wars…
John Maynard Keynes can be Thanked for this change of Heart amongst the Victors of the Second World War; and his words sound prophetic even today as we are dealing with the European Sovereign Crisis: “This is a Treaty that the Victors have No Right to demand — and that the Vanquished have No Right to Accept.”
This was a very good Start and a significant Change of Heart in 1945 that under the mental influence of John Maynard Keynes, the Allies chose a different path. They opted for a long term Peace and Prosperity, because along with the ghosts of the Treaty of Versailles, Keynes intellectual Leadership and Economic Reasoning in it’s full application, allowed us to have a democratic Germany, and a long lasting period of Peace in Europe for seventy years.
That is until today in 2015 that the Germans apparently forgot HISTORY’S GRAVE LESSON: “Magnanimity in Victory… is Victory itself”
But should You have an inkling to get your “news” from a disinterested observer — then go back to 1377, when Ibn Khaldun published his historical treatise on Leadership and State Affairs Management from a historical perspective. His perspective is clear and keen, and his view is unmolested by private interest, political, or ideological bend, and it’s even free from religious paternalism.
All in all — Ibn Khaldun is a very disinterested and spirited observer and a far better Man than our friend Niccolo Machiavelli.
And much like Maynard Keynes in the first and second World Wars was the leading Economic light — Ibn Khaldun stole the thunder of all his contemporaries and wrote the best Economic Treatise of Macroeconomic policy in the “The Muquaddimah” that was published in Cairo, in the late 14th century, and it was a slow but certain blockbuster since it became the requisite reading for any Minister of the Ottoman and the European empires in the centuries that followed. So in that famed Opus Magnus, Ibn Khaldun explained, about as well as anyone else has since, what happens to a country when the burden on the People is unsustainable and the tax collectors get too greedy…
Ibn Khaldun wrote “The Muqaddimah” also known as the Muqaddimah of Ibn Khaldun (Arabic: مقدّمة ابن خلدون, meaning in English: Ibn Khaldun’s Introduction) or Ibn Khaldun’s Prolegomena (Greek: Προλεγόμενα), is a book written by the North African Maghrebi historian, Ibn Khaldun in 1377, which records an early view of universal history as it pertains to Leaders and their Peoples.
Some modern thinkers view it as the first work dealing with Philosophical Realpolitic matters, with basic Leadership, and with a mixture of Politics, Economics, Statecraft, General Leadership, Sociology, Demography, Geography, Strategy, Diplomacy, Cultural History, Social Evolution, Pre-Darwinism, Ecology, Realpolitic, and MacroEconomics. The Muqaddimah also deals with Islamic theology, political theory of statecraft, and it also covers the natural sciences of earth, physics, medicine, biology, and chemistry.
Ibn Khaldun was not just a more modern Aristotelian observer and a keen noticer of patterns and a “cloud reader” — but was a polymath and a serious traveller who involved himself in the affairs of Man and State…
Ibn Khaldun wrote the work in 1377 as the introductory chapter and the first book of his long planned “Maximum Knowledge” work of World History, the “Kitab al-Ibar” otherwise known as the Book of Lessons; full title:Kitābu l-ʻibar waDiwānul-Mubtada’ wal-Ħabarfītarikhi l-ʻarab wal-Barbar wa man ʻĀsarahum minĐawīAsh-Sha’nl-Akbār, ie: “Book of Lessons, Record of Beginnings and Events in the history of the Arabs and Berbers and their Powerful Contemporaries,” but during his early lifetime the short and concise “The Muqaddimah” became the most important independent work on these subjects and on its own right. That’s a powerful reminder for us writers that being concise is a far better strategy than trying to write like James Joyce writing “Finnegan’s Wake”
In “The Muqaddimah” Ibn Khaldun writes his History basically about all the matters of the People and the Nations as it reflects on the affairs of State Management and State Economic Policy. And on the subject of runaway Austerity Economics he writes: “Eventually, the taxes will weigh heavily upon the subjects and overburden them. … The result is that the interests of the subjects in enterprises disappears, since when they compare expenditures and taxes with their income and gain and see the little profit they make, they lose all hope. Therefore, many of them refrain from all economic activity. The result is that the total tax revenue goes way down. … More Tax Collecting Violence follows and Attacks on people’s property become constant. Once the attacks on people’s property become commonplace, they remove the incentive of anyone to acquire and gain property. … Eventually it is the state that suffers from all these acts, inasmuch as civilization… because it is all ruined when people have lost all incentive to do anything or even work towards any goal. The whole nation soon perishes…”
Ibn Khaldun is very clear on the subject ad he recites many examples of foolish rulers who destroyed their nations through this method of Mismanagement. And yet today we see this method of Economic Mismanagement being applied to all of the hurt economies of Europe and the periphery. As for Greece forget it. It is really a shambles. And it is now being Blitzkrieged through another round of Austerity attacks and nightly bombings of it’s moribund economy.
Can the “creditors” be that foolish?
Or maybe it is an Intentional Collective Punitive policy applied in some form of Economic War, in order to destroy the Spirit of the People and turn them into slaves?
Maybe, if we listen to Ibn Khaldun extorting us back to Reality from the 14th Century observations of the previous THousand Years History — then we will understand about the Science of Subjugation of a whole People. And maybe then we will be clear eyed enough to understand that, that is the very plan of the “German Creditors” towards Greece today.
Complete Subjugation through economic slavery of the last independent people of Europe. The Greeks.
There is no other explanation and it clearly is not about being repaid the old Sovereign debt, because everyone in positions of Authority knows that according to John Maynard Keynes: “No Debtor Nation ever became more creditworthy by being forced to accept less income…”
“People, firms, or even countries, faced with an unbearable ratio of debt to income certainly do not need more debt and less income.”
And our friend John Maynard Keynes became prescient on this well before the horrendous “Peace Treaty Of Versailles” was even signed by Germany back in 1919…
The Germans simply were forced to sign an abominable “Memorandum” that they had No Right to Sign, and the Victorious allies had No Right to demand of them.
But who remembers the Treaty Memorandum of Versailles today, almost a century later?
An Abomination of a Treaty Memorandum that predictably brought Hitler to power and engulfed Europe in the stupidest war ever. The Second World War that was supposed to be another war to end all wars.
We All Know How Well That Plan Worked Out…
Yet that combination is precisely what has been repeatedly prescribed for Greece — with Germany leading all the other creditors, the IMF, and the EU, demanding ever-increasing Austerity, and ever-rising tax rates, so that the dwindling number of remaining Greek taxpayers will become ever more impoverished and will be saddled with ever-increasing debts that are shifted from the country to the people.
This is not only an unsustainable economic system because of it’s general stupidity — but because through simple accounting it cannot generate anything but ever diminishing returns; since in today’s Greece, the number of employed adults fell by more than a million from 2008 to 2014 — that is over 23 % — even as the working age population fell by almost half a Million people through brain drain and general emigration under threat of famine. And this phenomenon is intensified and it rivals the bloody migration of the Irish during the periods of the potato famines back in the 19th century. Consider these numbers growing fast in Greece that is a country of almost 10 million citizens…
Reducing drastically the Tax base is not an Econometrics problem — it is an Existential problem. And driving people off the land forcefully in order to seek “food” in a distant land is a Catastrophe for a small nation that is akin to GENOCIDE practiced through economic means.
Has anyone read the magnus opus of another writer titled “Mein Campf” ?
Perhaps You should read it because it describes this plan of ECONOMIC GENOCIDE rather well, and perhaps because many Creditors have read it and espoused the views within. I know that people like Wolfgang Shauble and Frau Merkel have this book on their night table too but what I don’t know; is if the IMF heads also subscribe to this ideology.
As for Greece being able to Existentially survive this round of Austerity and Taxation without Representation?
What Do You Think?
Does this sound like a problem likely to be alleviated by higher tax rates on labor?
The industrial production index of 2010 being 100, fell from 119.3 in 2007 to 85.3 this May — the lowest since 1978.
Does this sound like a problem likely to be alleviated by higher tax rates on business or investors?
Yet today’s Creditor nations wrongly assume that instructing Greek tax collectors to snatch a larger percentage of a shrinking economy has improved the government’s budget —albeit at the expense of the budgets of Greek families and firms. Measured as a share of GDP, revenues did indeed rise from 40.2 percent of GDP in 2007 to 45.8 percent in 2014. But the Greek economy shrunk by 25 percent. Since 40.2 percent of €100 is larger than 45.8 percent of €75, real revenues actually fell by 14.4 percent. By grinding down taxable payrolls, profits, and sales, punitive tax rates left the government with less real revenue, not more.
More than five years have passed since May 2010, when Greece was enticed to borrow €73 billion from the International Monetary Fund (IMF), European Commission (EC) and European Central Bank (ECB) with painful Austerity and Over-Taxation strings attached.
That 2010 program, said the IMF, “had two broad aims: to make fiscal policy and the fiscal and debt position sustainable, and to improve competitiveness.” There was no emphasis on improving domestic economic growth or employment — just “competitiveness” in trade. The IMF speculated that “restoring confidence” would “lead to a growth recovery” in 2012. When that didn’t happen, another €154 billion in loans was provided. And the IMF blamed the bad “investment climate” on a “lack of confidence,” rather than any lack of after-tax income or Money Supply in the Economy.
Much like back in 1919 John Maynard Keynes fought for economic Reality, today’s prominent U.S. economists also recognize the Disaster and blame the seven-year depression in Greece on savage cutbacks in government spending and on super Taxation imposed by Germany.
“The contraction in government spending has been predictably devastating,” wrote Joseph Stiglitz in February.
And Paul Krugman later openly criticized the period “from 2009 to 2015, the years of major spending cuts” in Southern Europe.
But because the Economy tanked, as a proportion of GDP the Greek government “spending” rose from 44.9 percent of GDP in 2006 to 53.7 percent from 2009 to 2012 and to 60.1 percent in 2013. That 2009-2013 “fiscal stimulus” was precisely when the economy contracted — by 4.4 percent in 2009, 5.4 percent in 2010, 8.9 percent in 2011, 6.6 percent in 2012 and 3.9 percent in 2013, and continued to contract till today and beyond…
By contrast, the economy grew slightly in 2014 when government spending was “only” half of GDP. That is, the economy fell when government’s share rose, and the economy rose when government’s share fell.
What is rarely or never mentioned in the typically one-sided misperception of spending “austerity” is the other side of the budget — namely, taxes. Honerous Taxation without Representation…
Making Tea in the harbour of Athens is not such a bad idea right about now.
The latest Greek efforts to appease creditors would raise corporate tax again to 28 percent, raise the 5 percent “solidarity surcharge” on personal incomes, and discourage tourism by raising the VAT on restaurants and island shopping.
Looked at separately, each of these suffocating tax rates might appear almost reasonable. Looked at together, they are totally unreasonable. To offer a Greek employee an extra €100 requires that €42 be first subtracted for Social Security tax, and then up to €46 more subtracted for income tax. Out of the original €100 of marginal labor cost, the remaining €14 of after-tax income going to a skilled worker could only buy about €10 worth of goods after value-added tax is paid.
The tax wedge between what employers pay for labor and what workers have left to spend, after taxes, is 43.4 percent for a Greek family of four with average earnings — the highest in the OECD and more than double the comparable U.S. wedge of 20.6 percent.
This demoralizing tax wedge, which grows even larger at higher incomes, clearly depresses hiring and working in the formal economy. It also helps explain why a third of the Greek labor force is self-employed, making tax avoidance easier.
AND THIS IN CONSIDERATION THAT GREECE TODAY IS BY FAR THE POOREST COUNTRY IN EUROPE.
Poorer than Albania in real economic numbers of today’s values.
Are you able to conceive of it?
Little wonder then that Greece has been suffering a massive brain drain — with hundreds of thousands of the best and brightest Doctors, Engineers, PHDs, Economists, and all the educated young talents — emigrating during the recent years of the Great Depression” that befell the little country.
But since most smart people including most of the Specialist Doctors of the small country, have left for abroad…
There probably isn’t anybody left of rigorous intellectual value, to negotiate a decent treaty with the “Creditors.”
And there isn’t anyone left to fight the setting rot either.
Since 2007, at least a fourth of the remaining Greek economy survived by going underground, but that “shadow economy” ran on cash and banks are now sternly rationing cash withdrawals and transfers to delay capital flight.
You may believe that Greece’s economic pain is mostly the doing of heartless and inept decision makers in Brussels, Frankfurt and Berlin.
You may believe that the Greeks’ inefficiency, profligacy, and fecklessness, have all been so extreme that cutting them any kind of slack, will destroy the credibility of the euro and single handedly bring down European Civilization as we know it.
Or if that’s not far fetched enough — you may believe that Austerity, Poverty, and this new “Treaty of Versailles” against Greece, will eventually work by some miracle… maybe through the intervention of Jesus Christ…
Second Comings being an integral part of Greece’s peculiarly strong Christian Faith — this is entirely possible; albeit not very probable or credible where public sovereign debt is concerned.
One signs the Treaty of Death….
Me thinks that either way you cut it; by this point in history — you can probably agree that it was a mistake for Greece to join the EURO; the European common currency back in 2001.
Maybe you think it was a mistake because doing so put the Greeks at the mercy of a bunch of austerity-crazed Northern European German led politicians with Undemocratic and rather Autocratic Prussian proclivities.
Or maybe You understand that for an independent Nation State, having it’s own currency and Monetary Policy is an inalienable BirthRight.
Or maybe you think it was a mistake to join the EURO, because the Greeks were fabricating their Accounting and their GDP vs Debt ratios, in order to get in to the eurozone; and thus now have no business pretending to be part of a modern developed and expensively advanced economy. Especially since they have zero industry to prop up their exports and their balance of payments…
Yet, no matter what your point of view — I’m guessing that there isn’t anyone who would argue, that Greece and Europe would be in a worse off position today, if the Greek drachmas had not been traded in for the new Deutche-Mark, the super valued, and sugar coated, Euro.
So why exactly are Greece and its European creditors still trying these silly talks, and the silly walks, and are going through all these silly exercises and convulsions — against all odds, and against all good and common sense, just in order to keep the country in the eurozone?
And this question needs to be answered.
Mind You, I don’t mean it entirely as a rhetorical question either…
So please — I’d really like somebody to tell me…