“Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon.” Winston Churchill
“In the wake of the world financial crisis, the jig is truly up for Greece. No country in Europe, or anywhere else, finds itself in need of protection against Greek industrial competition. Greece has virtually no industry. And, the little industry they have had is rapidly collapsing.
“After declining at a 7.8 percent annual rate in November, Greek industrial activity plunged another 11.3 percent in December. The youth unemployment rate for Greeks ages 15 to 24 is 48 percent, while in the crucial family-forming years of 24 to 34, unemployment in Greece is about 25 percent. Only Spain has higher youth unemployment.
“Little wonder that Greece’s fertility rate is 1.3 children per woman—just above the ‘replacement rate.’ Meanwhile, a quarter of the Greek population is 65 or older. That age group is expected to rise to one-third by 2050, at which point Greece’s working population will have dwindled to just 20 percent of the total population. By 2050, every Greek who works will be supporting four others who don’t.
“The receivership proposal that apparently most infuriates the Greeks is the notion that 30,000 Greek government employees be retrained and redeployed to the private sector. All the rioting and ruckus reflects the knowledge among Greek government employees that taking a job in the private sector is tantamount to telling the junior ministers that from now on, they will be driving taxis.
“Greece is a corrupt economy. It has no industry to speak of. One of the few private-sector growth industries in Greece is what is known loosely in the U. S. as “Medicare fraud.’ Through layers of ingenious scams, Greece has achieved the standout distinction of surpassing even the United States as the economy in the world that spends the greatest percentage of its GDP in medicines—2.4 percent.
“For more details see the analysis by Andrew Jack and Karin Hope in the Financial Times. They report: ‘Greece’s continuing high level of spending on medicines is a striking example of the broader problems facing the country as it battles under international pressure to cut public expenditure and rein in the nation’s debt.’
“The shambles of an economy is dominated by big government, with 151 ministries and money-losing state enterprises that have 1.3 million people on the payroll. Almost all Greek government activities are inefficiently and corruptly run, with high salaries rewarding chronic overstaffing that qualifies the 700,000 bureaucrats and 600,000 employees of state enterprises for lavish and early retirement.
“The ever-more destructive riots that seem to accompany every attempt to rein in absurdly lavish spending underscore the precarious financial footing of the welfare state. People who are used to generous benefits, free medicines, and long vacations won’t give them up graciously. The hissy fits in Greece are hints to the wise that even after 16 summits to resolve the Greek debt crisis, nothing has been resolved. One way or another, a Greek default looms ahead.
“That could be a lot more serious than any of the permabulls let on. As John Paulson puts it: We believe a Greek payment default could be a greater shock to the system than Lehman’s failure, immediately causing global economies to contract and markets to decline. [The euro is] structurally flawed and will likely unravel.’” John Dale Davidson, Financial Intelligence Report, March 2012, p. 2