"The President of Greece warned last night that his country stood on the brink of the abyss after three people were killed when an anti-government mob set fire to the Athens bank where they worked." -- The Times Online
That "anti-government mob," it must be understood, consisted of civil servants, tens of thousands of whom took to the streets to protest austerity measures. Greece is in the midst of a general strike. Airports are closed. Trains are not running. Classrooms are empty. Trash is piling up. The Wall Street Journal reports that "Angry youths rampaged through the center of Athens, torching several businesses and vehicles and smashing shop windows. Protesters and police clashed in front of parliament and fought running street battles around the city." The Greek crisis, like a fraying rope on a footbridge, is also sending shudders throughout the Eurozone.
This is more than a financial crisis. This is a national meltdown. And while facile comparisons to the U.S. must be avoided, there are nonetheless lessons for us --particularly in light of the direction the Democratic Party wants to travel.
First, the differences. Greece is a small nation of 11.3 million people. Its GDP is estimated to be in the range of $333 billion (though with recent revelations of government dishonesty about deficit numbers, all figures must be viewed skeptically). Greece partakes zestily in the Mediterranean tradition of tax avoidance, and corruption is endemic. Many ordinary transactions are greased with "fakelaki" (little envelopes) or "rousfeti" (political favors). Daniel Kaufmann, a senior fellow at the Brookings Institution, compared 40 industrialized countries and concluded that "If Greece had better control of corruption -- not to Swedish standards, but even at Spain's level -- it would have had a smaller budget deficit by 4 percent of gross domestic product."
So Greece has cultural problems that contribute to its economic implosion. But there are similarities to the U.S. as well -- and because we have elected Democrats, they are growing. By the end of 2011, Greece's debt will be 150 percent of its GDP. According to a March report by the Congressional Budget Office, President Obama's 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years -- $1.2 trillion more than the administration projected -- which will increase our debt to GDP ratio to 90 percent by 2020.