Is Greece Our Future?

Jeff  Carter
|
Posted: Oct 21, 2011 12:01 AM

Watching television this morning we hear the news that Greek protestors still occupy the streets and protests have turned extremely violent. Will it be different in the US?

The Greek government is voting on “austerity measures”. What’s really happening is that the net present value tables combined with no economic growth have caught up to them.

The jig is up.

The Greek economy is puny. The city of Los Angeles has more economic activity. But the lessons of Greece are large. Here are the two major lessons.

1. Without economic growth, you cannot have a social safety net.

2. Governments create nothing, and are not productive.

That’s really all you need to know when you refocus and think about what needs to be done for the US economy.

The US has very little time left in the hourglass. Since the inception of a government safety net in the 1930's (significantly ramped up since 1965), we have had the benefit of demographics. Baby boomers populated the workforce and the economy needed to create stuff for them to live.

Now, the boomers are retiring. They are going to be less productive, and will start to draw on the government resources. Eventually, as they begin to die, they will be a significant drain on medical resources since most of your medical care comes in the last two years of your life.

That’s why things like Obamacare will never work. Socialized medicine isn’t cheap, and it doesn’t have enough production to service all the constituents that need it. What will develop is a competitive black market where only ones with enough money to afford medical care will get it in time. The rest of the poor saps will be stuck in line.

We have had some mini-Grecian events in the US. The occupation of the Wisconsin state capital comes to mind. What were they protesting?

The end of being on the government dole.

Government employees that are unionized are a roadblock to the economic vitality of the United States. They produce nothing. They create headaches. Instead of smoothing the path for entrepreneurs and companies, they litter it with paperwork and regulation. We have to slash the size and scope of the US regulatory juggernaut. It is in the path of economic growth.

Occupy Wall Streeters want jobs, the President wants jobs, and the 20% in this country that are unemployed want jobs. But the solutions they are proposing are job destroyers, not creators.

The social safety net and job creation are intertwined. Making small adjustments on the edges won’t do a thing. Tackling the legacy programs and costs and reformatting them so the economic interests of government align with the economic interests of the people must be done.

We are in a situation that calls for pretty radical change from the perspective of a socialist. But if you are a capitalist/entrepreneur, the changes we need to make aren’t that big a deal. It’s more like the normal course of daily existence.

The Greeks are on the march. No doubt, their kin in the US, public employee unions and socialists, will hit the streets here. They will make a lot of noise, and create a lot of fear. The reality is we cannot afford them anymore.

Things like that are a legacy of the past, just like buggy whip manufacturers.

Today's Links:

Chicago’s Hyde Park Angels portfolio company Gradebeam is bought by Textura. Entrepreneurial ecosystem spawns another success in Chicago.

A letter to Republican candidates.

Private college makes successful start ups.

Tips on running a small food business.

Comparing some Farm Bill proposals.

The world’s biggest garage sale doing okay. ($EBAY)

Position limits.

What VC’s are seeing.

How to build an entrepreneurial ecosystem.

We got a little weather here yesterday.

Groupon scales back its valuation. No biggie. Company has come a long way since inception.

Abbot Labs ($ABT) is splitting into two companies.

Yesterday’s CPI number is the first one that gives an argument to the inflationistas. We have printed so much cash worldwide it’s difficult for many economists not to imagine massive inflation. Gold bugs rejoice. ($GLD, $GC_F)

US birth rate stalls. This is actually pretty big news. Demographics play a big part in economic growth. Without a constant supply of young people, growth stops. Ask the Shakers of Ohio.

Algae as fuel.


 

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