# Greek debt crisis: A conservative or liberal economic lesson? **URL:** \ **Category:** Great Debates\ **Created:** [July 29, 2015, 4:01am UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447 "2015-07-29T04:01:47Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 30, 2015, 6:01am UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/21 "2015-07-30T06:01:37Z")
Current revenues: $119 billion Current expenditures: $128 billion Debt: almost $500 billion [https://www.cia.gov/library/publications/resources/the-world-factbook/geos/gr.html](https://www.cia.gov/library/publications/resources/the-world-factbook/geos/gr.html) We’re talking pretty big numbers here. With Greece’s $25,000 per capita income, I don’t see why we’d prioritize helping Greece over helping poorer nations that need it more. ---
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [July 30, 2015, 12:13pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/22 "2015-07-30T12:13:14Z")
> [@puddleglum](#): > > Government spending is high, labor markets are rigid, corruption is rampant, and regulations are stifling… > > A liberal before the crisis would have told Greece to join the Euro keep all the inefficient regulations, raise taxes on the richest and keep spending high. This is mostly the agenda that was implemented and the result is the economic meltdown. OK, do you have any specific examples of inefficient Greek regulations? Or is it just a matter of faith that because they’re in trouble, by definition they must have inefficient regulations? ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 30, 2015, 12:17pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/23 "2015-07-30T12:17:20Z")
Heritage ranks Greece 130th in economic freedom. > **[Index of Economic Freedom: Greece | The Heritage Foundation](https://www.heritage.org/index/pages/country-pages/greece)** > > Explore the Index of Economic Freedom to gauge global impacts of liberty and free markets. Discover the powerful link between economic freedom and progress. The 30th edition illustrates key factors shaping our world's landscape. From @Heritage > [@](#): > > The rule of law remains problematic, with property rights weakly enforced, tax evasion on the rise, and corruption pervasive. Despite efforts to create a more business-friendly regulatory environment, the labor market remains rigid and slow to adjust to market realities. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [July 30, 2015, 12:47pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/24 "2015-07-30T12:47:00Z")
Count me as confused. All the German and french bankers act so surprised-they KNEW that Greece had no way to repay what they borrowed. Greece has a history of defaulting, going back years. the country is mostly tourism, with a little olive oil and low grade wine thrown in. Bankers are supposed to do “due diligence” before floating loans-what part of this wasn’t understood? Shut Greece down and have a going out of business sale. The only was is to start over-without the hideous Greek government bureaucracy. ---
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [July 30, 2015, 1:14pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/25 "2015-07-30T13:14:30Z")
> [@adaher](#): > > Heritage ranks Greece 130th in economic freedom. > > [Index of Economic Freedom: Greece | The Heritage Foundation](http://www.heritage.org/index/country/greece) That site is a real hoot! Looking at the US page: > [@](#): > > President Barack Obama’s second-term efforts to expand government spending and regulation have been thwarted to some extent by Republican Party opposition in Congress. Economic policy leadership has devolved by default to the Federal Reserve, whose attempts to use monetary policy to stimulate economic activity have not restored robust growth. Implementation of the 2010 health care law, which has reduced competition in most health insurance markets, remains a drag on job creation and full-time employment… > > Protection of property rights has been uneven, with instances of regulatory overreach by the executive branch requiring court adjudication. Looks to me like a view of the world through the lens of the Kochs. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 30, 2015, 3:18pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/26 "2015-07-30T15:18:12Z")
> [@camille](#): > > Thank you for the thoughtful answers. I think I learn more from your posts than the news articles covering this story. Journalists often don’t have an economics background, and economists often don’t have a humanities background. There is some advantage being at the intersection. > [@](#): > > Is the govt issued scrip you mention the same as Varoufakis’ plan to issue IOUs/parallel currency? > > The only criticism I read about him is about his politics and personal style. What do you think of the plan he had in mind? I’m having trouble myself understanding through the breathless outrage what exactly it is that he had in mind, but it looks like he was laying contingency plans for euro-withdrawal and the foundation of a new drachma payments system. Not exactly the same thing, if that’s the case. I think they should set up an alternative system _even if_ they stay on the euro. It would ease pressure today, while also making any future transition easier. He was wargaming the breakdown of eurogroup negotiations. I take it that his own preparations, while prudent in general outline, might have run afoul of the law. Computer h4x0rz or something. I mean, in his place I know I definitely would’ve had some sort of tentative plan in place for Grexit, but not sure he was going about it in the proper way. Maybe. I don’t trust the political remonstrations and recriminations that fly back and forth so I only want to speak generally myself. 1) Backup plan: good. 2) Blatantly breaking law, if that’s what happened: maybe not so good. > [@](#): > > I never heard that one before. I didn’t even think it was possible. Interesting idea. Can’t remember where I read it. Might be daffy but it stuck with me. Point being, they need to think around the problem. They need some intellectual flexibility. They need some sensible thinking. Unfortunately, this has been in even shorter supply than usual. Something about the nature of this crisis brings out the crazies, not just in politicians but generally. We in this thread need not look far for more examples. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 30, 2015, 3:24pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/27 "2015-07-30T15:24:59Z")
> [@Hellestal](#): > > Journalists often don’t have an economics background, and economists often don’t have a humanities background. > > There is some advantage being at the intersection. Of economics and humanities, I mean. Not journalism. ---
**Author:** ![Fuzzy\_wuzzy](https://avatars.discourse-cdn.com/v4/letter/f/a8b319/32.png) [@Fuzzy\_wuzzy](https://boards.straightdope.com/u/Fuzzy_wuzzy)\ **Post date:** [July 30, 2015, 3:46pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/28 "2015-07-30T15:46:54Z")
> [@BobLibDem](#): > > OK, do you have any specific examples of inefficient Greek regulations? Or is it just a matter of faith that because they’re in trouble, by definition they must have inefficient regulations? > [@BobLibDem](#): > > That site is a real hoot! Looking at the US page: > > Looks to me like a view of the world through the lens of the Kochs. Some more information here: [http://www.nytimes.com/2012/03/19/world/europe/in-greece-business-rules-can-puzzle-entrepreneurs.html](http://www.nytimes.com/2012/03/19/world/europe/in-greece-business-rules-can-puzzle-entrepreneurs.html) [http://www.nytimes.com/2015/02/18/business/international/greece-bureaucracy-not-just-austerity-is-an-economic-drag.html](http://www.nytimes.com/2015/02/18/business/international/greece-bureaucracy-not-just-austerity-is-an-economic-drag.html) [http://www.theguardian.com/business/2013/nov/27/oecd-takes-aim-at-greek-bureaucracy-growth](http://www.theguardian.com/business/2013/nov/27/oecd-takes-aim-at-greek-bureaucracy-growth) ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [July 30, 2015, 4:14pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/29 "2015-07-30T16:14:20Z")
> [@Hellestal](#): > > Paul Krugman and Milton Friedman both were against the eurozone. I don’t see how “conservatives” have such a monopoly on the currency itself. > > But the story doesn’t stop there. Given that the euro was created, the core governments were fine with bailing out their own banks by having their public institutions take on the debt. Obviously there are plenty of conservatives who hate bank bailouts, but regardless of the ideological spectrum elsewhere, we can see that _inside the eurozone_ that decision was made by people on the more “conservative” side of the spectrum. Would a “liberal” have used public money to bail out banks instead of letting the banks fail and then reorganizing them? People on the European left are certainly complaining about it now, while the establishment conservatives seem to me more quiet on the issue. > > The ECB has a mandate for price stability, by international treaty. This mandate is defined as an inflation rate over the medium term of almost, but not quite, 2%. Yet core inflation in the eurozone has been less than 1% since 2014. Headline inflation actually went negative. Since the financial crisis in 2008, the Fed in the US has had three different rounds of QE. The ECB started its first round in January of this year – seven years after the fact – and they still haven’t done enough to meet their own legal mandate and they have no apparent plans to do more. Would “liberals” in charge of the ECB have done more? Yes. Yes, they would have. Milton Friedman would be criticizing the ECB to hell and back if he were still alive, but _inside the eurozone_ it’s the more conservative inflation-haters who are in charge. > > Likewise, I could create a long list of problems that the European left hasn’t fully acknowledged. But there are other threads for that and I’d like to take a different approach. > > * * * > > There’s a broader issue here. > > Blame is a funny thing. Human beings aren’t very good at it. It’s always the other guy’s fault. > > Imagine a series of switches, and a set of workers whose job it is to flip their own switch when they arrive at their station in the morning. Say there’s five switches, and all five need to be flipped, but on a certain day two of the five workers neglected their job. Shit is fucked. So how do we assign blame to the two who failed at their job? Do we split the blame in half? Is each person 50% responsible? Hmm. Maybe such diminished blame is not quite fair. Both tasks were necessary conditions. Each task was not sufficient in itself. So in a sense, both people were 100% responsible. > > But if you ask either one, they’ll point out that it didn’t actually matter what they did because the other guy fucked up. The buck stopped somewhere else. There are always ways to spin the story, too. What if one person is a new worker, and the other a veteran? What if one switch takes a lot more effort to flip? What if one worker has a well-earned reputation of irresponsibility? People will always point this stuff out. How much weight does each excuse earn? A 5% shift of the blame? A 15% shift? > > Such a discussion would never end. > > We could talk about relative blame all day, mitigating circumstances and all that nonsense, and in the end, it doesn’t really matter. Both switches need to be flipped. End of story. Everybody is wagging the finger, and everybody is pretty much right in doing so. People have fucked up all over the place. If we had a coolly rational Mr Spock to assign blame, and he gave 63% to one side and 37% to the other, then I guess that would be fine. > > But we don’t have Vulcan dispassion. We have human beings who are eager to blame the outgroup. The only way to stop that buck-passing would be for both sides to acknowledge 100% of the blame. There were switches that weren’t flipped on both sides, and every switch needing flipping. There are all manner of important lessons to be learned, but the anger at the outgroup’s mistakes has become so intense that basically no one is acknowledging their own fuck-ups. The series of Greek governments have been an extended clown show that’s lasted more than a decade, and the ECB’s decisions have arguably been the worst by any central bank since the Great Depression. > > There are plenty of legitimate lessons to learn from all over the European ideological spectrum. We genuinely do not have to pick and choose one side or the other. You seem to have your own definition of conservative versus liberal, to me the distinction is small government versus large government. Stay out of bad currencies and don’t practice bad monetary policies are non-partisan lessons from the Greek meltdown since they do not involve the size or scope of government. However, Greece is not the only country to be in the Euro and be hurt by the Euro, but it is the only country that has had its economy meltdown because of the Euro. The reason for that is that the Greek government borrowed and spent too much money. All historical events have a myriad of causes but the central fact of this crisis is that the Greek government borrowed and spent more than it could pay back. Thus the central lesson is don’t do that. That is a conservative lesson. ---
**Author:** ![Grey](https://avatars.discourse-cdn.com/v4/letter/g/b782af/32.png) [@Grey](https://boards.straightdope.com/u/Grey)\ **Post date:** [July 30, 2015, 4:28pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/30 "2015-07-30T16:28:20Z")
No it isn’t. That would be a lesson in prudent fiscal behaviour available to large or small governments. ---
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [July 30, 2015, 4:30pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/31 "2015-07-30T16:30:30Z")
> [@Fuzzy\_wuzzy](#): > > Some more information here: > > [http://www.nytimes.com/2012/03/19/world/europe/in-greece-business-rules-can-puzzle-entrepreneurs.html](http://www.nytimes.com/2012/03/19/world/europe/in-greece-business-rules-can-puzzle-entrepreneurs.html) > > [http://www.nytimes.com/2015/02/18/business/international/greece-bureaucracy-not-just-austerity-is-an-economic-drag.html](http://www.nytimes.com/2015/02/18/business/international/greece-bureaucracy-not-just-austerity-is-an-economic-drag.html) > > [http://www.theguardian.com/business/2013/nov/27/oecd-takes-aim-at-greek-bureaucracy-growth](http://www.theguardian.com/business/2013/nov/27/oecd-takes-aim-at-greek-bureaucracy-growth) There may be a few tweaks needed but a few anecdotes from disgruntled businessmen doesn’t a crisis make. Get more aggressive in tax collection and create a regulation czar/ombudsman to recommend reforms. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [July 30, 2015, 4:34pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/32 "2015-07-30T16:34:56Z")
> [@BobLibDem](#): > > OK, do you have any specific examples of inefficient Greek regulations? Or is it just a matter of faith that because they’re in trouble, by definition they must have inefficient regulations? In 2013 the OECD did a report on the over regulation of the Greek economy and recommended the abolishment of dozens of regulations. Such as the restriction of sale prices to certain time of the year, the maximum distance a race track can be from an airport, that athletic training facilities aimed at tourists must be open all year,etc. [PDF](http://http://www.oecd.org/daf/competition/Greece-Competition-Assessment-2013.pdf) ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 30, 2015, 6:59pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/33 "2015-07-30T18:59:10Z")
Bob, if there’s a liberal site that measures economic freedom, then I’d love to see it. Until then, all we have is conservative sources. Why liberals don’t care about this kind of stuff I don’t know, because bad regulatory policy should not be a partisan issue. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [July 30, 2015, 8:30pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/34 "2015-07-30T20:30:14Z")
Nothing wrong with regulatory policy, unless it limits the creative energies of investment bankers to create new and exciting investment vehicles. Lizzy Warren wants them to return to the days of bankers being all boring and secure, but how then could they afford to support the lifestyles of their upper management, the style to which they are accustomed? Not to mention a swarm of bright young MBA’s, eager to slice a very good living out of the small investor. ---
**Author:** ![up\_the\_junction](https://avatars.discourse-cdn.com/v4/letter/u/f1d935/32.png) [@up\_the\_junction](https://boards.straightdope.com/u/up_the_junction)\ **Post date:** [July 30, 2015, 8:38pm UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/35 "2015-07-30T20:38:30Z")
The lesson is - conservative, liberal, left, right, inside out - don’t get into bed with the Germans. ---
**Author:** ![camille](https://avatars.discourse-cdn.com/v4/letter/c/22d042/32.png) [@camille](https://boards.straightdope.com/u/camille)\ **Post date:** [July 31, 2015, 8:37am UTC](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447/36 "2015-07-31T08:37:20Z")
**Deal or No Deal?** New article by Frances Coppola in _Forbes_: [**The Wheels Are Already Coming Off The Greek Deal**](http://www.forbes.com/sites/francescoppola/2015/07/30/the-wheels-are-already-coming-off-the-greek-deal/) Seems that there is something of a power struggle going on between the Eurogroup (or at least the German finance minister and his supporters) and the European Commission. President Juncker is hugely relieved that there is a deal: Wolfgang Schaueble is still pushing for Grexit, by fair means or foul. I’m not sure which one I would back to win. Also, according to [Peter Siegel at FT](http://blogs.ft.com/brusselsblog/2015/07/17/who-will-pay-for-greeces-new-e86bn-bailout/), there’s a funding shortfall of 24bn Euros, so they can’t proceed without the IMF. Will the IMF cave and bend the rules _again_? Political partisans, place your bets. [Previous page](https://boards.straightdope.com/t/greek-debt-crisis-a-conservative-or-liberal-economic-lesson/726447.md?page=1)