A day of reckoning for ‘gimme’ nations
STEVE HUNTLEY email@example.com June 14, 2012 7:00PM
German Chancellor Angela Merkel talks to Slovenian Prime Minister Borut Pahor at an EU summit. Merkel says the eurozone crisis can't be resolved without tackling the causes of high debt in Greece, Spain, Italy and other countries. | Frank Augstein~AP
Updated: July 16, 2012 6:23AM
The day of reckoning appears to be rapidly approaching — if not already here — for the entitlement state that has flourished in the West for half a century. And you get the sense that this rendezvous with reality cannot be postponed despite all the improvising, maneuvering and pouring of bailout money into bankrupt economies that we’re now seeing in the eurozone crisis.
A critical date is Sunday, when Greece votes again on a new government. Anxiety runs high that the radical left party Syriza might prevail on its platform of rejecting the tough austerity measures required for the country to continue receiving billions in bailout funds. That would spark a Greek exit from the euro currency of 17 European nations with unknown consequences. Already fear of a “Grexit” has sparked a run on banks there as Greeks withdraw billions seeking a safer haven for their personal finances.
Syriza is locked in a too-close-to-call race with the conservative New Democracy party, which pledges to keep Athens’ bailout commitments and prevent Greece from reverting to yesteryear’s currency, the drachma, and the economic collapse that likely would ensue.
A Syriza victory would inject an even higher sense of crisis into next week’s G-20 economic summit in Mexico. As if tensions weren’t already high enough. Last week’s $125 billion bailout aid for Spain’s debt-ridden banks hasn’t restored confidence in a country where youth unemployment has hit 50 percent. Then came word that Cyprus might become the fifth nation — after Greece, Portugal, Ireland and Spain — to seek a bailout. And confidence flagged that Italy could salvage itself from its debt crisis.
Fiscally stressed European nations resist almost anything that cuts entitlements and public payrolls. Lawmakers in Rome are reportedly backing away from reforms of economy-crippling labor regulations. France’s new Socialist President Francois Hollande has started reversing Nicolas Sarkozy’s effort to raise the retirement age from 60 to 62. And last month Greeks came close to putting Syriza into power in inconclusive elections that forced this weekend’s voting.
Greece’s spending binge was coupled with its notorious record of tax evasion. Last year, the New Yorker reported a “burgeoning market in camouflage swimming-pool covers” to hide the luxuries from tax collectors. There you see the essence of entitlement mentality — it’s all about “gimme, gimme, gimme.”
And who do the Greeks, Hollande and the left-wing masses want to give more? Generally “the rich,” specifically Germany. But the industrious, frugal Germans don’t have much appetite for paying for early retirement for Greeks or anyone else. They know their prosperity is tied to Europe — nearly 40 percent of German exports go to other eurozone states — but they also know, as Chancellor Angela Merkel put it, “We can only overcome the crisis when we tackle it at its roots, the high debt level and the lack of competitiveness in some member states.” She rightly noted Germany isn’t rich enough to pay for the excesses of profligate states.
As bad as the consequences of a Greek exit from the eurozone might be, maybe it would be a wake-up call to other indebted nations, the public sector unions in America, and liberals everywhere that the entitlement state dream of ever shorter workweeks, long vacations, early retirement and gold-plated pensions are not sustainable in any economy. “Gimme, gimme, gimme” doesn’t make economic — or common — sense.