Greece’s dysfunctional, disastrous, and devastating political and economic tale can be likened to the classic 1950 picture, The Last Holiday, starring Alec Guinness. A middle-class salesman learns that he has only six weeks left to live, so he decides to cash out his savings, purchase new clothing, and spend his final days at a luxurious seaside resort. He then discovers that he was misdiagnosed by his physician, but Guinness dies anyway in a freak car accident. That is a Greek tragedy that sums up the situation in Athens of the last decade: death, no death, and, finally, death.
Hello, Mitsotakis; Goodbye. Tsipras
Fed up by European Union intervention and disappointing economic results, Greek voters took a chance on opposition conservatives New Democracy and Kyriakos Mitsotakis. What did they have to lose?
Kyriakos Mitsotakis
Mitsotakis and his party captured just under 40% of the vote for 158 seats, compared to the 31.6% that incumbent Prime Minister Alexis Tsipras and his Syriza received, good enough for 86 seats. Other parties that made the 3% threshold to serve in the 300-seat parliament were the center-left Movement for Change (22 seats), the Communist Party (15 seats), far-right Greek Solution (nine seats), and the new MeRa (nine seats). Golden Dawn, described as a neo-fascist, neo-Nazi party, fell short of the 3% mark.
New Democracy will form its fifth government since 1974.
The new prime minister said that he has been given a strong and clear mandate from the people, promising fewer taxes, more investments, and tough-on-crime policies. Speaking in a televised address, Mitsotakis stated that “a painful cycle has closed” and “a difficult but beautiful fight begins.”
So, can the newly elected prime minister make Greece great again? Or is this just another act in the Greek tragedy?
Stewing in Greece
To understand Greece’s future, it is important to look at its debt crisis from 2009.
Greece’s economic downfall is another case study in modern socialism. Though its destitution and despair are not on par with other socialist landmarks of the 21st century, Athens was on the brink of annihilation in the fallout of the Great Recession. The budget deficit topped 15% of its gross domestic product (GDP), the bond market crashed, the banking system was in shambles (still is!), and lavish pension payments became too much for the government to handle.
The European Union, Germany, and major banks lent a hand, but their bailouts came at a price: Greece had to embrace austerity, or fauxterity, as some libertarians called it.
This was a prescription of spending cuts and tax hikes that destroyed the economy. But the public refused to accept even a nostrum that might cure the country’s ailments. Suffice it to say, the public was not happy, turning to riots and anyone who promised the easy way out. Yet, even these Mephistophelean power grabbers could not combat the forces of basic finance and economics.
Burdened by exploding debt and unemployment, various governments and leaders had no other choice but to reduce pension benefits by 1% of GDP and raise contributions. Considering that half of the country depended on a pension income, the measure ignited a firestorm of frustration and animosity.
In the years following, political upheaval has been the norm amid innumerable austerity measures that never seem to be enough for the EU brokers. At the same time, debt ballooned, the banking system became volatile, and unions paralyzed the economy. Things have somewhat improved in the last couple of years, mainly through privatizing, selling off non-performing loans, reforming entitlements, and making union strikes more difficult to hold.
Is this enough to achieve growth? The economy is advancing at a modest annual clip of 1.3%, the budget is in a tepid surplus, and the government is covering the interest on its debt. To juxtapose these positive trends, here is what life in Greece looks like today:
- Banks are still saddled with bad debt.
- Federal spending accounts for half of GDP.
- The black market represents a quarter of the economy.
- Unemployment is at 18%, and part-time jobs dominate the labor market.
- Bureaucracy stalls commercial investment.
- More Greeks are evading taxes because of high rates.
And that is just the tip of the moussaka.
Perhaps Mitsotakis can take Greece to the next level by implementing real change, not espousing empty rhetoric that tickles the voters’ conservative bone before breaking it into 12 different pieces.
A Moutza to Brussels
Conservative campaigns now consist of promises to cut taxes, not spending. Candidates say that lower taxes will grow the economy, which will be enough to cover the nation’s tab. This rarely happens. Sure, the economy roars and revenues balloon, but the final tally fails to pay the bills.
This is what the New Democrats must do: Implement across-the-board tax cuts, complemented by across-the-board spending reductions. It will spark public outrage, but these efforts are important for the long-term health of Greece.
There are other realpolitik proposals that the prime minister could consider. One is to emulate Switzerland, a European economic powerhouse that is not beholden to Brussels but still trades side by side with the trade bloc.
Then there are other measures to mull over:
- Ditch the euro, exit the EU, and adopt a gold-backed currency (drachma).
- Decentralize the bureaucracy, outline property rights, and remove judicial obstacles.
- Impose free-market banking; distinguish between loan outfits and depository banks.
- Ramp up repayments to the EU to avoid bowing down to debt masters for the next 50 years.
- Gradually phase out benefits and mirror policies of Sweden (privatize pensions).
Perhaps a good old-fashioned Greek moutza to the rest of the world would suffice, too. Who knows?
What Would Sophocles Say?
When musing on Greece, one cannot help but turn to the works of Sophocles, who wrote, “Yes it will be a grace if I die. To exist is pain. Life is no desire of mine anymore.” Greece has abandoned any semblance of a pro-capitalist culture, choosing instead to rely on anti-capitalist hypochondriacs in all parties who break out into epileptic seizures at the mention of shrinking the state, instituting market reforms, and ditching Brussels for fear of poking the socialist spirit that lives within most Greek voters. The New Democracy might promise a new economy, but Greece will inevitably return to its tragic roots, leaving a population to paraphrase Sophocles once again: It is better to have never been born than it is to suffer pain.
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