Bad move, Greece

9

THE ongoing Greek debt saga may yet take a surprising turn or two, but as it stands now, it appears the people of Greece have made a tremendous blunder that will have tragic consequences.

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Most of the rest of the world has offered approval for the Greek voters’ rejection of further austerity in exchange for debt relief from the European Union. The vote on the referendum called by Prime Minister Alexis Tsipras after the most recent collapse of negotiations was seen as a triumph of democracy: Even though they may face hardships as a consequence, the people stood up to outside oppressors attempting to dictate how Greece manages its sovereign affairs.

That is a very stupid point of view for the Greeks or anyone else to take. The rejection of the demands of the EU and the IMF was a mistake, and the fact that it was arrived at through a democratic process does absolutely nothing to rationalize it.

Going it alone
Greece, in effect, has said that if the rest of Europe will not help repair the country’s finances on Greek terms, the country is prepared to go it alone. The trouble with that brave but foolish attitude is that the Greeks themselves are to blame for their own economic mess, and are not very likely to be willing or able to carry out the drastic structural changes necessary to clean it up.

At the end of last month, two articles – one in The Economist, and one published online by Forbes – succinctly summarized the problem with Greece: An inefficient bureaucracy plagued by nepotism, an inconsistent, glacially-slow justice system, badly-run, loss-making nationalized assets, and oligopolies entrenched in key industries by laws that restrict competition and new entrants.

Some commentators here have pointed out that these characteristics are disturbingly familiar. The reason why Greece ran into trouble while the very similarly managed Philippines has not is because much of Greece’s debt was incurred in maintaining social safety nets: Subsidized prices, wage controls, low- or no-cost health care and education, various forms of financial welfare, and so on. The Philippines has very little in the way of comparable safety nets, and thus does not have to pour money into keeping its population content in the same way Greece has for generations.

No sovereignty issue for PH
That presents an entirely different set of problems for the Philippines, but one problem it does not create is a reduction of sovereignty through debt; foreign or transnational creditors do not have the same sort of claim against the Philippines as they do Greece, and as a consequence do have the legitimate position to demand changes in the way the country is governed. How the country is governed will have little to no impact on any other country’s economic well-being, so if the Philippines wishes to exercise its democratic prerogative to maintain an unjust and unproductive system, there is little anyone else can or should be allowed to do about it.

Greece, on the other hand, because of its huge debts puts public and private creditors at considerable risk, and consequently gives those creditors the right to demand changes – after all, that’s exactly how the bankruptcy process works. The Greek people should have never been allowed to choose, because Greece is not the only one affected by their decision.

The proper course of action at this point would probably be to eject Greece from the eurozone. The Greeks do have the right of self-determination, just as any democratic society, and they have the right to make stupid decisions – so long as the consequences of exercising those rights only affect them.

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9 Comments

  1. Chino is right. Yoko is not a Filipino and he doesn’t anything about the suffering of Filipino people. the Philippines has nothing lose to start with compared to the better lives and high living standard of the Greeks since time immemorial. Greece economy is among the highest in the world and the Philippines economy is a west orchestrated economy that Greece rejected in their recent referendum.

    Greece ranks above the average in health status, work-life balance, and personal security, but below average in education and skills, income and wealth, civic engagement, housing, environmental quality, subjective well-being, social connections, and jobs and earnings.

    In terms of employment, some 49% of people aged 15 to 64 in Greece have a paid job unlike their Filipino counterparts whose salaries were below poverty line.

    Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Greece, the average household net-adjusted disposable income per capita is US$ 18,575 a year.

    Congrats to the Greeks for fighting the imperialist west political domination and economic subjugation.

  2. Arch.Lito L. Mallonga on

    I fully salute Greece on what they did. Never to be pressured by
    anybody on the way they run their government. Just too bad that
    the Farmers has been taken for granted by those big Corporations.

    As for the Philippines. Do you think we would have survive if not
    for the remittances send by most of the OFW’S and Filipinos
    abroad . I do not want to say it but its the real truth anyways.

  3. There we are: Instead of taking Greece as example of people rejecting a prohibitive and partly also illegitimately incurred debt, leading to deep social cuts, to massive exit of the productive force and to cementing poverty – the Manila Times is even proud that the Philippines is not “maintaining social safety nets: “Subsidized prices, wage controls, low- or no-cost health care and education, various forms of financial welfare, and so on. The Philippines has very little in the way of comparable safety nets, and thus does not have to pour money into keeping its population content.”
    Such can only come from the feather of a well off upper-middle class not affected by public poverty, as they can afford to pay for education and health services from their own pockets. Outright classism!

  4. An inefficient bureaucracy plagued by nepotism, an inconsistent, glacially-slow justice system, badly-run, loss-making nationalized assets, and oligopolies entrenched in key industries by laws that restrict competition and new entrants. HHMMMM sounds like a description of the Philippines!! Beware folks.

  5. “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no
    motherland; financiers are without patriotism.”
    Napoleon Bonaparte

    The Greeks should have been aware of bankers creating rifts, and the IMF bearing gifts.

    Their problems started by cooking the books in order to join the euro, then when the extent of their deficit became apparent, by promising reforms in exchange for the first bailout. Europe soon learnt – never trust a greek ( Greeks don’t even trust each other when it comes to money)

    With typical short sightedness many greeks went from horse and cart to Mercedes in 10 years on the back of spending other peoples money. Now the repo men are about to turn nasty.

    Greece never had a european dna, and ideologically is more aligned to the east, and to Russia. It followed what it thought was a path to ‘easy money’.

    It was always regarded as the ‘basket case’ of europe, and was strong on emotion, long on talk, but weak in action and short on achievement.

    The cultural similarities with the philippines should also not be lost on filipinos, particularly within the future ASEAN context
    – low standard of living/agriculture based
    – short termism/lack of planning
    – tax evaders/non payers
    – corruption
    – financial and budgetary irregularities
    – victim mentality/blame others
    – bureaucratic incompetence
    – political naivete/poor leadership
    – isolationists
    – status driven/class conscious
    – import dependent
    – lack of home grown innovation
    – brain drain

    To restore the Greek economy is a task akin to cleaning the Aegean stables, but without Hercules to assist.
    Or Sisyphus pushing his rock uphill.

    As Icarus, and any banker knows – keep kiting and you eventually fall to earth. ( as chinese investors are also currently discovering)

    At least Greece still has its islands!

    • brain drain?
      this is the main reason why ph still afloat and became a creditor from a deptor as per imf. perhaps, the greeks have no brain to drain..
      last time i checked, a certain first world country in eu had drawn almost half a billion dollar from ph fund through imf. not bad for a basket case such as ph..
      who knows sooner or later another greece type story would follow. isn’t it farfetched?

  6. Way I see it, Greece had a lot to lose, and it did lose a lot. The Philippines on the other hand has nothing to lose, because it has nothing. Perhaps in a way, it’s already on a level of default like what Greece is just entering. Greece still has space to fall down, but the Philippines has nothing to fall onto.

    • Chino, you must be out of your mind. The Philippines has a much stronger economy and are not subjected to the same amount of humongous debt as Greece does. The Philippines has a huge population, resources and work force compared to Greece and are not encumbered with unsustainable social programs. Basa basa din pag may time.