It is not the welfare state that made Greece go bust
Published by MartinVarsavsky.net in Economy with No Comments
There is a myth going around that Greece went bust because of the size of its welfare state. And the extension of this myth is that sound finances are incompatible with a sizable welfare state. That it is the welfare state itself that is making other countries such as Spain and Italy approach bankruptcy. But this is not true, many European countries have a bigger welfare state in relation to GDP. Greece did not go bust because of the size of its welfare state in relation to GDP but because of the size of its debt in relation to GDP. Countries can choose to be more or less socialist. What they cannot choose is to be socialist when they can’t afford it. Nordic countries are more socialist than Greece, but they provision for their generosity.
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Mike Tommasi on June 29, 2012 ·
and here in France we are expanding social programs precisely thru debt…
Re corruption, in Italy where I come from (and probably in Argentina where my mother comes from), corruption is a way of life. The best way to escape prosecution in Italy is to get elected and benefit from immunity. The cherry on the cake is that a seat in the Italian government will not only save you from prison, it also is the highest paying job you can get (highest pay of all EU governments) if you are totally incompetent, and that pay is nothing compared to the graft that you can manage in total impunity while getting 20 grand salary. All this saps the country of opportunity and finance.
Doug on July 5, 2012 ·
It is also helpful to remember that a lot of those “socialist” countries are actually more business friendly than the United States and other more “capitalist” countries.
Mike Tommasi on July 5, 2012 ·
Doug, France and Italy are governed by the right, but remain “socialist”, and extremely business-unfriendly. Not just government, that tries to kill your business before it is born, but business people are also profoundly conservative and suspicious of startups. In Italy you cannot, I repeat, you cannot fire an employee; this socialist measure makes it very hard to find a job – so much for socialism.
OTOH Sweden is also socialist, but in a serious practical way, I compare it to Canada. People don’t really mind paying taxes, because they get good value: everything works reasonably well, health care and education is good and free, services function properly. And they don’t have any of the soviet style socialism of southern Europe. As a result they have prosperous economies, even during this crisis.
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Elradioplanner on June 29, 2012 ·
You are right, but there is another component: corruption. Political corruption (and I am not talking just about those that steal public money, but also about those that are wasting money to keep themselves at the government or for the profit of friends…) and moral corruption of the people that don’t think of public money as the common money of all us.