Christine Lagarde, the French woman who heads up the International Monetary Fund (IMF), gives a clear message to the Greeks. http://www.guardian.co.uk/world/2012/may/25/payback-time-lagarde-greeks In my view she is absolutely right. In Greece we now have a crisis which is destabilizing the global economy and putting people out of work. This is on the back of spendthrift governments in southern Europe, led by populist governments from Left and Right. In the particular case of Greece we have a political culture which is by all accounts best described by a national feeling of entitlement that they are owed something for nothing. Greek small businesses routinely evade taxes. There is no stigma for denying chidden and old people life saving drugs by not paying your taxes. Somehow that is someone else's responsibility - a banker, the German Chancellor, a New York stockbroker - anyone but the Greeks' fault themselves. Civil servants lie and deceive the public and refuse to modernize. And on the back of all that they have run up massive debts consuming European imports that they can't pay for. And yet we still have economically illiterate French leftists insisting that the problem is caused by Banks (they NEVER explain how) or just merely "anglo-saxons" by which they mean British and American stock market capitalism. In France hostility to capitalism is sizable, which is remarkable for a capitalist country whose prosperity is built upon the success of their global industries. The socialists are indeed like the Bourbons. From the twentieth century they have indeed learned nothing and forgotten nothing. I am hoping mes chers amis francais will show up to this thread. You know who you are and you know I love you (see my Moliere signature). This is not to overlook Germany's place in this mess. Germany's "ordoliberalismus" has indeed been a model economic doctrine that any fiscal conservative should be happy to endorse (actually it is the true, orthodox Keynesianism, including the "balance the budget over the cycle" bit which keynes preached). Its model, combining sound public finance with a highly effective welfare state and education system, makes Germany rich, civilized, innovative and with very high social mobility, much higher than in the USA for example. The Germans endured decades of austerity after the war, built an economy on investment, long term bank financed, low return capitalism. They have famously the oldest students (subsidized) and the youngest pensioners (who can rely on state subsidies to visit health spas). The number of PhDs per capital must be the highest in the world - every bugger's a doctor, so much that you are even advised that the best way to address someone with two doctorates is "Herr Doktor Doktor". All of this points to the strength of a public/private partnership approach to economic development and socials issues. To all the denigrators of European social healthcare, publicly funded higher education, welfare safety nets etc. that we find in the USA, Germany is a powerful counterweight. Here is evidence that social democracy, on the basic of sound public finances, works. But, as Greeks must pay their taxes, Germans need to now acknowledge that the Greeks were buying German goods and that the Eurozone has created prosperity for German households based on widened markets. Merely citing the example of the Ant and the Grasshopper (http://www.civprod.com/storylady/stories/AesopFables.htm) will not do any more. Germany has let its children gorge themselves on candy. Starving the children to death is not an appropriate response. Into this walks a Frenchwoman to confound all the stereotypes. I like her. She's smart, which is the first criteria that should be used nowadays given all the blustering idiots who seem to be spouting off on all sides. In a world, particularly a Europe which is devoid of political leadership we see a former French minister with class. She even has optimism: Why can't we have more politicians like this? Bright, undoctrinaire, emotionally balanced (i.e. a woman), and inspiring a little confidence in all the gloom. http://www.guardian.co.uk/world/2012/may/25/christine-lagarde-imf-euro
If Greece doesn't have a way to force collection of taxes, then there is no hope for them. It is time for them to install an IRS.
Greece cut taxes and then was lackadasical on collecting taxes on the books. That plus generous spending created the debt crisis they now have. And the attempt and simply cutting spending -- austerity -- has resulted in a devasting economic depression. Same thing is Spain. Same thing in the US? Could be.
