You Can't Always Get What You Want.

July 7, 2015

I saw her today at the reception
In her glass was a bleeding man
She was practiced at the art of deception
Well I could tell by her blood-stained hands
You can't always get what you want
You can't always get what you want
You can't always get what you want
But if you try sometimes you just might find
You just might find
You get what you need
-You Can't Always Get What You Want, The Rolling Stones
. . .
Living in Spain in 1993, I was treated to one of the richest literary feasts I had ever experienced. A friend lent me a copy of Nikos Kazantzakis's ephemeral tale, "Zorba the Greek." I would draw from the book's effervescent lessons on love and life for years.
The story follows an unnamed narrator who befriends a working Greek named Zorba. A passionate lover of life, Zorba leads the narrator to a lignite mine in Crete. There, the two settle down and experience Crete from vastly different though rapidly converging vantage points. As Zorba, embracing all that life can offer, teaches the narrator the meaning of humanity.
Eventually, I left Spain. Met the girl who would become my wife. Years later, we went to Greece. Partially due to the lush lessons from Zorba, still extant, in the core of my being.
Zorba, libertine though he was, would loathe the zugzwang in which his countrymen now find themselves.
Sunday, Greece voted against the European Union's austerity package. A vote that, despite the media's apocalyptic fixation, represents the rather banal end of another era. The failure of Greek and pan-European socialism.
As the Greek government ran out of other people's money, it was forced to fess up to that which should have been said in 2010. It could no longer collect enough from the haves to distribute and pacify the have-nots.
The Greeks want that which is desired by all American middle class high school kids: An existence devoid of hard work, yet replete with creature comforts. [Also see: free ride]
As the Stones have long crooned, you can't always get what you want.
Every part of the world in which they have taken root, the ultra-left leanings -- like those that long stewarded Greece -- failed. The leftist logic touted by academics like Paul Krugman and Joseph Stiglitz imploded. And with it, the belief that so long as a country can borrow and spend, there will be economic multipliers that buoy employment, add wealth, and stimulate growth.
These recidivist offenders and their Ground Hogs Day-like education -- occurring over and over again -- would be laughable, were not so many people suffering by their hands.
When the cradle of democracy was enjoined with the Eurozone in 2001, it was given a chance for financial rectitude. Interest rates were lowered on Greek debt. Even as the economy stabilized. Greek leaders might have used the nation's windfall to deregulate, privatize and cut spending. But, they did not. Choosing, instead, to pass out more freebies. While receiving political and intellectual cover fire from academics and intellectuals the world over.
Let not the interminably profligate spill tears over wasted opportunities. Lest they spend all their days in mourning.
Now, the bill has come due. The Greeks -- addicted to the largesse and handouts of a bygone era -- boldly defied the ECB, IMF and Eurozone governments. Who happened to be the only stooges still willing to lend to them. By refusing to downsize their bloated public sector. Oh, and still they expected more bailout money.
Eventually, spoiled children get spanked.
Greece. Detroit. Chicago. Puerto Rico. Each leveraging the same cauldron of confiscatory taxes, hyper-regulation and redistribution intended to buy votes. Each now faces the unintended consequences of enfeebled private sectors too small to continue nourishing a vampire-like public sector.
Ultimately, political systems that siphon money from the productive in order to buy votes and support the less productive will die. Once the productive citizens find the benefits of membership exceeded by its costs, they will look elsewhere to ply a trade and invest their capital. As evidenced by the billions of dollars that left Greece immediately before this debacle.
The entire episode is unified by a collapse in the critical thinking faculties of the EU's leadership. The austerity programs forced upon Greece in 2010 by its Northern European overlords were unrealistically severe. One cannot expect the inhabitants of a small, Mediterranean nation who had mastered the art of tax obfuscation to open-armedly accept such caustic measures. In fact, one would hardly be surprised had they taken up arms.
The forces at work in Greece? You seen them before in both Chicago and Detroit. In 2005, Chicago sold its Skyway Toll Road to a foreign investment consortium. Ten years later, the city's unfunded, over-indebted pension funds continue to force the Windy City onto a debt-laden precipice. Any slight breeze capable of forcing it into the same fate as its debt-beholden cousin, Detroit. Forced into bankruptcy in 2013, Detroit completed its devolution from one of the nation's largest economies into one that couldn't afford to fight fires or police its slums.
Detroit, Chicago, Puerto Rico and Greece. Keynesianism failed all three. Like any household, business or nation state, the laws of economics require more revenue enter than exit. A concept so easily understood that my sons -- with their aggregate age of 20 -- can comprehend.
In 2007, driving past a Best Buy, I watched a salesman helped a customer load a massive flat-screen television into the back of a rusty pickup truck. Right beside the dog. And behind the three kids. Perhaps it was the bumper sticker, reading, "My German Shepard is smarter than your honor student." But, I was reasonably sure in my assessment that the purchase of that flat screen was neither necessary nor discretionary.
Point is, Detroit, Puerto Rico, Chicago and Greece can all be analogized to that pickup truck. Sloppily spending funds they don't have on things they don't need. Which can only bring insolvency.
The Greek crisis is the prototypical test case envisioned by both Friedman and Hayek -- notable non-Keynesian economists -- in their stated skepticism over the practicality of a pan-European monetary union. Too many competing interests. Disparate philosophies. Simmering tensions.
The Greek economy represents only 0.39 percent of global GDP. Greece's failure will not wreck the global economy. It is smaller than Detroit. And the U.S. economy barely noticed as Detroit's socialist laboratory fell apart. Why should Greece be different?
There will, however, be collateral damage. Though not to the global economy. The fallout shall be incurred by the Greeks. Who should be apoplectic over how their government handled the bailout negotiations. Having put all of their livelihoods at risk. Greece's economy has shrunk by 25 percent these last five years.
Greece becomes the first developed economy to ever default on an IMF loan. The only two nations to do so previously? Cuba and Zimbabwe. Not exactly the sort of fellows a young lady might care to bring home to dad. Especially if dad were an economist.
The lesson gleaned from all this mayhem? The U.S. economy continues to grow. Americans need only look to Greece to view the ample carnage left by the failure of yet another socialist ideology. Throughout history, Americans have shown an ability to change course when faced with failure.
Were this the beginning of a course change? Then not all the news is bad.

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