- Gwyn Morgan, Columnist, Troy Media
The failure of Greece’s small economy would be internationally irrelevant if it weren’t for Euro-egotists such as French President Nicolas Sarkozy, who can’t bear the indignity of letting one of their own drown in dysfunction.
But for the wise who learn from the mistakes of others, here is the Greek six-step formula for failure:
1. Accept a downward slide in ethical values and principled behaviour. Greece ranks a dismal 3.8 out of 10 on Transparency International’s 2009 Corruption Perceptions Index. (Canada and Australia are tied at 8.7.)
2. Implement tax and social programs that discourage the efforts of those who contribute to society but encourage those who live off the efforts of others.
3. Follow socialist policies that involve government in business ownership and tilt the playing field against private enterprise. Impose a maze of bureaucratic red tape that impedes the establishment and operation of legitimate businesses. Pass rigid labour laws that discourage full-time employment by making it very costly to lay off workers. The World Bank assesses Greece to have one of the least hospitable business environments, ranking 109th. (Canada ranks 8th.)
4. Build a bloated public sector that dominates every aspect of life. Ignore debt and deficits as some sort of capitalist concept, and hand public sector unions the monopolistic powers to extract higher wages, shorter working hours and extravagant benefits well above those of private-sector workers.
5. Discourage employees who strive to work responsibly by tolerating slothful, uncaring performance in others. Public employees in Greece complain that as few as one in five actually care about doing a good job.
6. When the whole mess hits the financial wall, deny responsibility and blame “speculators” rather than recognizing it’s your policies that have turned the country into a debtor to whom only a fool would lend.
Payback time
In the euro zone, Greece, Portugal, Spain and Italy may be farthest along the path to self destruction, but some or all elements of the failure formula are also endemic in every other developed country. Reaction to the financial meltdown has unleashed activist politicians who believe big government is the solution. An explosion of stimulus spending and corporate bailouts, combined with falling revenues, have pushed national debt-to-GDP ratios into uncharted territory, while social program costs that were already unsustainable before the crisis continue to climb.
The West’s fairy-tale period of global prosperity, driven by ever rising real estate prices and debt-funded purchases of Asian consumer goods, was a Faustian bargain. Now it’s payback time.
Declining birth rates, combined with aging populations, mean fewer workers contributing to public revenues while social program costs escalate. Debts and deficits must be brought under control with serious cuts to public spending. Failure to do so will bring many more countries to the edge of the same abyss that Greece totters on today.
And that abyss isn’t just an economic one. The violence in Greece may well herald an even darker outcome. A desperate Athenian shopkeeper, explaining to reporters that her windows had been broken three times by government union demonstrators, pleaded, “What have I done to make them want to destroy my living?”
For her and other private-sector workers who endured job losses and wage cutbacks while public-sector workers maintained their jobs along with generous working hours and compensation, this kind of behaviour is akin to rubbing salt into an already raw wound. It’s a wound that’s present in essentially every Western country and in reacting to the reality of unavoidable spending cuts, public-sector unions would be wise not to deepen the resentment they have earned.
The Canadian government has signalled the time to rebalance the books is nigh, and union leaders are already posturing for battle. A recent poll shows a substantial majority of Canadians agree that major public-spending reductions are necessary, but even Canada’s relatively healthy books can’t be balanced by simply cutting programs. Private contracting of publicly-funded services is the only way to gain cost efficiencies and reduce union monopoly power that has all too often held Canadians as strike-bound hostages. In other words, introduce what private-sector workers face every day and what unions fear most: competition.
The failure formula
Canada is one of the world’s best places to live, but if you ask the average Canadian what distinguishes us from countries that are not, it’s unlikely that they’ll list any elements of the failure formula.
Besides plans to cut public spending, the Conservative government’s new budget contains business measures that include a further easing of tariff barriers and red tape reduction. Yet these important measures were lost in media and public reaction to a suggestion that a couple of words in our national anthem might be changed.
Democracies work when people have a basic understanding of what’s needed to build a successful nation, and what can destroy it. The Greek tragedy provides a valuable lesson for those willing to learn.
Gwyn Morgan is the retired founding CEO of Encana Corp.
