Greek protesters: Ready to face reality about the debt crisis?
Greek protesters are angry and in denial. But there’s no denying the consequences of spending beyond your means.
Dear Angry Greek Protesters:
Your country is hailed as the cradle of Western civilization. This honor is justified, not least because of the unprecedented flowering there, 2,500 years ago, of that most wonderful, unique, and useful of all human abilities: reason.
Alas, your behavior over the past few days will severely tarnish Greece’s reputation as a home to reason. You are behaving childishly and thoughtlessly – that is, unreasonably.
Screaming in the streets, waving banners, and tossing homemade explosive devices at the police do absolutely nothing to address the very real problem your country faces. That problem is that your country is not as wealthy as you would like it to be. Nor is it as wealthy as your government led you (and others) to believe it was.
In short, your economic pie is too small to satisfy all of your demands. Railing madly against this reality, however, does nothing to increase that pie’s size. Resources and wealth are produced neither by angry sloganeering nor by simplistic denials of the facts. Quite the contrary.
For decades your country has lived well beyond its means. Thirty years ago, your government’s debt-to-GDP ratio was 34.5 percent. Today that figure stands at 115 percent. In other words, for decades your government borrowed money to provide you with goods and services that you couldn’t afford.
Living on credit is fun while it lasts. But reason tells us that it cannot last forever. Now that the bills are coming due, you must somehow pay them. This requirement is unavoidable.
No reasonable adult is shocked or angered when the bill for the lavish meal that he enjoyed last week arrives in his mailbox today. Paying that bill is never pleasant, but it must be done. The reasonable adult pays. He doesn’t scream in anger at the bank that loaned him the money to pay for the meal. He doesn’t blame others for his debt obligations. And he doesn’t demand that people who are in no way responsible for his decision to buy that expensive meal, and who didn’t share it with him, nevertheless help him to pay for it.
The reasonable adult also knows that if he refuses to pay his debt, he might keep a few more euros in his pocket today, but only by sacrificing his future ability to borrow. And he knows that his resulting reputation for forcing others today to pay his expenses will diminish the willingness of others tomorrow to deal with him economically.
In short, the reasonable adult doesn’t clamor for something-for-nothing. Instead, he works and saves, knowing that, over the long-run, nothing is free.
In your defense, I realize that the steady stream of goods and services that your government bestowed upon you until recently seemed to come out of nowhere. This illusion perhaps misled you into supposing that whenever government borrows to pay for goods and services, it does something fundamentally different from what private individuals do when they borrow to pay for good and services.
In fact, though, reason informs us that government, being a human institution, is subject to all the laws and constraints that bind every other human endeavor. Despite appearances, the past few decades’ massive spending of resources that allowed you to consume more than you produced has made you poorer today (for those resources are now, well, spent – gone – used up). And this deficit spending has burdened you with debt from creditors who quite justifiably wish to be repaid.
While I do not excuse your government for misleading you about its powers to spend without constraint, I cannot excuse you – you from reason’s crib – for your present stubborn and mad refusal to accept the reality of your government’s near-bankruptcy.
Your government simply does not have available to it all of the resources that are required to satisfy all of your demands.
Your only reasonable course of action, then, is to work harder, save more, and adopt wiser public policies that promote wealth creation. Chief among these policy changes is to reject the socialism that you have been infatuated with for too long now. You need greater respect for private property. You need entrepreneurship. You need competition. In short, you need free markets. Without these, you will never become more prosperous.
If you wish, of course, you can continue to deny this reality – a reality that is now slapping you in your face. But as the economist Thomas Sowell is fond of pointing out, reality is not optional. He is both right and reasonable.
Donald J. Boudreaux, a professor of economics at George Mason University, is the author of “Globalization.”