Thursday, March 25, 2010

In today's WSJ, Marcus Walker and Alessandra Galloni outline the European Union's current struggles with Greece, organized labor, and infighting amongst union members.

Greece's primary struggle centers around bringing to heel its massive government debt.  Steps towards this end have been termed 'austerity measures' by the global media.  Multiple steps are under consideration, but perhaps the greatest in magnitude and most controversial is the slashing of benefits and pensions given to the country's current and former workers.  Nationwide protests greeted the measures as thousands of unionized labor participants poured into the streets and deemed the austerity measures as unfair or even unnecessary (by those who understand little about how economies work).

Cutting government entitlements in order to prevent economic collapse does not seem protest-worthy.  To put another way, protesting against the economic survival of your own nation seems reprehensible and unfathomable.  For this reason I cannot accept that the average protester understands that maintaining their benefits, pensions, and jobs will come at the expense of the entire nation's economy and result in Greece expulsion from the EU.
Walker and Galloni rightly point out that Europe has a choice to make.  The EU can choose to create a society with broad and generous social safety nets and sacrifice economic growth, or they can cut spending on pensions, benefits, and social programs.  The term 'austerity' brings something harsh to mind, but harsh measures are exactly what walking countries like Greece back from the edge of economic abyss requires.  Countries in socialist-leaning Europe will need the willpower to break the back of organized labor.

The following excerpt from Walker and Galloni's article represents the thinking prevalent in many European workers:

Even in France, some erstwhile oppoents of reforms are changing their tune.  Julie Coudry became a French household name four years ago when she helped organize huge student protests against a law introducing short-term contracts for young workers, a move the government believed would put unemployed youths to work...Today, the 31-year-old Ms. Coudry runs a nonprofit organization that encourages French corporations to hire more university graduates.  Ms. Coudry, while not repudiating her activism, says she realizes that past job protections are untenable.  "The state has huge debt, 25% of young people are jobless, and so I am part of a new generation that has decided to take matters into our own hands," she says.  "We've decided that we can't expect everything from the state." 

Let's hope America's youth never get to the point where they have to decide that the state isn't their provider.


brian said...

This is a question concerning the protest taking place in Greece.

Prof G what might the outcome be for the economic stability of the Greece if they were let out of the EU?

Also, if Greece left the EU what effect do you feel it would have on the value of the Euro?

Michael Garrison said...

Hey Brian, I think the consequences would be pretty severe. The EU would only kick Greece out of the union if their economy was in absolute tatters.

Michael Garrison said...

Also, Greece does not want out, they desperately want to avoid leaving the Union.

Tony said...

Tony Robertson here,

Just briefly, I think the main problem that the protesters, and more broadly the citizens of socialist countries, have is exactly what you alluded to: Their disregard for the relationship between cause and effect. Most people who support socialist policies or regimes simply do not do enough analysis of their situation to understand that they are literally destroying the very thing that their lives depend on. All of the things that a person's life depends on (food, clothes, shoes, housing, water, transportation, and on and on) are created by men whose goal is to make a profit: The Capitalists. Capitalists can only do what they do in the absence of force being used to control their economic activity, whether that be by the government or a looting gang (sometimes you cannot tell the difference). But it is precisely socialist policies, policies that give the government the power to regulate parts or the whole of an economy, that stop the capitalist from being able to produce the things that the socialist needs to loot from him to survive. If they would just read that story about the goose and the golden egg, all would be well.

Tony said...

And as an aside, I think the majority of kids growing up now are being taught that it IS the state's job to provide everything for them. They see their parents getting cars, houses, food, education, and medical care from the government. Unless someone teaches them otherwise of they manage to think for themselves, what else are they to believe?

Tony said...


Michael Garrison said...

Tony, thanks for the comments. As usual, you explain the role of free enterprise in a society well, and remind us that goods are not produced in a vacuum, but are produced when one feels that such production will be rewarded.