There's a lot we can learn from the Greeks

 

Although most Americans and Europeans cannot fathom that they might someday become Greeks, the upside to the Greek tragedy is that the Greeks themselves are proving that folks can indeed survive tough economic times.

Greeks Adopt Alternative Currencies as Economy Implodes As Greece’s economy and the euro continue to struggle, regular Greeks are increasingly taking matters into their own hands, creating informal underground barter markets and even alternative currencies. And the government is actually encouraging it. Over a dozen non-euro trading networks are already believed to be operating in communities throughout the embattled nation, with more on the way. But one effort in particular — called Local Alternative Units, or “TEMs” in Greek — has attracted a great deal of international attention. In the port town of Volos — where unemployment is above 20 percent, the economy is struggling, and tax rates are rising — a group of locals decided it was time to take action. The population still had the same skills and resources as before the crisis, just not the euros needed for commerce. So, a handful of people got together and formed the alternative currency known as the TEM. It quickly took off. And major newspapers and media outlets around the world — from the United States to the United Kingdom — have taken notice as it continues to expand.  Read more here.

As government and social services break down, misery is acute but the human spirit to survive is also very much alive. John Henley, journalist for The Guardian, wrote "A determination to 'move beyond anger to creativity' is driving a strong barter economy in some places." Bartering, underground economies and the will to survive are leading the transition from dependency to self-sufficiency. The underground Greek economy is substantial and it's been estimated to be as high as 50% of all economic activity. Of course, American bureaucrats absolutely cringe at the notion of a strong underground economy and Paul Solman of PBS wrote "If you think there's been a tax revolt in the U.S. -- or even California -- consider Greece. The estimates we've heard, from the sources that seem the most reliable: 40-50 percent of the Greek economy is underground. i.e., untaxed." The Greek government isn't overtly interfering with underground economic activity because it's paralyzed and powerless.

The Greeks just didn't accidentally fall on hard times. They created the nightmare they are living by acquiring mountains of debt to fuel its socialist cradle to the grave paradise. Greece isn't anywhere near out of the woods and it's got hugely powerful public sector labor unions who are largely responsible for bankrupting the nation. Michael Lewis summed up Greece accurately in his book Boomerang.

As it turns out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past twelve years the wage bill of the Greek public sector has doubled, in real terms – and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a years. Twenty years ago a successful businessman turned minister of finance….pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension…..and there isn’t a single private company in Greece with that kind of average pay.”

What have the Greeks learned? More importantly, what can we learn from the Greeks?