Friday, December 14, 2012

We're All Greeks Now and it's a War Between the Parasitic Public Sector and the Plundered Private Sector

Greece, from the birth of Western Civilization to the death of civilization, is a study in contrast and history.

The Greeks legitimately lay claim to one of the world's oldest surviving civilizations. It's a fascinating and tumultuous history full of wars, empires, conquests and much more. During the 20th century the Greeks endured civil war, monarchy and eventually settling on a democracy of sorts, a situation fairly similar to all European nations. At the end of the day the Greek are no different than anybody else - they are just people trying to survive in a world gone mad. What makes the Greeks unique is that while their situation is not necessarily historically unique, Greece is the first western nation to literally implode financially and politically, a fate that many predict will ultimately fall on most western nations as a result statism and fiat central banksters.

Greece is at the end of its rope. It indebted itself on a massive scale to sustain its socialist paradise and there is no way the debt can ever be repaid without making the deeply impoverished citizens of Greece debt slaves for all eternity.

The ancient Greeks may have invented the genre of tragic/comedy theatre but thousands of years later, the Greeks are still living it and cling to its national dysfunction as a badge of honor.  Although Greece is constantly in the headlines because it's a bankrupt basket case, this week the Greek drama is focused on its proposed tax increases that will impose the maximum tax rate of 42% on those earning $55,000 a year.

Greeks earning 42,000 Euros to be taxed at top rate under plan
ATHENS, Greece (AP) — Greeks earning more than €42,000 ($55,000) per year will now be taxed at a new top rate of 42 percent, under a major new tax reform bill submitted to the country's parliament late Thursday.
Greece is a mess because of its public sector unions that dominate political power for the exclusively benefit of its thieving public sector. The situation is so bad that even the obsessively liberal, statist and labor union loving New York Times chirped in to complain about the thieving Greek public sector.

The Cost of Protecting Greece’s Public Sector
For generations, political power in Greece has been based in large part on providing public sector jobs in exchange for votes....

Though it was very rare for a government worker to be dismissed, this did not stop politicians from continuing to hire supporters — feeding a bloated, inefficient and expensive public sector that was accountable to no one.

So today, for every seven private employees who have been laid off, only one has left the public sector. This leaves fewer and fewer workers in a country where the unemployment rate now hovers around 25 percent to pay the taxes that provide the salaries for the people who work for the government.....

The expansion of Greece’s huge government sector took decades to create, but its growth in recent years has been particularly striking. Public employment grew by fivefold from 1970 through 2009 — at an annual growth rate of 4 percent, according to a recent academic study by Zafiris Tzannatos and Iannis Monogios.. Over the same four decades, employment in the private sector increased by only 27 percent — an annual rate of less than 1 percent.

“Instead of shrinking the bloated government apparatus and making it more efficient, New Democracy and Pasok hardly even touched it,” Stefanos Manos, a former Greek finance minister, said in an interview with Frankfurter Allgemeine in June.

Wages in the public sector were on average almost one and half times higher than in the private sector.

In the past, a more productive and expanding private sector could have withstood — to a degree — the financial drain of a costly and profligate public sector. Today, shielding the public sector is no longer an option, especially when it comes at the expense of the rest of the population.
Indeed it is refreshing for newspaper like the NYT to honestly report on the destructive powers and growth of public sector labor unions. The issue has been in the closet for way too long and needs to come out of the closet for a real debate because because suffering taxpayers can no longer afford their outsized wages and benefits.

In his outstanding book, Boomerang, Michael Lewis was spot on in his analysis of Greece that also accurately portrays most problems in nations with powerful public sector unions. Lewis said "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 piƱata 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.”

The Economist chirped in on the severity of the situation which is far more complicated than a mere localized capital vs. labor dispute. Even the statist and socialist leaning Economist observed that public sector unions have been literally feasting at the expense of the much lower paid private economy that, incidentally, works to pay the taxes that feeds the bloated public sector.

The battle ahead
LOOK around the world and the forces are massing. On one side are Californian prison guards, British policemen, French railworkers, Greek civil servants, and teachers just about everywhere. On the other stand the cash-strapped governments of the rich world. Even the mere mention of cuts has brought public-sector workers onto the streets across Europe. When those plans are put into action, expect much worse.....
People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else's expense...
The public sector unions have become a noose around the necks of government and taxpayers, as well as economic growth and prosperity. Socialist governments everywhere bred them, fed them and now are faced with the abject horror that nobody can afford them. For public sector unions, it's austerity for everybody except for them. The dual edged sword of socialism for public sector unions and banksters will continue to impede economic recovery while intensifying the misery of economic decline and stagnation. In fact, together they definitely have the power to guarantee the death of economic prosperity in the West.

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