The Greek government has been trying to save its welfare state by means of austerity for three years now. The result is increasingly depressing: today the average Greek household has lost 17.40 euros of every 100 euros they earned in 2008. This massive contraction of GDP has caused a social disaster – youth unemployment, e.g., is now at 55 percent and regular unemployment is near 25 percent – with no end in sight. The latest forecasts point to yet another 3.5-4 percent contraction of the Greek economy in 2013.
Yes, the Greek economy is contracting. (That’s “negative growth” for all you socialists out there.) And this contraction feeds the vicious circle of never-ending austerity: for every new round of austerity measures the economy contracts a little bit more; for every 100 euros that the economy contracts, government loses roughly 35 euros worth of tax revenues. As a result, in the next round of austerity the government must then cover for those 35 euros in the form of new spending cuts or tax increases, which in turn leads to a new decline in GDP.
There are, in a sense, no intermissions in the Greek tragedy.
The only way to break this vicious circle is to stop trying to save the welfare state. Greece would have benefited from a structural reform package that eliminates entitlements but also cuts taxes and removes regulations. Such a package, which is easily implementable here in America, gives people a way out of government dependency and in to self sufficiency.
However, no such package is on the horizon for Greece, or for any other austerity-ridden European country. On the contrary, the economic, political and social outlook for Greece is getting increasingly desperate. The British newspaper The Guardian reports on the latest sign of a nation in rapid decline:
Greece’s far-right Golden Dawn party is increasingly assuming the role of law enforcement officers on the streets of the bankrupt country, with mounting evidence that Athenians are being openly directed by police to seek help from the neo-Nazi group, analysts, activists and lawyers say. In return, a growing number of Greek crime victims have come to see the party, whose symbol bears an uncanny resemblance to the swastika, as a “protector”. One victim of crime, an eloquent US-trained civil servant, told the Guardian of her family’s shock at being referred to the party when her mother recently called the police following an incident involving Albanian immigrants in their downtown apartment block. “They immediately said if it’s an issue with immigrants go to Golden Dawn,” said the 38-year-old, who fearing for her job and safety, spoke only on condition of anonymity.
There are many examples of how a recklessly managed economic crisis can turn into a democracy crisis. There was a lesson to be learned from the Treaty of Versailles, a lesson that would have been directly applicable to Greece if anyone had cared to pay attention. Instead, the Greek Nazis are allowed to exploit the crisis for their own purposes – with devastating results for the stability of the Greek government, and the country as such.
As the Guardian story shows, austerity policies have done such great damage to the Greek government that it cannot even maintain its monopoly on law enforcement anymore:
“We don’t condone Golden Dawn but there is an acute social problem that has come with the breakdown of feeling of security among lower and middle class people in the urban centre,” she said. “If the police and official mechanism can’t deliver and there is no recourse to justice, then you have to turn to other maverick solutions.” Other Greeks with similar experiences said the far-rightists, catapulted into parliament on a ticket of tackling “immigrant scum” were simply doing the job of a defunct state that had left a growing number feeling overwhelmed by a “sense of powerlessness”. “Nature hates vacuums and Golden Dawn is just filling a vacuum that no other party is addressing,” one woman lamented. “It gives ‘little people’ a sense that they can survive, that they are safe in their own homes.”
And this is precisely the kind of foundation that a totalitarian party needs in order to achieve its goal of replacing the parliamentary democracy. By showing that they can protect people in their homes and their neighborhoods, the Nazis effectively become a parallel government.
Much like the NSDAP used its Sturm Abteilung during the earliest years of Hitler’s rise to power. And, as the Guardian continues, the parallels to interbellum Germany are so many these days that it should scare even the most passionate supporters of austerity into rethinking their positions:
In recent weeks racially-motivated attacks have proliferated. Immigrants have spoken of their fear of roaming the streets at night following a spate of attacks by black-clad men on motorbikes. Street vendors from Africa and Asia have also been targeted. “For a lot of people in poorer neighbourhoods we are liberators,” crowed Yiannis Lagos, one of 18 MPs from the stridently patriot “popular nationalist movement” to enter the 300-seat house in June. “The state does nothing,” he told a TV chat show, adding that Golden Dawn was the only party that was helping Greeks, hit by record levels of poverty and unemployment, on the ground.
The part about “the state does nothing” is directly derived from austerity. The very point about austerity is to remove government spending without cutting taxes or deregulating the economy. The cuts take away, e.g., welfare spending, health care benefits and police protection. Since taxes remain high, though, people do not stand a fighting chance to replace what government no longer gives them with a path to self sufficiency. With enormous unemployment in the way, there are obviously no jobs available. Furthermore, between 2007 and 2010 Greece lost 42 percent of its private-sector business investments, and every indication is that the loss has continued since then.
In other words: the Greek economy is in free-fall, government is defaulting every one of its promises to the citizenry while still stifling private-sector activity, and the totalitarians are moving in to replace the defaulting government.
The Guardian gives a street view of what this means:
On the back of widespread anger over biting austerity measures that have also hit the poorest hardest, the popularity of the far-rightists has grown dramatically with polls indicating a surge in support for the party. One survey last week showed a near doubling in the number of people voicing “positive opinions” about Golden Dawn, up from 12% in May to 22%. The popularity of Nikos Michaloliakos, the party’s rabble-rousing leader had shot up by 8 points, much more than any other party leader. Paschos Mandravelis, a prominent political analyst, attributed the rise in part to the symbiotic relationship between the police and Golden Dawn. “Greeks haven’t turned extremist overnight. A lot of the party’s backing comes from the police, young recruits who are a-political and know nothing about the Nazis or Hitler,” he said. “For them, Golden Dawn supporters are their only allies on the frontline when there are clashes between riot police and leftists.”
The scariest part is that even if you tell them about Hitler and the German experience with the Nazis, chances are they won’t care. Young Greeks really have not seen anything else than crisis and depression in their young adult lives. Austerity harshness from government has discouraged them from building loyalty to the democratic government.
Greece may still be several years away from a totalitarian government. But since the fall of the Third Reich, Europe has never been closer to having a Nazi government on its soil again.
Based on the Greek experience, there is one question that politicians in other countries have to ask:
Is the welfare state so precious that it is worth putting freedom and democracy on the line to save it?