My Big Fat Greek Bailout

greece lighting

Greece-ed lightning

The headline in the National Post this morning read that Greece has surrendered to the Germans.  No, it was not from April, 1941, but February, 2015.  Germany, victorious in 1941, was the poor man of Europe by 1945, is now again the European economic powerhouse, and carries most of the responsibility of bailing out the poor Greeks whose country they once invaded.  What is, is what has been.  However, there are conditions to the Germanic ‘loan’, as there must be to any loan.  The Greeks have apparently agreed to most of the terms of the proposed bailout, but Germany has now declared that that is not enough:  It seems, in an ironic turnaround to the end of the last world war, unconditional surrender is what it will take.  And this just after the Greeks elected a government that was pledged to ‘no more austerity, no more conditions’.  Oh, the shame of it all…


At stake here is the unreality of Greece’s economy; well, everyone’s economy is to some extent ‘unreal’; it’s just that Greece is more desperate than most, and thus is in the spotlight.  Greece is dependent upon Germany to keep her economy, which is well beyond bankrupt, afloat.  Economists say that without the influx of a whole lot of German Euro-Deutschmarks, Greece would run out of money by the end of this month.  Even though this is a leap-year, that date is rapidly approaching…


You may have read one of my last posts, that an economy in massive debt (read:  Every economy on Earth at present, with the exception perhaps of Monaco, supported by the rather fake economy of rich nobility gambling) has already ‘run out of money’.  Canada is out of money ($620 billion in debt); the U.S.A ($17 trillion in debt) and Russia (about 260 billion in debt in U.S. dollars).  Add to all these figures ‘and counting’ (just see the debt-clock figures for a more depressing visual real-time view). The deeper principle here is, will anyone continue to loan you money?  Is the credit card finally going to be shred?  And, it seems, the Greeks got the short end of the stick, for no one seems to want to lend them money, at least not without a whole lot of strings attached.


Greeks rioting

Stand back, officers, the drachma ain’t worth enough to walk through fire…

These ‘strings’ include what is, perhaps inaptly, called an ‘austerity package’, with the proviso that the Greeks at least try to get their financial house in order, and live even somewhat within their means.  These austerity measures, which in the end are milder than they might be, have caused Greeks to riot in the streets, burn buildings and refuse to work.  Well, I am not sure the last effect implies any change.


As of writing, no one is sure how Greece will respond to Germany’s demands.  The Greeks, like most of us, have become accustomed to living well beyond their ‘means’.   A majority of Greeks, like Quebecers (another failed economy), work for the government, or government-sponsored unions, receiving salaries and pensions that bear little connection to what might be called the ‘real’ economy.


Ah, yes, the real economy, something that now lives, ironically, in fantasy land.


To understand what the real economy is, we should go back to the original social encyclical of the Church, Rerum Novarum, promulgated in 1891, and a line from Pope Leo XIII that I do not see quoted very much, but which I consider very significant:  “It is by the labour of working men that States grow rich”


I have pondered much on that phrase.  Who are these mysterious ‘working men’?  And how do they make us ‘rich’?


Pope John Paul II, in his Laborem Exercens, defined work as any activity of man, especially those activities that fulfill us as human beings, and perfect our capacities and potential.   Everyone, to some extent, works, in the sense that they subjectively perfect themselves by what they do.  Of course, some activities are more ‘perfecting’ than others.  Learning a Bach two-part fugue, or how to bake a perfect tiramasu, is more beneficial than getting to the tenth level in World of Warcraft, if one could even argue the latter activity’s benefit at all.


However, work also has an objective dimension, measured by what it produces for the economy, and there are certain kinds of work that have a more direct bearing on a nation’s wealth.  ‘Wealth’, as I have mentioned before, may be defined as ‘what people value’.  In strict economic terms, wealth comprises those things that other people, whether within or outside the nation, are willing to trade and pay for.


This is the basis of the real economy, in the production of things (usually material products, but they may take the form, as John Paul says, of ‘technology, know-how or skill’) traded, bought and sold for other things.  Those who produce such ‘things’ are those ‘working men’ who make a state rich.


Yet many economies have come to rely less and less on such working men, whose work is undervalued and exploited, to feed an ever-more-remunerated politically-connected class, who do little of the economically productive work that make us ‘rich’.


Consider for a moment the jobs with the greatest remuneration in our society, and you won’t find many of the productive jobs amongst them.


Ponder:  Most provincial police officers, after a few years on the job, receive close to or well over the sunshine quota of 100 grand, plus benefits, overtime, and a very generous early pension plan.  Their work, in theory, is necessary to protect property and our own safety, but they do not directly produce wealth.  Rather, their task is to protect the wealth that is already being produced, and they are, at least in theory, paid by such wealth.  The same may be said of firefighters, whose starting salaries are now approaching the sunshine figure.


Politicians, whom I have discussed in a recent column, have starting salaries of  $163,700 (federal) and anywhere from $115,000 to nearly $200,000 (provinicial), again excluding expenses, golden pensions, benefits, second apartments in the capital, lip balm benefits, and so on.  Yet they also produce no direct wealth.  Sure, we need them, or at least some of them, but  their paycheques, again, require that the wealth already be there.


Physicians and nurses and the whole myriad health-care apparatus that currently absorbs over one half of Ontario’s entire economy?   Yes, we need them, my own father is one of them, and I value their services and work, but they too do not produce wealth in the tradeable sense (prescinding from those few who invent new drugs and medical procedures that can be bought and sold); rather, they produce health, so that we, and in particular the ‘working men’, can then go out and produce wealth.  Health to no purpose (so we can sit around all day) does not wealth produce.


Do not misunderstand my point:  All of these occupations work, and they may work very hard, but their work does not directly add to the Gross National Product of a nation. We need them, but we also need many more of those who do add to the GNP, who make us, yes, you said, it, rich.  Yet in the rural area in which I live, any one of these non-wealth-producing jobs can make three times or more as much as a laborer in the local sawmills, and significantly more even than the tradesmen and construction workers who build and repair things, whose work is often seasonal and haphazard.  Factory workers in Canada, if you can find a job, now generally make a starting wage of about $12 to $25 per hour ($24-48,000 per year), often with little or no benefits or pension, unless they are unionized (and just try getting into a union now).  Contrast this with one recently suspended 42 year-old police officer whose base salary was $132,000 (the  O.P.P. union apparently has a clause in their contract that they have to be the highest paid police force in the province, leading to a ratcheting effect on salaries).  Psychiatrists, opthamologists and other specialists in medicine can make salaries approaching the half million mark.


Where does Canada’s real wealth come from to pay for all this?  Well, from agriculture, manufacturing, small businesses, construction, retail, timber, mining (potash, nickel, etc.) and, not least, Albertan oil, what was once considered black gold.  These economies, and those who move the products by truck, train, through depots and stores throughout and beyond our land, all done by ‘working men’, these actual real products, are what make us rich, at least in the non-spiritual, economic sense (I will write later about spiritual riches, a much more important category).


However, we may not be as rich as we think, as we read of the precipitous drop in the price of oil especially, and the other products are not faring much better.


Yet the governing class (legislative, judicial, executive: besides the politicians and police, lawyers, judges, their myriad office staff, the thousands in the military and so on), and  all those who depend on the government either for a paycheque or welfare (too long to list, but, as a sample, besides the already mentioned physicians and nurses, teachers and educational administration, city and social workers, CSIS, Canada Revenue, and every bureaucrat in all those offices in Ottawa, everyone in prison and everyone on a government pension, just for a start), has become rather too accustomed to living off the avails of these ‘working men’ and the products they produce.  They, and the vast swath of people who depend upon their handouts, consider themselves, as a rule, fully justified in what they receive, and regularly demand and give themselves raises (‘cost of living or proportionate adjustments’), even if the real economy continues to bend and crack under the strain.


Greek beach

Beautiful, but bankrupt…

The test case for what happens when the strain becomes too much, and, like the crumbling Gardner Expressway, things break apart, will be Greece.  What products does Greece produce to keep its real economy afloat?  I like olive oil, but it only goes so far as an export, and there is not much timber or farms  in the birthplace of democracy, nor, as far as I know, are there oil deposits off the Mediterranean coast (thankfully, beautiful as it is).  Sure, tourism goes some way, but not when your whole economy is collapsing, and you never know whether or not your plane will fly you home, or the airport shut down due to a strike or riot.   I wonder how many Europas have flocked to Greece’s fair beaches of late.


Economists say that Greece’s collapse could have a contagious effect on the economy of Europe, leading domino-wise to the drying up of credit country by country, many of them much bigger than Greece (the unfortunately-named P.I.G.S, Portugal, Ireland, Greece and Spain), leading to one default after another, and the whole shell-game will be shown up for what it is.


There are, basically, two ways to face reality:  Before the disaster, and avert it, or afterward and reap the consequences.  I relish not the effects of such a calamity, but I do believe reality will have to be faced someday, somehow.


I am a great believer in the ‘before-disaster’ model, turning the car around as you see the cliff approaching.  But many, it seems, including our own benighted leader Kathleen Wynne, to say nothing of Trudeau and Mulcair licking their socialist chops in the wings off-stage,  just want to clamp down on the accelerator.   Harper is not much better, but at least he wants to speed up a little more slowly.


thelma and louise


Reality, however, is a hard taskmaster, and many would rather enjoy the ride, listening to the music with the wind in their hair, until the day of reckoning comes.  Well, the wind gets a lot stronger when you fly off the edge of the Grand Canyon, and the landing, I suspect, not all that pleasant.


I have often wondered what life would be like if we were indeed forced to live within our means, and stopped kicking our debt-load onto our great-grandchildren several generations down the road, like a drunken sophmore in Vegas with daddy’s gold American Express.  Perhaps our great-grandfathers lived in such a way, even our grandfathers, the benefits of whose hard work and sacrifice we have reaped.  In our own day, I suspect the Amish do.  So, also, the Trappists and the Missionaries of Charity.  There may even be those in rural sections of Canada that strive also to live within the realm of what wealth they actually produce.  It was the baby-boomers, those born post World War II, who grew up in the great liberal-democrat-socialist experiment begun under Roosevelt in the States with his ‘New Deal, and with Trudeau Sr. up here with his ‘new Canada’, who really separated the fantasy economy from reality.  Their heirs have not changed course.  We are all Greeks now, and there aren’t enough Germans to bail us out.  In fact, there aren’t enough Germans to bail the Germans out.


But, hey, once the dust settles, we will all get to find out what simplicity is like.  If we can avoid or hold back the barbarian hordes, I suspect we who value civilization and culture will have to live more simply, equitably and truthfully; and life, although perhaps harder,  will also be more beautiful.   If it is anything like the Trappists, at least the beer will be better.


And if the barbarians storm over the crumbling gates?  Well, heaven awaits.


One way or the other, the truth, besides being free, always makes you free.


A blessed Lentendtide to all!


February 19, 2015