Greece: Democracy Failed

Posted by PSR_AXP

Democracy is about the democratization of opportunity. It is not about perpetuating elitism through corporate welfare and crony capitalism any more than it is about handouts to able bodied, capable individuals. It is about providing physical as well as intellectual infrastructures that encourage productivity, innovation and efficiency.But it is also about majority rule. And if the majority votes for policies that undermine their own and their country’s interests then democracy fails…


ATHENS, Greece, 2012 — As I pass the post-riot, burned out shells of buildings in a smoldering city reeking of history, these thoughts above are going through my mind over and over again. And where better to examine the implications of modern democracy then at its roots? When you speak with Athenians, these thoughts are most certainly on their minds as well. They describe in detail how droves of desperate young people are fleeing the country in search of work. And again, I can’t help wondering if, ironically, the place that birthed democracy could very well be the poster child for its demise.

These days it’s easy to demonize the Greeks and legions of media pundits as well as numerous politicians have done just that. They accuse them of everything from sloth and gluttony to haughtiness and greed.

But Greece is not the only nation that has run up monumental levels of debt. In fact, this country is far from the worst in that respect. Japan’s negative balance sheet dwarfs that of Greece and so does the UK (see graph). And then there is the US, which is on a monetary steroid cycle with deficit spending in excess of five trillion dollars over the past three years (see graph). I look at these figures and feel like the dated Doctor Evil in the Austin Powers movie who thought a million dollars was a lot of money. Well, I once thought a billion dollars was a lot of money.
Contrary to claims from the European Central Bank, Greece is not an isolated case. It is simply the first of many dominos that will almost certainly fall across Europe and beyond because the limits of sovereign and private debt have been repeatedly breached. Despite trillions of Euros in stimulus money, many EU countries are sinking back into a recession that translates into a best case scenario of fewer jobs and a cycle of economic stagnation for years to come.
All of this begs the question: how did we allow this to happen?
From my observations I have concluded that by and large adults are increasingly behaving much like children. You offer either of them candies and they will gladly accept. Then they will demand more both now and in the future. Try to take the candy away, or not offer it again, then prepare for a petulant tantrum.

“We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.”


Democracy, it seems, can be the ultimate Candy Man. In most countries a political candidate must deliver what the people want and in the vast history of mankind what people want first and foremost is economic prosperity. Very rarely does an elected official get thrown out of office when the majority of his or her constituents have BMWs in the driveway. In today’s world the electorate has an unrealistic, and often unsustainable, sense of entitlement. So ambitious politicians lower the retirement age and cut taxes to the bone on both individuals and corporations knowing that it will be a winning formula. Leaders? Hardly, these politicos are the biggest followers in the world and will promise whatever it takes to keep their exalted positions.

The sad truth is that the demands of the electorate cannot and should not always be sated because, like it or not, we do have economic cycles and the unfortunate byproduct of that is that we do have recessions. No one wants to hear it and rare is the campaigning politician who will say it but sometimes belts have to be tightened and sometimes the jobless rate will rise.
Maybe it’s a bit of idealistic yearning but there once was a time when people were reasonable and realistic, and politicians were prudent. But that era is long gone, little more than faded nostalgia. Tolerance for even a whiff of a recessionary cycle is zero. In fact, our leaders will move heaven and earth, including leveraging the prosperity of future generations, to ensure the graph always slopes upwards.
It’s not really a secret how we got here. The proliferation of media outlets and their glorification of wealth are out of control. Journalism was once based on integrity and responsibility but has now morphed into endless sensationalized tabloids and pop culture shows urging us to indulge excesses.
We are inundated with images of the corporate titan with the 20,000 square foot house, private jet and mega yacht representing the epitome of happiness. Even as a number of them are being constantly exposed as frauds, the lifestyles of the rich and famous never fail to titillate. Bernie Madoff was a financial pop star before he was a disgraced convict. Of course, one led to the other, but why quibble? Not only should we aspire to such a lofty lifestyle, we should worship those who live it and we should do anything possible to emulate these modern-day Greek gods, even if it means maxing out a dozen or so credit cards.
And when it comes to credit cards, the finance industry has been a willing enabler by habitually prodding us to live beyond our means. Our “enjoy now, pay later or not even at all” culture has been infused with usurious debt instruments that would have made Shylock proud. These include credit cards that demand 20% interest and mortgage products that have low teaser rates but slam on outrageous rates in the future. Yes, but why worry about the future when you can live like a rock star today?
Also complicit in this endless cycle of debt are the cagey and clever ad men and women. These skilled marketers convince us that we must own certain brands not out of necessity, but because they will make us feel and act like superior beings relative to those who cannot afford them (or the small minority haven’t been sucked in and don’t want them). Almost from the moment we can walk we are reminded that we need to be cool. And no matter how secure you may be, we are all guilty of playing this game to some degree.
You don’t have to be one of the great philosophers venerated here in Greece to know what utter nonsense this culture of celebrating materialism is. Does having all the latest things really make us happy? It must because the world ravenously clamors for its designer labels while queuing up for miles on end to get the latest iPhone.
This relatively recent phenomenon of materialism seems to be the legacy of Sigmund Freud and his nephew and protégé Edward Bernays. They understood how to tap into what drives our id and modern day marketers extrapolated this knowledge and applied it to “setting the shelf heights just right” and making the siren’s song of shopping irresistible.
US President George W. Bush infamously implored Americans to “go out and shop.” As blatantly commercial as this command might have appeared, he was actually right because if we don’t consume, and often over consume, then we collapse the global economy. Paradoxically, this endless shopping spree we are on will still get us a collapse. However, the scope of the collapse will involve much more than the economy considering we live in a world of finite resources.
And yet when the citizens of countries like China and Germany refuse to join the debt-fueled bingeing, they are chastised and insulted for not buying enough goods and merchandise. Foreign politicians and business folk are incredulous and want to know what’s wrong with these people. Don’t they want more stuff? Spend!
This culture of excess can be directly traced back to our political system. Prudent fiscal policy goes out the window and we are stuck with politicians who are more than willing to drive us further into debt in order to get elected. They have bastardized Keynesianism and instead of running surpluses in anticipation of bad times, they deficit spend all the time. We often accuse them of corruption and incompetence, but aren’t they doing exactly what our consumer-driven society demands from them? Didn’t we elect them to stimulate the economy in whatever way possible?
But the wanton hubris and fiscal recklessness hardly stops with our elected politicians. This disease extends far beyond the individual voters and has infected global corporations who demand and receive trillions of dollars and Euros of subsidies and bailouts. Now try taking the candy from these leviathans, these corporate crybabies.
When it all goes badly, as it has in the recent past and as it undoubtedly will again, we wail and moan and shake our heads in disgust. And then we ask: how could this have possibly happened?
For better or worse in a democratic society, we mostly get the governments we deserve. But sadly, we are finding out that we also have to live with the consequences. Greece is merely the latest exhibit of a country living with dire consequences. It most certainly won’t be the last.
The author, Paul Luciw, is the Founder and Managing Director of AsiaXPAT.

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