Lessons from Greece

If you strip away the distractions the fundamental problem is that Greece is nearly bankrupt. In international politics we talk of failed states like Somalia. Greece is a fail-ing state. Greece is not the only failing state. There is an acronym being tossed about- PIGS. PIGS stands for Portugal, Italy, Greece and Spain. These are countries that are on the verge of bankruptcy. Greece was bailed out by its European neighbors because they are all tied together with the Euro as the common currency. The riots in Athens were triggered by the austerity measures that the EU required before bailing out the Greeks.

The Greek government’s annual deficit is being reported at 13% of Gross Domestic Product, GDP. That means the amount of money that the Greek government spends above what it takes in is equal to 13% of the whole Greek economy from the year! The Greek national debt is 124% of GDP. Do you understand what that means? The Greek government owes more than every man, woman, child and business make in a year!!!
When you and I get that upside down and start missing payments they threaten to repossess our car or our house. Who wants to repo a country?-
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Is there a connection between Greece and California?
The economy of California is bigger than the economy of Greece. While we are not as deeply in the hole as Greece, we are headed in that direction. Some state bonds are nearly at junk bond status already. According to the Public Policy Institute of California the State Debt is equal to 8% of the economy. Eight percent is huge when you have a state economy of $1.7 Trillion dollars per year. Yes, Trillion with a ‘T’. According to the Legislative Analyst’s Office the State Debt is over $55 Billion. That means our debt is equal to nearly half of the State’s annual budget!
As a school board member I have been seeing reports projecting $25 Billion per year state deficits for the next five years. The problem is not being solved and the hole we are digging is getting deeper.

Our friends in the environmental community are concerned about whether this or that practice is sustainable or not. Well, government spending like we see in Greece and have in California is not sustainable.

As I tell my students, “There is more to life than making a buck, but if we don’t care for the bucks we make life can be miserable.” Ben Franklin’s comment was, “Beware of little expenses. A small leak will sink a great ship.”

“ A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread that it has earned- this is the sum of good government.”
Thomas Jefferson

Obviously we do not have a ‘wise and frugal government’. On top of that we have a government that feels free to take from the mouth of labor the bread that it has earned.’ I have a left-leaning friend in local government who actually said it is immoral not to raise taxes since government has made promises it has to keep. I don’t even know where to begin on that one. I do know that was not Jefferson’s view of the good government.

State government in California has been heading for a cliff for some time now. In Greece we can see what will happen if we do not pull away from the cliff and change our ways.