We're all Greeks now

This post first appeared on HumanAction.co.za on 10 March 2010, when Greece was getting its first bailout.  Now, as Greece nears its second bailout, by undergoing €80 bln worth of ‘austerity’ (read: tax hikes and benefit cuts), in return for €120 bln worth of bailouts, the debt problem grows even bigger.

Of all the wonderful traits possessed by human beings, there are two that are anything but virtuous and admirable:

1) The inability to learn from past mistakes, and
2) the inability to plan correctly for the future.

Notice how both have to do with tenses other than the now.  There’s a good reason for that.  Both history and the future are constantly being distorted – history by historians, economists and politicians, and the future by blindfolded economic and social prognosticators.

We are forever drawing the wrong lessons from history and identifying the wrong threats in our future.  A few years ago, 2006/07 or so, I attended a presentation series held at GIBS, a fancy pants business school in Johannesburg.  The room full of hob-nobbing intellectuals, journos, business leaders and consultants, was given a menu of factors that would potentially shape the future global landscape, and asked to pick the one they thought was Numero Uno.  About 80% of the room said global warming would have the greatest influence on our future.

Before choosing nukes, rickety demographics, viruses, financial collapse, unfunded pension liabilities, wars, terrorism, political revolt, dollar collapse, or any other manner of risks to the stability of our fragile social system, these pseudo-intellectual buffoons, like a herd of lemmings, went through the global warming door and straight over the cliff into Irrelevance Gorge.

Not surprisingly the speaker approvingly told the crowd at GIBS that day that they had chosen in exactly the same way as the delegates at the World Economic Forum in Davos.  Now there’s confirmation of a bad choice!

For the record I chose demographics, which is part and parcel of the severe fiscal crisis facing Japan and Europe right now and possibly the main reason why the next generation in the West will be poorer than the current one.  The lack of babies has led to a lack of savings which has meant that Western economies have simply mortgaged all the real capital they once created in the past in order to keep ‘growing’.  But the ‘growth’ they created was fake, and, well, so is man-made global warming.

No doubt those smug intellectuals are still sticking to their global warm-mongering line, although I bet some have quietly shifted their attention on the next non-problem du jour.

And there’s the point: We’re collectively desperate to find the next crisis that gives our lives some meaning and galvanises us into agreeable community, but we keep latching on to pseudo-crises while the real ones are left unfretted over.

Debt has been the ever-growing crisis of our time but most of the lemmings had the blinkers on.  Now the fraud is all unraveling in the wash and the ‘unthinkables’ which became ‘pessimistic scenarios’ are now starting to become ‘core views’.

As I said the other day, Greece is the head atop the bulging pustule that is global debt.  Greece’s day of reckoning has arrived, but when that boil is lanced, we’re going to have to deal with a river of gunk.

Folks, we learned the wrong lessons from our economic history.  For millennia, leaders tried to spend their nations wealthy by going into debt.  When the tax intake faltered they resorted to debasing the currency to pay for the obligations.  When the currency collapsed the economic system imploded, wealth was destroyed on a mega scale, and ordinary folk had to once again build their lives from the ground up.

The idea of using government debt to create prosperity had been so thoroughly discredited by the turn of the 20^th Century that for profligate statists to reinvigorate their agenda they needed an especially silver tongue to dupe us all back into la la land.

One JM Keynes was their man.  Ignoring 6000 years of empirical evidence, Keynes, through a series of fancy-looking diagrams and convoluted reasoning, succeeded in getting us all to agree that government debt and printed money was the path to lasting economic success.

By ignoring the past and listening to Keynes and his disciples, irresponsible governments have jeopardised our future.  Worse still, while the state has mortgaged our future to pay for a party, Mr. and Mrs. Simms from 8 Dreary Lane in Dullsville, have failed totally to plan for a rocky future.  A world full of trusting citizens has given the reins over to the state.  They entrusted their old age to the state, let the state make all the important decisions for them, and now realise the people driving the juggernaut were playing cards in the cockpit as it careered headlong toward disaster.

Everyone’s pointing fingers at Greece, but the three little fingers pointing back at everyone have a poignant message: In the post-modern liberal democratic state, we’ll all Greeks now.

Fun times.