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George Michael: Warnings from Greece and France

June 01, 2012|By GEORGE MICHAEL

The people of Greece and France had the opportunity to make some momentous decisions in their recent elections.  The choice was clear. The citizens of these two nations could either vote for lower wages and reduced benefits from the government or they could vote themselves higher wages and greater benefits. How much easier could it be?

As former New Hampshire Sen. Judd Gregg noted in an editorial about the French election, “It is obvious that voting for one’s living is a great deal easier than working for it. It is easier to blame someone else who is wealthier for a reduction in the standard of living than to look in the mirror and ask hard questions about the nature and effect an expansionist government has on the quality of life.”

Gregg noted that France “has a government that absorbs more than 50 percent of its economy. They have a cradle-to-grave employment system, where once you have a job, it is virtually impossible to lose it no matter your level of performance.”

The winning candidate in France, Francois Hollande, certainly did not hide his intentions in the runup to the national vote, which ousted Nicolas Sarkozy. Hollande said that the wealthy need to pay more in taxes, 75 percent for top earners, and that he would renegotiate the fiscal plan of austerity approved by his predecessor with the European Central Bank. He wears his socialist label proudly.

Meanwhile, over in Greece, no clear-cut winner emerged and another round of voting will occur later this month. However, the majority of the Greek electorate appeared to be in the same camp with Hollande. 

Coming in second in Greece was the Coalition of the Radical Left (Syrzia Party), headed up by 37-year-old Alexis Tsipras.  When the more conservative New Democratic Party was unable to form a coalition government, the Greek president gave Tsipras three days to put together a government in their European parliamentary-style system. Tsipras failed, which led the president to call for another round of voting. 

Tsipras is one of the more radical politicians trying to win in Greece. He is not the only socialist among the leading candidates but his combative style and good looks make him a strong candidate.

Tsipras would withdraw from NATO and close its bases, halt repayment of the national debt, reverse privatizations, seize banks, eliminate the sales tax (benefitting the lower and middle classes) and impose a 75 percent tax on the rich. That would be just for starters. 

In addition, he would tear up the 130 billion euro bailout that calls for Greece to radically scale back public-sector pensions and wages in return for loans to keep the country afloat. 

However, EU leaders have said in no uncertain terms that if Greece follows the Tsipras course of action, it would mean the end of the bailout money from the European Central Bank, possible bankruptcy and Greece’s exit from the euro, which nearly 80 percent of Greeks want to keep. 

The people of Greece apparently want it both ways, believing that they can keep the euro as their currency, yet spending without restraint, opposing the German austerity plan and expecting others to finance their debts.

With this recent political turmoil coming from Europe, American and European financial markets have suffered a tough three weeks with the Dow Jones index dropping 6 percent since early May. This translates to billions of dollars of asset losses for our nation. Thanks a lot, Greece. 

Is the writing on the wall for our own nation? Are our citizens more likely to move us to a sensible financial program of reducing the debt and curbing our appetite for more and more handouts and government goodies? Or will it be full steam ahead with annual trillion-dollar deficits and more calls for taxes on the rich?

As Gregg noted in his editorial, “They (France) have dealt themselves a losing hand. We should simply observe, note it, and hopefully choose not to play the same cards.” We will know in five months whether or not we heed his warning.


George Michael, who lives in Williamsport, is a former principal of Grace Academy. His email address is gfmichael46@gmail.com.

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