Socialism’s Greek Staring Contest

The day will come when America faces its own inner Greece.

Daniel Greenfield, a Shillman Journalism Fellow at the Freedom Center, is a New York writer focusing on radical Islam.

The Greeks gambled in their referendum that European elites were more committed to their ideological obsession with integrating Europe than with mere economics. Stand up to a bunch of corrupt Greek civil servants and Europe risks going back to the bad old days of nation states and independent economies.

It is likely that their bet will pay off.

After all even a cursory glance at the European Union shows positively Grecian levels of waste, fraud and economic mismanagement. The $1.8 billion IMF payment that Greece defaulted on is a hole in the bucket compared to an annual $6 billion in the European Union’s estimated budget fraud.

A radical left-wing government in Greece is betting that more moderate European Socialists will meet their demands rather than risk opening a chasm that will expose the economic unsustainablity of the existing system. The Greek economy may be a fraud, but it’s a fraud built on a bigger Euro fraud.

And that’s a familiar pattern.

This is the way that public sector unions browbeat their Democratic allies in Chicago, New York and California to extract insane concessions from their unworkable budgets. The budgets are already bankrupting cities and states, so why not tear off free cosmetic surgery or $80k salaries from the mess?

Greece is just treating the European experiment the way that the California Teachers Association treats the state. It’s a giant corrupt piggy bank, so why not raid it? It’s going to go bankrupt, but it will anyway.

That’s the typical mindset in Socialist countries. The average Russian stole as much as he could under Communism because the entire system was built on theft. Much of Greece dodges taxes because they’re certainly that the money will just go to corrupt public officials. And they’re usually right.

When everyone is convinced that the system is corrupt, they take out as much as they can while putting back in as little as they can. That’s true in Greece, in the old USSR and in Obama’s America.

The Democrats stumbled into a belated showdown over education with the unions only to back off when the unions helped usher in a class of even more radical left-wing politicians. It’s what happened in Greece, but it’s also what happened in New York City, Seattle and Chicago.

The Democrats can’t stand up to their unions even when it comes to protecting their pet political priorities or saving their budgets. Why should European elites fare any better against Greek leftists?

The Socialism staring contest pits radicals against moderates. The radicals are willing to wreck the system, whether it’s exiting the Euro or keeping a hundred thousand minority kids out of school. Their bluff usually works because the moderate political hacks are too committed to the big picture to risk putting their foot down and driving that final inch in the backstreet game of chicken.

If Greece wins its bluff, the spirit of mistrust and greed that got it into this mess will spread deeper and wider across Europe. There will be more crises as national economies go Grecian grey and then black as taxes aren’t paid and transactions happen off the books while social benefits still can’t be cut.

And yet there are few alternatives.

The consequences of a Grexit or a compromise will resonate across Europe. The system will shudder as its internal tensions increase. Either outcome weakens the great experiment, but a Grexit will appear more damaging by undermining that vital sense of inevitability that has kept all this going for so long.

The left lives and dies by the inevitability of its solutions. It wins by convincing everyone that the trajectory of history is on its side. Any development that undermines that also undermines its power.

The collapse of the European experiment would mean the undoing of what the left has been working toward for a century. It’s cheaper to shoulder more Greek debt than to accede to such a disaster.

The Greek radicals in office have little to lose from a Grexit and much to gain. At worst they’ll be left with an even bigger economic disaster that they can blame on the Germans. The only solution will be more Socialism, even if it’s the Socialism of food rationing overseen by a police state. The enthusiasts of a Grexit hoping to defeat “austerity” and “neoliberalism” won’t be too disappointed by that outcome.

The left has a thing for oppressed victims of capitalism living under a righteous leftist police state.

And when you don’t have an actual working economy, but do have a ready scapegoat and you owe more than you can ever pay back, a massive economic disaster is not your worst case scenario.

That’s the political impetus for wealth redistribution. Wealth redistribution moves the center of political and economic influence from the producers to the destroyers. There is a constant pressure on the producers to somehow fix the way of life of the destroyers because the mechanism of wealth redistribution has concentrated a great deal of debt and economic leverage in their hands.

Think about Baltimore’s race riots or the subprime mortgage crisis. Wealth redistribution empowers radicals who have less to lose because they have less invested, socially, creatively and economically. It used to be that only very wealthy men could run up debts big enough that default would be a problem for the bank, not for them. Wealth redistribution doesn’t really redistribute wealth; it redistributes debt.

CalPERS, California’s huge government pension fund, can afford to be a corrupt economic disaster because California will eventually have to bail it out. And the United States will eventually have to bail out California. The big cities can’t be allowed to go bankrupt no matter how much they mismanage their budgets. Neither can the big states. Everyone can be as economically irresponsible as they want to be.

Until the ‘too big to fail’ limit is finally reached.

Whether it’s Greece or Chicago, a local state of corruption in which dishonesty at all levels of government is the norm is passed upward through the assumption of debt. It’s not just numbers being moved around, but a culture in which only suckers pay their bills and honesty is a form of oppression. Objective laws and standards are replaced with the honor-shame codes of respect and humiliation.

Owing money becomes real power even as the debt itself becomes a blank check for unlimited credit. The left is obsessed with integrating everything into bigger systems and that allows the more unstable parts of the system to take everyone else as a hostage. That’s what the Greek left has done.

It may seem silly that a bunch of Greek civil servants can take the economies of Europe hostage, but when you tie everything together, that sort of crisis becomes inevitable.

The idea that one day a teachers’ union in California, Chicago or New York City may be holding the entire economy of the United States hostage seems equally unlikely, and yet it’s likely to happen. The real lesson of the European disaster is that centralization without reform is a ticking time bomb.

There are numerous such ticking time bombs buried in the ledgers of major organizations and cities across the country. The day will come when America faces its own inner Greece and without better leadership than it has had until now, we will lose that Socialist staring contest.