Lessons from Greece

http://www.politico.eu/article/how-the-olympics-rotted-greece/

Like most problems in Greece lately, the issue results from an overtaxed society without the stomach to reign in generous retirement pensions and a lack of new investment. In any society telling the retires that their living wages are about to be cut is political suicide. When the country can't pay it's debts, raise new money or agree with creditors on a more favorable restructure, what remains?

The IOC (International Olympic Committee) didn't help the Greeks by offering them the chance to host the Olympics in the most historic and perfectly suited city, Athens. The birth of Western Civilization and the center of art, philosophy, mathmatics and politics couldn't have found a more appropriate location. Feel good stories are followed sometimes by nightmarish conclusions for citizens of that once great Aegean country. Blaming the IOC is a bit like blaming the liquor store that sold the booze that led to the drunk running a red light and crashing into a ditch. Responsible countries do research on the Olympics and the financial benefits versus costs to their respective cities and try to make it work. Sometimes they get it right and sometimes they get it wrong; voters in Greece are also responsible for the policies they sign on to. Politicians and governments are the result of those collective choices made by citizens who have decided on a national direction in economics, religion, art and culture. The Greeks are to blame here.

There is a lesson here for the United States and our insatiable lust for credit and debt. People in democracies can cost along for a while on interest free debt while business and foreign investment money continues apace. Eventually though the propped up market place collapses and creditors send out a bill. The U.S.  government's addition to borrowing money and pushing the debt forward on future citizens is an extension of voters doing the same thing in their own lives. The easy thing to do is blame 'reckless politicians' for their tax and spend misdeeds, but they use debt in the same way most Americans do. Their concern is for the now because now is what is in front of them. There are three things the United States should do to reign in spending. Clamp down dramatically on the regulatory state which makes it difficult for new business to start making money and hiring workers. I heard an idea recently that some wealthy pro-business types would set up a legal fund to defend owners of companies that have been harassed by silly regulation and the cost of compliance. This is a great way to fight back and keep entrepreneurship strong in America.

The second fixable area of spending is to pass some kind of Amendment that keeps the spending by Congress to a portion of the income. Other 'balanced budget' amendments pop-up as a proposal from time to time but the real energy and will to get it done is clearly not there in Washington D.C. The country has a debt ceiling supposedly for this purpose; Congressional leaders vote to raise it every time is comes up for a vote making the purpose of having a ceiling moot. Amendments can't be voted away. Third, simplify the tax code by making it easy for ordinary people to  read and figure out. I am no tax expert but the code should reward businesses first, because they provide jobs, and investors second because they keep money in the economy. Filing tax paperwork every year need not be a messy and painful affair for those business owners paying their own salaries. Complicated tax laws have given secondary industries like legal firms and tax accountants too much time to create myriad ways of hiding money and using loopholes to get around crazy high rates. Just simplify the law and watch it fix itself.

I haven't mentioned what programs I would cut or even get rid of altogether. The reality is when governments collect less revenue they have less creative ways to spend it. Too many programs that should have gotten the ax years ago are still with us and they continue to grow like a tumor, continually fed by redistributed wealth. Or put another way, money that could be used for job creation and private venture is being sucked up by wasteful and unnecessary programs. Take away the money and you kill the program. If we don't start making our government smaller we could be facing down creditors like Greece, and forced to choose selling off assets or cutting retiree pay. It isn't a choice America will like any more than Greece.