The Greek Problem - A Social Theory

We all know that the Greek economy has ground to a halt, the only way apparently to save them is to lend them more and more money on top of the billions that have gone before. But every time they get their next installment from the EU (Germany) they are forced into severe austerity measures. Is this fair? And is there a way to stop this constant attack on the Greek public?



So what are the austerity measures? 

 - A tax increase of over €5 billion across the next two years.
 - VAT has risen from 13% to 23%.
 - Wages of workers in state-owned enterprises will be cut by 30%.
 - Health spending will be cut by nearly €2 billion by 2015.
 - Social security benefits will be cut by around €5 billion by 2015.
 - €50 billion is hoped to be gained from privatisation.
 - Defense spending will be cut by just over €500 million by 2015.
(All the data is derived from the BBC website)

The Problems

To a lefty like myself this seems unacceptable but even to a right winger one must agree that the severity of these cuts is great and it is difficult to consider agreeing to them happening in Britain. A pay freeze isn't nice with inflation so high but you can not compare this to 30% cuts in wages. The Greek people must feel like they are being punished for something that had nothing to do with them, yes their politicians were reckless pre-bust but does that mean there public sector should be utterly destroyed?

The measures also do not make sense, why is €5 billion being cut in social security and only €500 million in defense. I can't see how this is being justified but surely there is a better way then this 'tough love' policy that is being taken.

Putting the social and moral problems that these cuts cause to one side, economically the policy is not working. How long the German public is prepared to foot the bill is one issue, but drip feeding them money is only keeping Greece on a life-support machine not actually fixing anything. I am not an economist but it seems like all the basic theories I have learnt are being completely undermined. Increasing taxes and decreasing public spending so much and so quickly has created massive unemployment of over 16%. On top of this those still at work seem to always be on strike against the austerity, this sucks all the money out of the economy and, if anything, is making the problem worse.

What shall we do?


I do not have all the answers, and I'm not going to pretend that I have a solution to this massive economic problem, but if Mrs Merkel or Mr Sarkozy is reading this (as I know they both read 17 year olds blogs from London) then give Greece a break! Either pump enough money into the economy to support them on a more long term basis, or let them leave the euro so they can devalue and start to deal with their problems properly.

Both of these solutions are going to be costly and no one in the eurozone is going to be best pleased, but the longer this indecision goes on the worse and more expensive it gets. The Greeks are suffering under the burden of austerity and their suffering and the reasons behind that suffering has the potential to cause yet more suffering all over Europe, so for Gods sake STOP THE SUFFERING!