The Greek referendum will be done soon. Their economic wilderness will be in better focus and the lessons learned should be larger than mere economics.
The lessons in Greece are obvious and at a later time they may apply in places where they are now not so obvious.
The outcome will be hard on the majority of Greek people. The objective observation is that they have no money today because they spent it some day in the past. The government is no longer trustworthy or even competent. Creditors notice and as the result they cannot push the problem into the future.
People have understood this problem for at least 150 years. Governments seem not to have noticed yet. Consider French political theorist Alexis de Tocqueville in his book, Democracy in America.
“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”
The American Congress has, of course, discovered this fact but the American economy has so far been sufficient to endure. The same rules apply in Greece and their economy is now being asked to pay up or cease to be as it was.
There is some chat that Russia will help them out with money and protection from Turkey in exchange for Mediterranean naval bases. That would be an interesting outcome.
The unintended consequences of banks and bureaucrats behaving in a rule based manner will be a fine drama.
A Greek tragedy even. Sophocles and Euripides are watching from Olympus and talking to their publishers.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.