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Minimum Wage in Greece to be Decreased by 20%

Posted by Steve Markowitz on February 7, 2012

Much of the press concerning the Greek financial crisis focuses on the possibility (probability) that it will default on its debt.  However, a Greek default is but the canary in the mine.  Through fiat (paper) currencies, Greece and other countries have created huge debt obligations that are nothing more than forward taxes on future generations.

History has proved that the cycle for fiat currencies is predictable and repetitive.  Countries initially become successful due to the hard work of its people and/or the export of goods and services.  As countries become more affluent, their governments grow and increase services/handouts to their citizens.  In order to maintain and/or increase their power, these governments then make even more promises to citizens for increased handouts.  Their ability to print money enables such governments to increase benefits to unsustainable levels.  Initially these countries can borrow additional funds pay the promises.  However, at some point they cannot pay back the debt and default becomes inevitable.  This is the situation Greece now finds itself.  Other Western countries are also approaching this endgame.

Not only is Greece the canary in the mine for the end of the debt super cycle, but also evidences the flawed social and economic policies of modern Progressive governments.  Greece is caught in an unforgivable conundrum.  It cannot afford to pay back its debt unless its government’s tax receipts grow substantially, an impossible scenario given the amount of current debt.  Greece therefore requires a bailout by European creditor countries.  However, these countries will not bail out Greece unless it accepts extreme austerity measures that include cutting back on government spending and services.  Progressive governments cannot maintain power should they accept the demanded austerity measures.  In addition, these measures are contractive and will further decrease Greece’s tax receipts resulting in even less money available to pay back the debt.  This is sometimes called the death spiral for good reasons.

One of the austerity measures being demanded by Greece’s creditors is a 20% cut to its workers’ minimum wage.  This demand by the European Union is being made so that Greece will become more competitive versus the northern European countries whose workers are more productive, specifically Germany.  This is a remarkable demand from the Progressive governments of Europe.  It is a clear admission by Leftist economists that artificial minimum wages are a drag on a country’s productivity.  This is a reversal of a 100 year old Progressive axiom that a government created minimum wage stimulates the economy and helps those at the lower end of the economic scale.

As Sir Walter Scott so well said: “Oh what a tangled web we (Progressives) weave, When first we practice to deceive.”

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One Response to “Minimum Wage in Greece to be Decreased by 20%”

  1. interesting viewpoint, a bit different from mine here in Greece, I always like to read others’ views – thanks for posting this.

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