A modern Greek tragedy

Posted By Kori Schake Friday, May 7, 2010 - 11:18 AM Share

Watching Greeks fire-bomb their banks, shut down their airports and ruin the tourist trade that is their economy's main prospect, I can't help but hear Virgil reprised. In that Roman poet's great narrative The Aeneid, survivors of the Trojan War seek a place to start anew, after much difficulty founding what will become the Roman Empire. It's rough going, and after much hard luck and stormy seas, the Trojan women burn the ships in order to prevent the men returning them all to sea.

They knew the Sybil (a rough approximation to an oracle for the Greeks) had prophesied that when they "quit at last of the sea's dangers / for whom still greater are in store on land... wars, vicious wars / I see ahead, and Tiber foaming in blood." Seeing the fleet in flames, Ascanius' reaction is "but your own hopes are what you burn!" And so it is with the Greeks -- they burn their own hopes by such unwillingness to do the unpleasant but necessary belt tightening.

Tourism provides one in five jobs in the Greek economy and a full sixteen percent of its gross domestic product. Being tied to location, it cannot be manufactured elsewhere. Being tied to history and culture, it is inherently Greek. And the best way to attenuate the effects of the austere cutbacks in government spending necessitated by Greece's financial crisis is to grow their economy as fast as possible. The debt to GDP ratio goes down both by reducing the numerator and increasing the denominator. Yet the Greek riots against the austerity program are sure to diminish tourism.

It is difficult not to sympathize with German hesitation to bail Greece out. Germany has labored for nearly 20 years to bring the former East Germany up to par with the West. Greece leapt into the euro on questionable accounting and proceeded to splash around the cheap credit that German stolidity in finances extended to the rest of the eurozone. One in three Greeks is a government employee. Hairdressers can retire at age 50 with full pensions because their jobs are categorized as hazardous.

But now much more outrageous is that than our Foreign Service Officer's Union refusing rewarding diplomats that serve in war zones? When Secretary Rice tried to give preferential promotion to diplomats that volunteered for service in Iraq or Afghanistan, the union representatives argued that every posting is dangerous -- as though volunteering to serve in Iraq took no more courage than volunteering to serve in Costa Rica. Currently two-thirds of foreign postings are designated as hazardous duty posts.

The state of our public finances is not as bad as Greece's, but we'll get there fast. Current and future obligations already incurred by our government amount to 500% of our GDP. And President Obama's budget will triple our already staggering national debt by 2020.

What may -- may -- save America from Greece's fate is that public outrage is building at our government spending money we don't have. When California governor Arnold Schwarzenegger tried to move against public sector unions in 2005, voters rejected his ballot initiatives. Californians cannot yet bring themselves to make the hard choices Greece is now having imposed on it by the IMF and its EU allies. New Jersey governor Chris Christie seems more successful, perhaps aided by greater public awareness of the parlous state of government finances. The hold of "entitlements" and public sector unions over government finances needs to be broken -- otherwise we really will be Greece.

Markets will not bankroll U.S. profligacy forever. No one can say when the chill will start, but once it does -- as Greece's example demonstrates -- the effects are dramatic. The longer we stall before facing up to the unpleasant reductions we must make, the more draconian will be the demands. As the spiraling cost of reassuring markets of the EU's commitment to support Greece demonstrates, it's much better to beat markets to the reckoning.

Here again Virgil offers sound advice. As the Sybil gives Aeneas instructions to Hades, she cautions:

The way downward is easy from Averinus.
Black Dis' door stands open night and day.
But to retrace your steps to heaven's air,
There is the trouble, there is the toil.

It's easy to become Greece. But it's very hard to get out of their predicament.

LOUISA GOULIAMAKI/AFP/Getty Images

EXPLORE:EUROPE, FINANCIAL CRISIS, GERMANY, OBAMA ADMINISTRATION
 
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WOLFBOY

7:01 PM ET

May 7, 2010

Federal Deficit

You are right, Dr. Schake to note that the size of the projected US deficits is cause for serious concern. You are wrong, however, to suggest that this is primarily a result of spending in Obama's budget.

In fact, Obama's budget reduces deficits significantly relative to a realistic baseline. See http://www.cbpp.org/cms/index.cfm?fa=view&id=3143

Overwhelmingly, the primary contributors to increased debt projected by 2020 are the 2001 & 2003 tax cuts, the current economic slowdown, and the wars in Iraq and Afghanistan. See http://www.cbpp.org/cms/index.cfm?fa=view&id=3036

"The hold of public sector unions" has very little to do with the federal fiscal situation.

 

ACNONPRO

7:47 PM ET

May 13, 2010

oh come on....

....I don't think the ref to the foreign service issue is relevant analogy. There's a worthwhile discussion to be had on that topic of the Iraq/Afghanistan incentives but the union's objection was I believe that there was a sense that the promotion/assignment process risked suggesting being in a dangerous/difficult environment was the most important thing a diplomat could do as if maintaining our fractious alliances didn't matter. It was also a distortion in the system given how many people had been to those posts. No one objected to danger/hazard pay.

P.S. You should also know that there are no "hazardous duty" posts. There are two types of post classifications. Hardship posts are those where there is a health risk. There's a wide range of posts with a range of compensation. These posts include places where you cannot drink the water or give kids a bath without treating it, where air pollution is horrendous, etc. Danger pay is where there is a threat of political violence such as Juarez, Islamabad, etc. Those are less common. And there is a range. Few suggest that all posts that are hardship and/or danger are as difficult as Iraq/Afghanistan which is why they receive the highest classifications.

It is a testament to the places we send civilians that so many posts are classified as "danger" or "hardship". To equate this with hairdressers in Greece is a stretch.

The risks to the US economy are real but they do not come from too much govt - we're nowhere near the Greek levels!

 

Shadow Government is a blog about U.S. foreign policy under the Obama administration, written by experienced policy makers from the loyal opposition and curated by Peter D. Feaver and William Inboden.

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