Greece Used to Be an Economic Miracle, Then the Socialists Got in


I am lucky enough to be writing from the Cato Institute, which is holding a conference on the euro-crisis and the European welfare state today. One of the speakers, Aristides Hatzis, is a Greek lawyer who helps run the blog, which is well worth a visit. During his time to speak Hatzis laid out how extraordinary Greece's economic achievements were in the years up to and following the brutal Nazi occupation. A copy of the arguments made can be found here.

From 1929 to 1980 the Greek economy's average growth rate was 5.2 percent. In that time period Greece experienced dictatorships, occupation, civil war, and a military junta. It was only in 1974 that Greece began to resemble something like a liberal democracy. Some years later Greece was accepted into the European Community, as Hatzis explains: 

Seven years after embracing constitutional democracy the nine (then) members of the European Community (EC) accepted Greece as its tenth member (even before Spain and Portugal). Why? It was mostly a political decision but it was also based on decades of economic growth, despite all the setbacks and obstacles. When Greece entered the EC, the country's public debt stood at 28 percent of GDP; the budget deficit was less than 3 percent of GDP; and the unemployment rate was 2–3 percent.

In 2011 Greece's public debt reached 165.4 percent of GDP, the budget deficit was 9.1 percent of GDP, and the unemployment rate was 17.7 percent. What happened?

Hatzis' theory is that the rise of the socialist PASOK party after the election in October 1981 is largely to blame. While in power PASOK established a bloated and inefficient welfare state, and while in power PASOK's main opposition (New Democracy) was changed to the point that the differences between the two parties are few and far between. I would strongly recommend more of Hatzis' writings on the topic over at, where this argument is fully laid out.  

As per usual, Greece's economic misery is largely the fault of government officials who managed to ruin what should have been a success story in development and recovery. It's a shame that recent Greek protests are now aimed at those who understand that something resembling fiscal sanity will have to be in place for prosperity to be realized. It looks like the hangover from the socialist successes is a long way from over. 

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  1. 30 years is an awfully long time for a cause to produce an effect.

    1. Well, the “cause” isn’t a single, one-off event, but more of an ongoing transformation of society.

    2. They don’t even have functioning land registry in Greece!

    3. 30 years in the life of a nation is a pretty brief period of time. The Qin Dynasty only lasted 15 years.

      1. There used to be a Q in Dynasty?

        1. It was a silent Q and it violated the laws of grammar, that’s why they removed it.

    4. increments, how do they work?

    5. Now that’s just embarrassing.

  2. Greece America Used to Be an Economic Miracle, Then the Socialists Got in


  3. 30 years is an awfully long time for a cause to produce an effect.

    It takes a while to wreck an economy. North Korea used to have a stronger economy than South Korea.

    1. Not the best example. Much of North Korea’s GDP were subsidies from the Soviet Union.

      It’s been all downhill for NK since the Iron Curtain fell.

  4. ” While in power PASOK established a bloated and inefficient welfare state, and while in power PASOK’s main opposition (New Democracy) was changed to the point that the differences between the two parties are few and far between.”

    Thank goodness that can’t happen here.

    1. You beat me to it…swap out the TEAM colors for PASOK and ND, and it reads unfortunately American.

  5. Chavez hasn’t yet utterly wrecked Venezuela’s economy. It takes a while to cause nationalized oilfields to quit producing due to poor or nonexistent maintenance. It takes a while to put braindead economic policies in place, or hire massive numbers of parasitic and unproductive, and sometimes counterproductive, government employees.

    People are resilient. They try to route around the damage.

    1. Chavez may have not utterly wrecked Venezuela’s economy yet, but he’s getting close.

      From Brett Stephens at the WSJ-

      Since coming to power 14 years ago, Mr. Ch?vez has manufactured dependency on a scale unseen elsewhere in the post-Soviet world. He has nationalized farms, steel mills, cement factories, telecoms and the assets of foreign oil companies. His government subsidizes everything from oil to milk. Government spending, much of it on cheap housing, has risen at a blowout rate of 30% in the past year alone.

      The result? Chronic shortages of everything from oil to milk. A 24% inflation rate. A homicide rate that in 2011 clocked in at 67 per 100,000 people?nearly five times the rate in Mexico. Latin America’s lowest growth in GDP per capita over the past decade, despite record-high oil prices. Constant devaluations. The diversion of an estimated $100 billion in recent years to a slush fund controlled exclusively by Mr. Ch?vez. Rolling blackouts. A credit rating on a par with Ghana’s and Bolivia’s. The steady degradation of the country’s once formidable oil company, PdVSA.

      The only bright spot, according to the BBC, is that Venezuela “now boasts the fairest income distribution in Latin America.” Isn’t that wonderful?

      But maybe NEXT time, NEXT time centralized socialist policies will work.

      1. Sure, NEXT time the right man will be in charge.

      2. Venezuela “now boasts the fairest income distribution in Latin America.”

        Yeah, all the skilled professionals that could left for Canada and the US.

        It’s interesting that the Beeb can point that out without noticing that those at the bottom of the scale are no better off than they ever were, in fact they’re probably worse off.

        But they’re more equal.

  6. While in power PASOK established a bloated and inefficient welfare state, and while in power PASOK’s main opposition (New Democracy) was changed to the point that the differences between the two parties are few and far between.

    Hm…that reminds me of something. Wish I could remember what.

    1. The thing is, this is inevitable now. The precedent has been set: if there is a boom and good times, the parasites will gorge and gorge and no one will care because the money is rolling in and everything is great. But when the boom ends, as they all must, the parasites are too engorged to stop and will not even back off their rate of parasitism because they’re used to it now. And they will run out of money and take on enormous debt.

      The government parasite is too big, and if we recover from this, and experience good times again, the exact same thing will happen again.

      1. So…you’re saying we are living in The Matrix?

        1. You already sold us out for a fucking steak, didn’t you. You bastard!

          1. Matrix quotes should be off limits after the disaster that was the last two movies.

            I still have nightmares about the stupid human rave dance party.

            1. I feel sorry for you poor souls who just can’t enjoy a good film. That being said, that dance party would have improved the quality of the film even more if it had been left on a cutting room floor.

              1. I think that’s about the point I became convinced that Matrix II was unwatchable.

                It’s rare that I return a DVD unwatched. i also deleted the next one from my queue.

              2. Or if there were better closeups of boobies.

              3. I feel sorry for you poor souls who just can’t enjoy a good film.

                We can. We can’t enjoy a BAD film. Unless it’s really, REALLY bad. Then it’s funny.

            2. The first was a good short subject, with a lot of filler in the middle to fill it out to feature length. Seems hardly any movie makers want to admit that what they’ve got is material for a short.

          2. And to be a movie star! Wouldn’t you??

      2. Bullshit. Man possesses reason and is therefore above this kind of habitual behavior. You wait and see, the cycle will be broken. One day.

        1. Man is a rationalizing animal, possessed of an infinite capacity to convince himself that WHAT OUGHT TO BE is the actual truth.

          Governments and their supporters have been spending themselves into bankruptcy since the Athenians first assembled in the agora (and probably before that). They have never learned from this in the past and show no sign of learning it now. Note how many pundits are blaming Europe’s problems on austerity instead of the debt.

          1. This is the kind of positive thinking I can get behind.

      3. “All this has happened before, and all this will happen again.”

        1. again…again…again…again

      4. Nothing is inevitable.

        If I got elected president none of that would happen. I’m excellent at flushing parasites, or so my proctologist says.

      5. Precedent? Are you saying that people are determining their behaior by what has been done before? I don’t see why that would make parasites any more or less parasitic. Are they taking lessons?

  7. Both Greece and Italy had remarkable growth post-WWII. Then, almost as a mirror of the UK and US at the time, their governments embraced welfarism in the 80s and we have what we have today.

  8. Greek socialists caused the 2008 US banking crisis in 1981?

    1. Makes more sense than obscure bigoted gibberish assassinating an ambassador.

    2. Is it Thursday yet?

      1. It’s always a good idea to ask this question of yourself before responding to T o n y’s lunacy.

        1. He’s not real, you morons. He’s a sockpuppet solely designed to irritate you.

          1. None of you are real. There is only one commenter having a debate with his hallucinations and psychoses.

            I dunno who that is, though.

              1. Honestly, I think it’s the Jacket working through some issues.

              2. Sandi, would be my guess.

            1. I’ll admit it, it’s me. And I can say I’m continually surprised by the strangeness that my mind is capable of spitting out.

            2. Militant Solipsist: I’m the only one who exists and you are too!

    3. Sure, Toady, the Greeks are having a debt crisis all because of the US banking crisis.

      And, no, American socialists caused the US banking crisis all by themselves.

      They are two separate events. Either could have occurred without the other.

    4. Greek socialists caused the 2008 US banking crisis in 1981?

      No, American socialists did.

      A house in every pot! A chicken over every head! Or so said Barney Frank.

  9. Feeney you Kochtopus Stooge, everyone knows spending other peoples money and creating a shitty environment for work socialism represents progress in the evolution of man! Sheesh.

  10. The central bankers working for the Zionists know that their fiat is based on nothing. They are in the process of converting their cash into hard assets. In the Euro-Zone this looks like Greece and Spain handing over sovereign debt. In the US, it looks like Bernanke buying mortgage-backed securities and becoming the biggest landowner America has ever seen. In this methodology, the technocrats are solidifying their position in the race toward One World Government.

    1. What color is the sky in your little world?

      1. Chem-trail green, or Bildeberger blue?

      2. Prussian Blue.

        1. Field Grey?



      1. JOOOOISH LIZARD PEOPLE? Lady GaGa is a Jewish Lizard Monarch? Man, I am quite uninformed!

    3. Umm, buying mortgage-backed securities doesn’t make you a landowner, or even give you the right to foreclose on property.

      That said, the steady increase in hard assets (PMs, diamonds, productive land) does show that somebody is converting their fiat money to hard assets.

    4. Those damn zionists. How did they get so good at money?

  11. This is why Obama and the Democrats need to go. Progressives are dangerous for the future of America.

    1. Progressives are dangerous for the future of America.

      I think this is more correct.

      1. Yep, that’s better.

    2. Regressives 2012!

    3. Could have been McCain and his never seen a country he didn’t want to invade and never seen a war he didn’t want to get involved in foreign policy. Republicans are no better, they are just the other side of the same political coin of total gov’t control of the masses.

  12. So your advice if for Greece to return to fascism? Golden Dawn is working on that.

  13. There is a Greek port part of which the state leased to a Chinese company in order to raise some money. Guess which side is doing better: the privately run Chinese side or the state run side mired by unionized labor?

    I like this quote from the article:

    Captain Fu, for his part, says Greece has much to learn from companies like his. “The Chinese want to make money with work,” he said. In his view, too many Europeans have pursued a comfortable, protected existence since the end of World War II. “They wanted a good life, more holidays and less work,” he said. “And they spent money before they had it. Now they have many debts.”

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