Declaration of Dependence

An ominous example of what happens when governments exceed their spending limits is being shown in Europe, and more particularly Greece, right now. For years, whenever the debate between socialist vs. capitalist arose, Europe seemed to always be brought up as a shining example of the success of socialist policies. Canada was another one, but they spend next to nothing on national security so their financials are labeled “N/A” in my book. Anyways, back to Europe.

If you haven’t heard yet, Greece is in a jam along with Spain, Portugal and Ireland. Euro is losing value and those that manage the Euro have had to make some tough decisions. “Do we drop Greece and fix the Euro by ourselves, or do we bail them out?” (Is anybody else getting tired of the word ‘bailout’?) To my dismay, Europe has elected to appease the irresponsibility of Greece. This help, however, came at a price. To the dismay of the people of Greece, the price of the bailout will be paid with pay-cuts and pension reductions. Riots and protests have taken place in Greece that resulted in a few deaths. The Greek people are, in a word, unhappy.

The really aggravating part about this whole scenario is that they were happy enough not so long ago. Their economy has experienced incredible growth throughout the last 50 years. The growth of the Greek economy was so stunning that the Greek government began to feel left out and made all sorts of plans for growth as well. To fund all the growth and government expansion, Greece began to borrow money. If used efficiently, and if the global economy remained unchanged, these funds would have been paid back easily.

So, what happened? First of all, Greece abandoned the principles of frugality and thrift that had caused such rapid economic expansion. Government officials became slightly corrupted by all the prosperity and began to line their own pockets. Also contributing to the issue was the housing crisis in the U.S. When Americans have less money to spend, we take go on less vacations to Greece. Given that tourism is such a large part of the Greek economy, this was a big hit.

The main problem, however, is a more internal, broad issue. The government was trying to do too much. They trained their citizens to depend on government to manage their economy. For a while they were fat and happy. But now that everything is crashing down, who is to blame? The citizens are responsible for believing that their government was doing a good job. The government is responsible for believing that their leverage ratio was okay.

The United States is headed in the same direction. Many financial analysts are very worried about the repercussions that the U.S. will feel as a result of the Greek meltdown and the devaluation of the Euro. Global trade will definitely be affected. But just as the core of Greece’s problems was not caused by foreign markets, the problems in the U.S. have been building for a while.

Believe it or not, the United States is still suffering from the Great Depression. The Feds had to step in and fix things; it was necessary. FDR did some valuable things and definitely helped us out of a jam. The problem with that scenario was that the government has been seen as the economic problem solver ever since. Since the depression, there have been numerous ups and downs in our economy. Thomas Jefferson wrote the Declaration of Independence. FDR wrothe the Declaration of Dependence. When times are good, politicians are given the credit (and are rewarded handsomely) for the prosperity. When times are bad, heads roll and politicians are fired.

My question is simple. “In what world can political science buffs and lawyers be expected to manage an economy effectively?!” These people did not study economics or business in college or high school. Why do we think they know anything about the matter? Washington is not going to solve America’s problems. Just as “we the people” formed and ratified the constitution, we need to stimulate our own economy. Sometimes the government reminds me of a mosquito bite. The more attention we give it, the worse it gets. Please do not think that I advocate political apathy. We need to be active participants in government, but we need to stop looking to the government to solve problems that are beyond their constitutional job description.

Start businesses, buy houses, create trade! Take control of your economy! If we stop asking Washington to solve our problems, they probably will stop trying. Right now, the only booming industry in the United States is government. Does anybody else see the irony here? If so, please leave me a comment.

Turn the Tides