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Friday, November 18, 2011

Ancient Greeks and (not so) Ancient Germans

We owe Ancient Greeks the roots of democracy and the pillars of philosophy (“know thyself”, was one of the first things we learned in school about them). The sages of France and Germany, inspired by their Greek forefathers, gave the world Enlightenment which encouraged humans to “emerge from self-imposed immaturity, i. e. the inability to use one’s understanding without guidance from others”. Friedrich von Hayek suggested ways to leave the “road to serfdom” and Karl Popper reminded us of the importance of “liberty” and the “state of law”.

And what did we end up with in much of Europe?

We have tried to outlaw such basic economic truths like that there is no such thing as a free lunch; that the driving force behind the betterment of living standards is the reasonable competition of thought and performance. Instead, the illusion was created in people’s minds that sustained betterment of living standards comes about as the result of social legislation. The Welfare State which was originally intended to protect the weaker members of society has become an instrument to take care of entire societies. From grammar school onwards, we have learned that everyone owes us something: the parents, the teachers, the employer, the state, etc. but no one really reminded us that, in the first place, is it us who owe something to ourselves.

Germans have now for decades been able to take it for granted that the formula “less effort but more social benefits” can work forever. Their expertise with production and customers around the world have made this possible (plus the benefit of having a third party paying for her defence). Greeks, on the other hand, developed an expertise in living and banks from around Europe made this possible.

And now we are all in a mess. Yes, we are ALL in a mess, not only the Greeks. The Greeks are in a mess because they OWE debt which they can’t pay. The others are in a mess because they OWN debt which isn’t being paid. Only a small debtor needs to be nervous in front of his banker. A large debtor makes his banker nervous. Greeks are already feeling great pains of adjustment because they can no longer buy so much abroad. Just wait to see the pains which Germans will feel once they notice that they can no longer sell so much abroad. Exports mean to Germany employment. Should they break away in a larger way, unemployment will skyrocket in Germany.

It is, of course, a lot more comfortable to talk about “us all being in the same boat” when the others are suffering already and you are not yet suffering. But rest assured: the others will suffer, too, eventually (particularly if they were to leave the boat).

Some African tribe allegedly follows the motto “when in times of trouble, remember your ancestors and think of what advice they would give you”. What advice would German and Greek ancestors give today?

Well, maybe German philosophers would remind today’s Germans that “you can’t have the cake and eat it at the same time” and maybe Greek ancestors would tell today’s Greeks that “there is no such thing as a free lunch”. They would use better words but it is the message which counts.

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