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Old May 4 2013, 11:17 PM   #5
stj
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Re: Greece's Underlying Policy Problem.

The point about Spain's problems, which are so similar to Greece's, yet obviously have nothing to do with the ratio of public debt to GNP, is well taken. And the situtation is pretty much the same with Italy. For that matter I think the Iceland problem had nothing to do with public debt but the insane overextension of its previously rather small banking system. On the face of it, the problem is a systemic failing of the entire capitalist system. The burden of proof is on those who want to blame the victims.

Of the domestic factors that made Greece weaker than other national economies, the worst should have been obvious. The infamous junta of the Seventies savaged the Greek polity with a savagely regressive revenue system. The notorious tax evasion began with the colonels letting the upper classes cheat. If anyone is to be blamed, it is them. But obviously the people who want the Greek population to suffer are brothers and sisters in spirit to the torutrers.

The Keynesian prescription for cutting government spending in normal times rather assumes that crises are inexplicable deviations, rather than the normal workings of capitalism. It even assumes there are no tendencies towards increasing magnitude of crises. It also tends to assume that "normal" capitalism will achieve maximum levels of growth (however you choose to measure that,) with no possibility of lagging development. It even assumes that normal capitalism will automatically develop nations! No Keynesians really make an effort to justify these propositions.
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