Friday, September 30, 2011

Greece demonstrates danger of govt. unions

If anyone is looking for a great example of why governments should not be unionized, Greece has it.

Let me set the stage.  The European Union, comprised of 27 nations filled with 501 million people, is in dire fiscal straights.  One member among them, Greece, is about to declare a sovereign default.  If they go under, most experts expect a domino effect of European Union nations sovereign defults:  Next Spain, Portugal, Ireland, Italy, and then the rest.  After months of anguishing political arm-twisting, yesterday Germany put its economic integrity on the line at the eleventh hour and approved a second round of bailouts for Greece. 

All that is left for Greece to do to be the recipient of Germany’s largess is to show some accounting documents to German officials.

Not so fast, say Greece’s government unions who have a lot to lose as a consequence of the bail out deal.  You see, Greece has much fiscal belt tightening to do to meet the conditions of the bail out.  A good deal of the belt tightening must come from public sector employees who are the Greek equivalent of General Motors employees who received unsustainable perks from their employer.  But different from General Motors, there is no government to bail out the employees of the Greek bureacracy except Germany who is the one imposing the conditions.

So, like any pissed off union that doesn’t want to lose its unsustainable perks, what does it do?  It strikes.  In the case of Greece’s government union, its strike is in the form of barring the doors of the government ministry that has the records needed to allow the bailout to go forward. 

Unions demonstrators were out in force on October 5th, with most government services shut down once again so the unionized government workers can demonstrate.  Violence erupted against police.

What results is a suicide mission by Greek government union workers.  They would apparently rather see their government in sovereign default than to lose some portion of their income.  “If we can’t keep all our perks, we would rather see our nation fail.” 

That is not the worst of it.  It is not just the Greek government whose fiscal neck is on the block.  It is the entirety of the 27 nations and 501 million people of the European Union, the Euro and all, that are at stake.

What can be expected from this union blockade is a violent confrontation with Greek police and violent union/government clashes.  If the Greek police are sympathetic to the other government unions and are themselves unionized, expect the military to step in.  I’m wondering what will happen if the Greek military is also unionized.  Hmmmm.  Military union or not, back in June there was speculation that a military coup might result if strick austerity measures were imposed.  That still might happen.

Am I the only one who has heard rumblings from the Obama administration about unionizing our military?  That could not possibly end well.


JB Gallin said...

The EU will attempt to invoke any measure that will secure their stability. The Greek situation is like a bottomless pit awaiting more subjects to be thrown into it's waiting jaws. It would be wise to remember a nation large enough to give things to it's populace is large enough to take them away.

Gerardo Moochie said...

Many people in the know are predicting that the bailouts are a futile bottomless pit. Resentments will bubble over on both sides, both by the bailers (like Germany) and the bailees (like Greece). Expect additional tensions and violence which will erode confidence in the stability of much of Europe in the coming months. Sovereign defaults are inevitable within the next several months with consequences not just throughout the EU but even for us in the US. Expect resentments to rise in the US when our government sends billions to help prop up the EU.