Bill Carmichael: Euro expulsion offers hope for Greece

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To paraphrase an ancient saying: “Beware Greeks bearing lots of ‘free stuff’”.

For all the grandiose rhetoric about “solidarity” and “equality” during the recent Greek election, what really caught the eye were the promises of lots of juicy giveaways. Syriza, the far Left party that took power in something approaching a landslide, offered voters “free” electricity and “free” food, alongside a big increase in both pensions and wages and a reduction in taxes – oh and lots more public spending.

Absolutely marvellous! But why stop there? Why not give a “free” Ferrari sports car to each and every citizen and perhaps an ocean going yacht apiece complete with troupes of dancing girls serving “free” vintage champagne?
Who knew that running a country was so easy?

Break it gently to any of your friends who are of a socialist persuasion, but rather like Father Christmas and the Tooth Fairy, “free stuff” doesn’t actually exist in the real world. If you get stuff for “free” it simply means that someone 
else has paid for it – and in the Greek example that happens to be in the main German and Dutch taxpayers. And as Margaret Thatcher once said: “The trouble with socialism is that eventually you run out of other people’s money to spend.”

As the Greeks reached that point some time ago I think we are in for an interesting few weeks.

It is impossible not to have some sympathy for ordinary Greeks. Their economy has been shattered, their democracy damaged and the life chances of a whole generation sacrificed thanks to the Euro-fanatics of the EU. But curiously they don’t completely blame the EU for their troubles.

Incredibly, most Greeks want to remain part of the Brussels Empire that has so impoverished their country. They want to remain members of the EU club – they just don’t want to abide by the rules, such as paying back the £180bn in bailout loans that has kept the country afloat. To try and square this circle, desperate Greeks have handed power to a bunch of 1970s-style Marxist academics who have never run anything in their lives. I mean what could possibly go wrong?

In fact the best thing that could happen to Greece is to be expelled from the eurozone. The so-called ‘3D’ solution – default on the debts, decoupling from the euro, and devaluation of a newly re-introduced drachma – is not without its risks, but at least it offers some hope for the future.

Devaluation would give Greece a shot in the arm by making its goods and services immediately more competitive on international markets, thereby boosting demand. The only alternative offered by the Euro-fanatics is decades of miserable poverty and Brussels-imposed austerity.

The only hope Greece has for a prosperous future lies outside the straitjacket of the eurozone, rather than within it. And there is a lesson in all this for the UK. Like Greece, we are a heavily indebted country. In our case our 
debts are about 90 per cent of GDP compared to more than 150 per cent for Greece.

Because of our stubborn refusal to live within our means we are adding £2bn every week to our total debt mountain that now amounts to an astonishing £1.4 trillion – about £50,000 for every working person in the country. We have no hope of paying this money off in our lifetimes. Effectively we are stealing from our own grandchildren in order to fund a lifestyle and level of public spending that simply is not sustainable.

The only reason we have survived so far is because interest rates on this huge debt are at historically low levels. Even so we spend more than £40bn a year on debt repayments – about £1,800 per household. Once interest rates begin to rise – as they inevitably will – we could well find ourselves in the same rapidly sinking boat as Greece.

Still, not to worry. Labour and Ed Miliband will probably win the General Election in May – and with a wave of the socialist magic wand there will be lots of “free stuff” for everyone. Hurrah!