generalspeaking

PIGS Trough

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. Chinese Proverb.

That hoary old adage of teaching a person to fend for themselves being far superior than supporting that person causing a lack of personal initiative and continued dependence is right. Folk wisdom knows whereof it speaks. Take away the burden of self-responsibility and you kill with kindness, setting the stage for continued lack of responsibility to self. There is a right time to help, and the right time to encourage someone to take the initiative to help himself.

Those whose existence is dependent on the goodwill and charity of others do not recognize the need to help themselves, they feel themselves to be in a comfortable place and simply do not aspire to become independent, even at the price of sacrificing pride in oneself. The cycle becomes one of illusion and delusion. Since help is so readily given, the receiver feels it becomes his due. Effectively, initiative is emasculated.

In Canada there was a seemingly far-sighted, noble experiment to ensure that the entire population of the country wherever they lived within confederation, would be assured a like level of public services and opportunities. A simple enough idea; the federal government would collect taxation from the provinces and re-distribute it through a scheme called provincial equalization. Wealthier provinces would support those less-well-endowed provinces.

The largest beneficiary of this system of generosity were the country's east coast provinces where employment tended to be seasonal. Additional assistance was given by way of unemployment benefits, assured at a higher level in the identified have-not provinces. And the Province of Quebec was singularly entitled to a stupendous share of the entire package. This seemed to work for a while and it made Canadians feel fairly smug about themselves.

Until the realization struck that the 'have' provinces somehow missed having services that the 'have not' provinces were able to mount for their citizens, thanks to the kindness of the self-sacrificing 'have' provinces. What's more, the 'have-not' provinces, having become accustomed to those no-strings-attached transfer payments saw no reason to make an effort to enrich themselves through their own resourcefulness.

Somewhat akin to the situation seen right now unfolding on the world stage where the European Union, patterning itself in a similar manner, to accord special treatment for its less-wealthy members finds itself in a financial and political bind with some of its members: Portugal, Ireland, Italy, Greece and Spain, heavily indebted, unable to pay back their loans. Loans granted them, enabling them to live beyond their means.

Except that, since the loans were granted to them by international bankers they had no reason to feel they were living beyond their means; they believed they were entitled to live just the way everyone else does in the states that were better managed and more productive and hadn't built up an impossible debt-load.

It's like the family on welfare looking at the lifestyles of the middle-class and believing they too were entitled to live that way, and in the process misusing their welfare payments then finding them inconveniently finite. Resentment ensues from this, the same kind of anger and bitterness seen in the placards held up by Greek citizens, refusing to face austerity measures.

Little wonder German Chancellor Angela Merkel, whose country's well-run economic engine has made it one of the more powerfully successful countries in the EU, expresses the anger of German citizens, incensed that they would have to prop up a failing economy in Greece, where people live beyond their means, while German citizens live far more prudently.

At the same time, Greek citizens are resentful that they are in this position, one that they and their government created by their wasteful habits and lack of spending restraints, and they are indulging in a nasty back-lash against Germany, resuscitating old enmities and war-time wounds, accusing Germany of having looted Greek wealth under the Nazi war machine.

The natural human impulse would be to let Greece and the other PIGS flounder. But since financial institutions are now globally intertwined that would result in huge bank collapses, which would benefit no one, bringing down financial ruin on banks having no connection to the ill-considered loans, but dependent on the health of the ruined banks to keep their own solvent.

And the same is true of countries innocent of the ruinous policies of the PIGS nations; well-run and mindful of careful government spending; they too would suffer. As it is, because of the disaster of downgrading government debt to junk status for Greece, and more on the horizon for other countries, world stock markets have been enfeebled and currencies downgraded.

The world cannot afford to bail out these reckless governments, and they cannot also afford to let them flounder into ruination because of the far-flung consequences. It's an instance where banks should have been far more abstemious in their generosity to clients who clearly were living above their means; a mirror image, in a sense, of the U.S. mortgage debacle that initiated the now-recovering global financial collapse.

Countries that have felt complacent in living beyond their means and encouraging their citizens to do the same, have infantalized themselves politically, socially and economically. Yet their feelings of entitlement still exist, and although they are themselves responsible for their financial plight, they blame outside sources.

How very human. How very adolescent. How very irresponsible.

Labels: Economy, Environment, European Union, World Crises

posted by Pieface @ Wednesday, April 28, 2010