TheMoneyIllusion » Puerto Rico or Ireland? The choice facing Greece

Greece faces two options.  One is to become a sort of ward of the EU, kept afloat by endless subsides, with a loss of sovereignty.  Here a model might be Puerto Rico, or the US possessions of the South Pacific, or perhaps the Native American reservations within the US.  These regions consume more than they produce, with the help of transfers from Washington.

But there is another model.  When I was young, Ireland was quite poor.  Articles were written explaining how the Irish poverty reflected some sort of flaw in the Irish culture, or even a lack of intelligence.  But then Ireland adopted a neoliberal economic model, and it has now become one of the richest countries in the world (although that’s a bit overstated, as its GDP exceeds its GNP due to heavy multinational investment.)  Still it’s a successful economy.

When I researched neoliberalism back in 2008, I was puzzled by Greece’s relatively high GDP per capita, given that it had the least neoliberal model in the entire developed world.  Of course we all know what happened next, that flawed model finally caught up with the Greeks.  Greece tried to maintain developed country living standards with a third world-type economic structure, riddled with corruption and statism, by borrowing lots of money.

I sympathize with the Greek people, but the hard truth is that they continually elected the flawed and corrupt governments that brought Greece to its current situation.

Source: TheMoneyIllusion » Puerto Rico or Ireland? The choice facing Greece