T

ragedy is surrounding Greece. Since the economic crisis in the eurozone in 2008, Greece has never recovered. The economy is shrinking and unemployment soaring. To fix the economy, Greece borrows money from the International Monetary Fund (IMF). As usual, the IMF'€™s recipe for handling economic crisis is focused on austerity.

In contrast with Keynesian economics '€” where governments spend to move an economy in recession '€” austerity measures involve government budgets tightening up and letting the economy grow by itself. This recipe is frequently wrong, and it has turned out to be wrong in Greece. The Greeks has suffered for years with austerity measures that don'€™t work. It is unsurprising that in the referendum recently held over approval of more austerity measures, the Greek people rejected them. Why does tragedy continue to happen in Greece? There are two reasons: the eurozone and the Greek welfare state.

The European Union was established to avoid wars among European nations. After two devastating world wars, the Europeans wanted unity of all countries, politically and economically, to strengthen peace in Europe. Of the EU'€™s members, some have adopted a single currency, the euro, which was introduced in 1999. The group of countries using the euro is called the eurozone.

Many, including EU members, had doubts about the idea of a single European currency. That'€™s why England has not adopted the euro. A single currency means a single interest rate for all countries involved. It is a flawed theory. Every country has a different economic performance and different economic problems. Germany is very competitive.

 It failed in theory, and now it has failed in practice.

Make no mistakes, the other problem lies in Greece itself. Welfare-state policies introduced by the much revered Andreas Papandreou, a socialist, are to blame. He served two terms in office '€“ 1981 to 1989 and 1993 to 1996.

His legacy has unintentionally contributed to Greece'€™s bankruptcy. For instance, the Greek pension system is '€œbetter'€ than that of Germany. In Germany, 40 years of service allows a civil servant to get a pension equivalent to 70 percent of their final basic salary. In Greece, however, after only 35 years, if you are 58 or older, you receive 80 percent of your previous salary.

The Greek tragedy of economic disaster is currently being written.

Erwin Wirawan
Bogor, West Java