The Greek referendum that has been in the headlines in recent days is a severe warning to the Enriched World. Most commentators – such as Time here – have argued that it stands impossible for Greece to carry out needed funding cuts without losing the trust of their electorate – and they are right.
Experienced economists know that, for a nation without natural resources to build a tax base upon with minimal risk of losing businesses – Greece is geologically much too young to possess deposits of iron, aluminum, titanium or other minerals abundant enough to constitute a long-term resource base – a one-third cut in welfare is totally inadequate to attack government debt. As Hans Hoppe long-ago noted in his Democracy: The God That Failed, public welfare would need to be cut out completely to fully eliminate Greece’s debt. However, returning to the limited government of before universal suffrage would, throughout the Enriched World, definitely produce extreme violence demanding complete seizure of wealth from the business élite. Without the ability to seize Australian resources for the Enriched and Tropical World, this idealised “world communism” would simply not provide prosperity.
The extreme ease of exhaustion of natural inorganic resources in the Enriched World means it is (at all events today) impossible to maintain more than a primitive society without the resources of Australia, Arabia and southern Africa. This is even more true for renewable energy than for fossil fuel-based power: renewable technologies are heavily dependent upon minerals not found in the Enriched World, or found only in very localised regions thereof.
Whilst this business élite has many flaws in its way of life as is noted by insider Andreas Dracopoulos here, it is hardly likely that even if these could be corrected it would be the desired result of equality that the working class has always seen as its ultimate goal. Taxing what Greece’s wealthy ship owners – an industry in which Greece has its only “inherent” comparative advantage owing to numerous islands on the tide-free Mediterranean – earn abroad might be plausible: as much as with Australia’s much vaster and more polluting mineral wealth, if Greece were able to tax its shipping sector it would certainly reduce its losses. However, there are certainly extreme dangers in an economy with such a limited and singular resource base, because there might be switches away from shipping and to much-more-polluting (in terms of requiring extremely energy-intensive metals like titanium) air transport, which would add to the already-vast public losses of the Greek government. It is also possible that if the Greek government taxed what its shipping magnates earn abroad then they would move to bases in foreign nations. Whilst this is not easy because of Greece’s location allowing for more shipping bases than just about anywhere else, it would still be almost certainly easier than for Australian mining magnates who, except with chalcophile elements, almost always live upon the world’s largest reserves of the metals they mine.
The crisis in Greece potentially provides a great lesson for the rest of the Enriched World, which possesses the same comparative disadvantage, debt and unemployment problems as Greece to a lesser degree. If Greece were able to cut taxes and spending by the amount advocated by the Austrian School that its government debt would be reduced, but money wages would fall dramatically and, with the greater bargaining power of employers due to transport improvements, real wages might fall as they did not a century ago in order for each Enriched World nation to be potentially competitive.
Even if real wages did fall across the Enriched World, the benefits from lower prices there would be very large. For one thing, there would be potentially greater diversity in Enriched World economies than tourism and high technology, which have proven hopeless at preventing lowest-low fertility and extreme exclusivity in nations able to support large populations at low ecological cost. Secondly, the Enriched World’s extremely individualistic culture might be ameliorated, and the development of family and community to end lowest-low fertility a possibility. Indeed, in the long-term the Enriched World might be in the long term be less powerless – more able to contain the ecological devastation of resource-rich nations like Australia, South Africa and the oil states with their greenhouse pollution and unsustainable agriculture – with lower wages and prices, because it would not be burdened wiht funding a selfish class without resources to do so.