The Cato Institute’s Dan Mitchell writes, “Centralization is the secular religion of the European elite and they want Greece in the Euro.” Dan, however, advises no more bail out money for Greece and counts Austria, Belgium, France, Ireland, Italy, Portugal and Spain as countries all drifting toward bankruptcy.
Dr. Mitchell concludes, “There is a solution for the Greek mess. Politicians need to cut spending over a sustained period of time while also liberalizing the economy to create growth.”
Given the somewhat blurry battle lines between Greece and its creditors, what’s the best outcome for advocates of limited government and individual liberty?
That’s a frustrating question to answer, particularly since the right approach would have been to reject any bailouts back when the crisis first started.
Without access to other people’s money, the Greek government would have been forced to rein in the nation’s bloated public sector. To be sure, the Greek government may also have defaulted, but that would have taught investors a valuable lesson about lending money to profligate governments.
And it would have been better if Greece defaulted five years ago, back when its debt was much smaller than it is today.
But there’s no point in crying about spilt milk. We can’t erase the mistakes of the past, so what’s the best approach today?
Actually, the right answer hasn’t changed.
And just as there are two reasons why the Greek government is being at least somewhat clever in playing hardball, there are two reasons why the rest of the world should tell them no more bailouts.
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