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Subsidies: one of the very best ways to screw up an economy and a society

Krasimira is gloomy about the future. She doesn’t think Greece will implement the necessary reforms and will, in the end, have to leave the eurozone. As ever, she views the situation through a Bulgarian prism. “Greece has received €30 billion from Europe,” she says. (In fact the figure is far higher). “That’s more than seven other Balkan countries have received put together — I saw it on Bulgarian TV. You’ve got to pay back your debts in order to take more loans. If I ask you for a loan you’ll give it to me; if I can’t pay it back you wont give me any more.”

She has a final comment — on the EU subsidies. “In Bulgaria the state doesn’t give subsidies to the farmers.” She points to some sprinklers watering the garden. “So what you see here: water being wasted, you’ll never see in Bulgaria. My brother has 2,200 hectares there and grows corn and wheat and he is not allowed to overly water them, he has to rely on the weather. If it’s not good he has a problem.”

“Yes, the subsidies have made Greek farmers spoiled and wasteful. But since Bulgaria joined the EU and started receiving subsidies you’ve seen the same thing — people receiving subsidies and using them to buy houses and consumers goods instead of investing the money.”

The EU as resource curse: it’s an old tale — and one that seems to have had disastrous effects for Greece, which for years grew fat on easy money. Now in its time of crisis it must watch its poorer, leaner neighbor to the north further compound its deep, almost existential, despair.

– David Patrikarako, from the article Greece vs Bulgaria

9 comments to Subsidies: one of the very best ways to screw up an economy and a society

  • CaptDMO

    E#0,000,000,000 in debt, that was squandered on “immediate gratification”?
    WOW! I guess that made the USA “Too Big to fail” in the last 7 (or so years.
    Say, what was the collateral that Greece “put up” for that “loan”?
    “Free” shipping through international waters between Japan and China?
    Powered with “free” fungible world market oil, from Iran and Venezuela?
    SEE? It just hasn’t been done RIGHT yet!

  • CaptDMO

    Wait! Wait! Any “historic”, or “family” connections between Greek shipping, and Venezuelan oil?
    Here’s the bill. Will that be cash, or “credit”?

  • Jacob

    “and one that seems to have had disastrous effects for Greece”

    No. Greeks have feasted and grown fat on EU (other people’s) money. Now they get less of that money (mind you – returning the debt – that isn’t happening and won’t happen). They just receive a little less, so they return a little bit to more natural dimensions. Where’s the disaster?

  • Where’s the disaster?

    Greece’s banks had essentially collapsed and businesses simply cannot get at their own money. Until this is sorted out the situation for Greek businesses is catastrophic.

  • Paul Marks

    In Estonia going into the E.U. has meant the introduction of regulations the nation was proud not to have.

    In Bulgaria it (as the post points out) is had meant farm subsidies.

    In Greece it led governments (of both major parties) to utterly mad – promising the people all sorts of goodies that could not possibly be afforded.

    Because “now we are in Europe [meaning the E.U.
    ]we can have the things Europeans have”.

    The E.U. can not cure the problem – because it is part of the problem.

    It gave people expectations that could not possibly be fulfilled.

    Although, yes it was Greek governments (and the people who voted for them) who set up the spending schemes that have bankrupted Greece.

    Entitlements that the Daily Telegraph (bafflingly) implied do not exist in Greece.

  • RRS

    Much as one may detest reifying or giving human personification to “The E.U.,” it is a subject of curiosity now as to why the E.U. chose to expand as it did.

    What were the factors and forces within its members’ politics or economics, or from the inclinations of their diverse populations, that led the E.U to “want” to include Greece in its immediate sphere of influence? What did the E.U. expect to gain? And thus, to incorporate Greek economy (and known social drift) into the functions of a common currency.

    Note the distinction from Turkey: what might be “gained” and what might be the “costs” of social adjustments vs. economic offsets.

    We seem capable of understanding why one neighbor wishes to graze his goats on the more verdant pastures of another; but, not of finding a motive when that adjoining neighbor invites the grazing.

  • Myno

    RRS

    Why add weak countries to the core EU? The “glory” of an expanding “EU” serves the interests of the bureaucrats who run it, even at the cost of “minor” economic consequences. By wrapping the combined populous in the mantle of togetherness, they are able to charge more swiftly towards collectivism.

  • Nicholas (Self-Sovereignty) Gray

    Maybe EUrotopia just decided to expand because it could? No, that can’t be the whole truth, or Turkey would have been accepted gladly into the Eurozone. I suppose they didn’t want the Turkish army overthrowing Brussels, since the Turkish armed forces think of themselves as the guardians of Ataturk’s legacy. The Eurocrats want to rule over the Euro-peons without any fuss or bother.