Economics: It's All Greek to the Greeks

“Austerity” is a late Latin word first used in the “severe self-discipline,” first coined in the late 14th Century. In other words, it took the world 1,400 years from the birth of Christ and the end of the Roman empire, preceded by the death of the Greek and Egyptian realms, to figure out a word to describe self-discipline.

But the Greeks are going into that good night of self-denial quietly. According to Reuters, at least 80,000 protesters gathered in Athens’ Syntagma Square to let the Greek officials know that they’re not ready to surrender their heritage of economic profligacy. Never mind that Athens is struggling to avoid a debt default and that the Greek government has already had to agree to one set of austerity measures in order to get a bail-out from the European Union. Or that it needs to make another deal involving several years of extra budget cuts and more privatizations to merit a second bail-out from the EU and the International Monetary Fund.

The Greeks are mad as hell and aren’t going to take it anymore. The budget cuts imposed under the first bailout one year ago pushed government worker unemployment close to 16 percent. Protesters have gathered on the square every night for 12 days, inspired by similar protests in Spain. Some carry banners that evoke the Arab Spring movement: "From Tahrir Square to Syntagma Square, we support you!" read one banner raised above a sea of splayed hands waved at the parliament building—a highly offensive gesture for Greeks, according Reuters.

Prime Minister George Papandreou’s parliamentary majority has passed successive rounds of austerity including cuts to pensions and civil servants' salaries. But faced with the popular anger, some PASOK lawmakers are becoming uneasy that the unrest could lead to early elections. A political stalemate would raise the risk that the new bailout deal might unravel. The new bailout could end up costing more than 100 billion euros, if Athens still needs foreign aid in 2013 and 2014.

Greece agreed its first, 110 billion-euro, bailout a year ago. But this assumed that it could resume borrowing commercially early next year, which now appears inconceivable. This is what happens when a public, government sector outgrows, or worse, replaces the private sector: it consumes itself, spiraling ever downward in an attempt to keep itself going. Higher salaries, more benefits, more unionized employees lead to more taxes, more loans, more debt, and a devalued system of increasingly worthless paper money.

Every attempt to rein in the excessive spending only leads to more civil unrest by the socialized unions. Credit is ruined, private sector businesses cut back on their employees, or go under altogether, further reducing the tax base until there’s nothing left but a spinning game wheel and a government bank printing out funny money.

The object of studying history is to learn to not repeat it. In this case, it’s modern Greek history Americans need to study – and not repeat. This is a history lesson we can’t afford to fail.