After ruled by military junta for several years, in 1974 the Greeks regained its democracy. This also brought prominent Papandreou dynasty coming back to politics. Back to 1963 George Papandreou became Prime Minister and was toppled by military coup d’etat in 1967.
In the new democracy era, Andreas Papandreou, the son of George Papandreou, American-trained economist came into power after landslide victory in 1981 legislative election. His party was PASOK (Panhellenic Socialist Movement). Andreas was a charismatic leader. During his tenure, he had done so much for the Greeks to prosper. He rolled out welfare state system in which the state took care of its citizens generously from cradle to grave. He took office first in 1981 – 1989. Marred by alleged financial scandal, he lost election. But in 1993 he took the helm again until his health deteriorating and retired in 1996 and died in the same year.
For Greeks, memory of Andreas Papandreou is still commanding influence. In 2007 and 2010, people voted him as the best Greek Prime Minister.
Then the economic crisis came and Andreas’ welfare state system heritage is in question. Andreas brought prosperity with untold consequences. Enormous spending to run welfare state system turns out to be a time bomb that is exploding now. Many see that the welfare system is the culprit of the unfolding Greek tragedy.
For instance, the Greek pension system is “better” than that of German.
In Germany, the retirement age is 67 increased from 65, but in Greece is trying to increase from 61 to 63. In Germany, 40 years of service allows the civil servant to get pension fund of 70% of final basic salaries, but in Greece only 35 years, if they have reached 58, and get 80%.
Not to mention, in Greece if you are a daughter of civil servant and somehow you don’t get married then the government will give you special stipend.
As a matter of fact, Greek government can certainly give more to its people as long as Greeks are more productive. It means the government can get more money from taxes or other sources. Unfortunately, it can’t. It relies merely on government bond as a last resort. The government sold pieces of paper to investors and pledged to pay the debt in the future. And now the Greek government can no longer pay the debt.
Greek welfare state fails. But this is not the end of the story.
Given the huge debt, the solution is very simple: austerity measures coupled with raising tax! The pension age should be raised, pension fund decreased, some entitlements deleted. The problem is you can’t do these painful policies through democracy. After enjoying for decades the benefit of welfare state, no ruling parties can implement these without protests. No political parties can ask people to sacrifice. If they do it, they will lose popularity eventually lose power.
And George Papandreou, the son of Andreas Papandreou, the Greek Prime Minister during crisis, must leave office because of this.
Facing this dilemma, Greece turns to technocrat who is unelected through election to lead the government. Lucas Papademos, a former European Central Bank vice president, has been asked to be a hoped-for savior. And several days after Papademos sworn in, Italy which is also in economic crisis follows suit. It is Mario Monti, former EU-commissioner, another unelected technocrat, to become Prime Minister.
This action reveals that democratic government doesn’t work in economic crisis, particularly, when quick, difficult, unpopular policy is needed.
Another blow to democracy and China is laughing!
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