Will we soon have riots like those in Greece?
This graph shows that we're on track to reach Greek levels of debt in about ten years.
Most reporting on the Greek riots miss the big point:
The Greek "austerity" reforms aren't nearly enough.
Yesterday, Greece's Parliament agreed to cut $4.4 billion in spending this year. Good for them. But it's a measly 3% of their budget. Even after the cuts, Greece's government will continue to spend nearly 50% of the country's GDP.
That's why the country went broke, and handouts from Europe will just kick the can down the road.
Greece has agreed to lay off 15,000 public workers this year. But that's just 2.1% of the bloated payroll. 705,000 Greeks still work for the state.
Also, Greece will continue to lag behind the world until it reforms its absurd labor laws.
Heritage Foundation Senior Policy Analyst Anthony Kim points out that in Greece, it's illegal to:
•Hire a temporary worker
•Work more than 5 days a week
•Work more than 40 hours a week unless you get paid 25% extra per hour.
•Fire an employee of 20+ years unless you give them half a year of notice and, after they leave the company, 36 weeks of severance pay.
All that scares Greek businesses. Why hire someone if you must pay them for almost a year if you fire them? And if you fire them for being negligent: "Obligation of compensation is not terminated in case of neglect of responsibilities but only in the commitment of criminal acts."
If a business needs to fire multiple employees because they're not needed anymore, they have to go through this: "Dismissals due to redundancy are treated by the courts as abusive when an employer does not follow the proper social order. In order for them to be valid, the employer should prepare a table of wage earners classified into four categories on the basis of objective criteria, namely work output, period of service, family responsibilities, and general financial condition."
In the U.S. - which ranks first in labor freedom - none of those laws apply. That's one reason why America's unemployment rate is 8.3%, while in Greece it's about 21%.
Don't politicians now understand that labor laws deter hiring? No wonder Greek youth unemployment is 48%!
The Greek Constitution includes lines like this: "Work constitutes a right and shall enjoy the protection of the State."
Such "rights" destroy entrepreneurship and hurt workers.
Heritage ranks countries by their economic freedom. Guess where Greece stands compared to other countries on labor freedom? 171 out of 184. One rank ahead of Hugo Chavez's Venezuela.
Even in Greece's austerity bill, there are stupid new rules like: a freeze on all private sector wages. It's essentially a ban on business rewarding good work.
We called the IMF and EU to find out why they would force a policy like that on Greece. IMF spokeswoman Conny Lotze told us:
"The [IMF] did not propose to freeze wages. That was a proposal by some of the [Greek] government parties."