Lesson from history 3: Modern Greece

Historical Archive

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In the second follow-up to my article on Spartan constitutions, I want to look at what lessons can be learnt from modern Greece.

From a free-market perspective, I argued that no bank should have been bailed out during the 2008 financial crisis. Businesses take risks, and bankruptcy is one possible consequence of poor decisions.

People would undoubtedly have suffered immediate losses, but those losses would have been recognised and the recovery process begun. Instead, three years later, many people had still lost savings, pensions had declined, homes had been repossessed, and the same banks remained at risk of failure while threatening entire nations.

Bankruptcy is part of the economic process. It destroys bad debt, allowing resources to be reallocated. New banks, free from legacy debts, could have been created to purchase the viable parts of failed institutions.

Greek Prime Minister George Papandreou announced a referendum on the European rescue package, effectively asking the Greek people whether they wished to accept prolonged austerity in return for continued financial support.

Many Greeks opposed years of austerity which they believed primarily benefited German and French banks rather than the Greek public.

Papandreou's decision to call a referendum represented, in my view, a return to democratic accountability by allowing voters to decide the country's future.

Although Greece faced genuine fiscal problems, I argued that the long-term market solution lay in sovereign default and currency devaluation, with speculation already growing about Greece leaving the euro and restoring the drachma.

The wider concern was that similar pressures could eventually affect Italy and Spain, threatening the stability of the euro project itself.

At the G20 meeting in Cannes, Greece's referendum became the central issue. I argued that the crisis reflected political failures in designing and managing the single currency rather than failures of ordinary citizens.

Democracy ultimately requires governments to answer to voters. Where governments cease to represent the interests of the people, political systems become increasingly unstable.

I suggested that healthy democracies require a balance between libertarian and authoritarian political traditions so that governments remain accountable through electoral change.

Applying those ideas to Jersey, I argued that economic pressures, tax increases and growing public dissatisfaction would eventually produce increasing political unrest unless meaningful reform took place.

I concluded that Jersey's political establishment could not indefinitely resist economic and constitutional change, and that democratic accountability would eventually prevail.

Two cheers for Papandreou for finally giving democracy a chance to live again in Greece. Sadly, I believed Jersey politicians were not paying attention.

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Historical Archive Update

This page was updated on 27 July 2026. The content has been preserved as originally published. This update was undertaken solely to modernise the HTML markup, improve accessibility, correct obvious spelling mistakes and grammatical slips, update obsolete links where appropriate, and bring the page into line with current web standards.