As the financial meltdown continues in Greece, some in this country have made a habit of warning that the United States is just a couple of steps behind. The reasons for Greece's inability to pay its debts are varied, but the overwhelming driver is a fulfillment of Margaret Thatcher's brilliant but simple reason socialism fails, i.e. "Eventually you run out of other people's money." Greece has been essentially living off the money of its European Union partners for many years, and as the saying goes, it is time to pay the fiddler.
But could what is happening in Greece because of debt happen to the United States? The reasoned answer to that question is an almost guaranteed "No." It is true that Greece's debt is 170% of their Gross Domestic Product and the United States debt is about 100% of its GDP. Some of those spelling economic doom for the U.S. based on what has happened in Greece also point to the Greek citizens' expanding dependence on government and high unemployment as corollaries present in the U.S. that will produce our own Greek tragedy.
But corollaries can not be mistaken for causation. And just because some of the factors present in Greece have a similar presence in the United States does not mean there is automatically a law of equal outcomes. It is true that the United States government has taken on far to much debt, but the Greek debt at 170% of their GDP does not bare a close relationship to the United State's debt of 100% of its GDP. The total GDP of Greece is the size of Miami proper. The smaller the economy the greater it will be affected by debt, and the larger an economy the more debt to GDP it can withstand. In other words there is no economic comparison to be made between the largest economy in the world, the United States, and one of the smallest, Greece.
Another major difference between Greece and the U.S. is that Greece gave up its currency to sign onto the Euro. They then went on a spending spree, mostly for pensions and entitlements. Since the Greeks are unable to devalue their currency to spur economic growth, because they are chained to the exchange rate of the Euro, their economy is destined to continue its tailspin. The United States dollar is the reserve currency around the world. Zimbabwe recently abandoned their currency and chose instead the U.S. dollar. Throughout the world the dollar is still the most accepted currency, and that is not going to change anytime soon.
So while it is a very populist idea to proffer impending doom and collapse of the United States economy based on minor similarities it has with Greece, the prediction of economic malaise for the U.S. on the level seen in Greece does not bare closer examination of the facts. As many people that are unemployed in America, she has a long way to go to catch the Greek unemployment rate of 27% in the general population and 50% among Greeks under 30. Those pushing the notion that the U.S. is on a Greek course to economic doom also like to say China is somehow going to replace the U.S as the economic leader of the world. That is not very likely, especially with China's recent economic collapse of their own. Other nations do not trust China enough to make their currency the reserve currency and the Chinese markets have collapsed in recent weeks.
The reasons are many that what has happened in Greece can not happen in the United States; the U.S. dollar is desired and accepted all over the world, we are able to control our money supply ourselves, we still have one of the least corrupt and most stable governments in the world, and we have the strongest military. That last data point people do not often think about as being a metric for a strong currency, but it is very important to other nations of the world when choosing the dollar as their reserve.
None of what I have said is in any way meant to say that things are just peachy here in the United States, they are not. The federal government must get spending under control and begin to pay off its rather colossal debt. Far too many Americans are unemployed or under employed, and the nation's economy has been stagnant far too long. But the U.S. economy is so diverse and large that it would be very unlikely that an economic collapse on par with Greece could happen. Even an economic collapse similar to the Great Depression of the 1930s would be highly unlikely, the economy then was still very much an agrarian one and today there are hundreds of industries that did not even exist then.
So be concerned but not fearful. Many of those proffering the "U.S. is Greek in waiting" scenario are pushing a political agenda or trying to stoke fear in order to sell gold. The United States is still an exceptional nation, and none of the Marxists in their enclaves in Manhattan, Washington D.C., or Chicago are going to change that or corral the spirit of freedom that exists in the vast heartland of this great country.