How to Compel a Fat Cat to go to Work?

Whereas the fiscal situation in Eurozone appears in general to be improving, then in some peripheral member states, especially in Greece and Cyprus, but also in Portugal the economies are still declining and the commercial banks or governments need systematic support from the European Central Bank and from the European financial stability mechanism.

The core reason of mounting debt and governmental budget deficit is of course quite evident – low productivity and competitiveness of national economies – which keeps governmental costs continuously higher from revenues (in Greece the budget deficit was 12.7% in 2013).

Aside from a group which hopes that this problem will solve itself with systematic monetary injections from the ECB and a second group who are sure that the problem seems to be cultural (e.g. low fiscal discipline in Greece, or high level of ‘black money’ in Cyprus) there is also a third group (creditors) who are mostly interested what should be done or reformed to get the peripheral economies finally grow and become able to service their debts.

Despite the great complexity of the problems, this question is in general as easy to answer as the question “How to make a fat cat to work so effectively that he could repay all the old debts caused by limitless eating in recent decade”.

In practice, the challenges faced by peripheral indebted Eurozone economies (especially Greece and Cyprus) and an overweight cat are surprisingly similar.

First, both were able to function in a balanced way and independently before getting to a solidarity based partnership offering them endless food rations or subsidies. It means that not only theoretically but also practically it is possible for the Greek economy and a fat cat to function without external support.  Second, during the partnership years (decades), endless consumption and welfare benefits have been so devastating to skills and overall fit, that today even the short term independent survival (structural balance in terms of governmental budget) seems a very complicated challenge. Third, there still seems to be hope and even expectation (especially in Greece), that someone will keep offering welfare free of charge, despite all the warnings of a painful diet being necessary. Fourth, an already experienced reduction of welfare and the growing stress has significantly diminished the will to cooperate with the ones who suggest possible ways for diet and cure.  

There have also been heard suggestions that the fat cat should go to take up a proper job and this way to earn his food and start to repay the old debts. Unfortunately, the hope to find an economically effective use for the Greek or Cypriot economies in today´s global competition is comparable with the hope to find a well-paid job for an overweight cat in a post-modern society with no mice to catch.

And even more, differently from a family (creditors) the cat seems to well remember that when he joined this wealthy family (the EU) many years ago, there dominated a vision about an ever growing wealthy life and about the necessity to show solidarity and enthusiasm to the family in return. No-one mentioned that cats should or could go to work in a postmodern society.

Creditors (like the family which offered wealthy life for the cat in the past) has taken the position that it is not their fault, that the cat has been consuming without limits and has therefore lost his (economic) health and competitiveness. And among themselves they are convinced that they told already many years ago that all the generous food and care is given not for free but to ensure that the cat will grow up strong so that he could serve the family in a profitable way.

In general the creditors (and the cat´s family) admit that the chances for the cat to repay the debts mounted during the decades´ long consumption are amazingly small, but the idea is fundamental: to show that there are no free lunches and all debts need to be repaid by everyone. And even cats make here no exception.

Published 20 July 2014

Author Viljar Veebel