Greek Election; Where Politics meets Economics.

Here's another blog entry from Oliver Larcombe, A2 Government and Politics student from Barnard School, giving some insightful background to the current Greek political situation:

Like a lot of keen politicians, I took an interest in the Greek general election and wasn't surprised that Mr Samaras was shown the door, given the level of government debt (Nearly $0.5 Trillion) and the Greeks generally poor economic situation. Now the left wing Syriza party have taken control of Greece. In the last few days the outcome of the election has caused a stir in the EU and the newspapers. In this article I hope to show budding politicians how deep the economic link is to politics.

Firstly, we will have to remember that Greece is in the EU and as such a lot of their economic policy is dictated by the European Central Bank plus they are accountable over their economy. The massive budget deficit is damaging the Euro and because it continues to grow, less and less people are willing to buy up the Greek debt. To stop Greece faltering on their debt the ECB has been handing them bailout packages. These ECB bailout packages come with Terms of agreement; these mostly consist of austerity and stabilisation measures. Austerity for those who don't know is the cutting of government spending plus extra increases in tax.

So think of yourselves as a purely self-interested person who heard that the plan to get rid of the government debt was to raise the amount of tax you pay and stop a wide range of government funded services you receive. If you were this self-interested person you wouldn't want this because it means a loss of your own personal welfare. The self-interested person is likely to do everything in their power to stop these plans, possibly even vote out the incumbent government to do so. In Economics it is said that we all embody this self-interested person and hold our own welfare above those of a society ignoring many externalities of our decisions, this is clearly evident in the Greek election.

So if we have a look at the main parties involved we have the previously incumbent 'New Democracy' party under the leadership of Antonis Samaras. 'New Democracy' is referred to as a liberal-conservative party so just right of centre on the spectrum. They were in the midst of agreeing a new bailout deal which meant that they would have to adopt strict austerity spending. Thus what we have seen in the general election is the shift of public opinion to the Left wing Syriza party. The Syriza party lead by Alexis Tsipras built their campaign around renegotiating the terms of the EU bailout. Syriza party have promised the people of Greece stronger opposition to the austerity measures imposed, a reversal on previously imposed austerity measures and greater spending. You can understand now how he got into power; the self-interested person voted them in.

Whilst realistically the best option may be to preserve these austerity measures until the deficit is cleared but has it isn't economically benefitting for the individual they voted him out. In this example we see a political election outcome decided by an economic decision by the public. Greece isn't the only example of this, after the economic meltdown the UK saw the Labour government ousted over their role in the meltdown and a similar situation occurred in America. There's a metaphor in Economics which goes something like; either jam today or jam tomorrow. As it is Greece were fed up with waiting for the jam and made a decision to aid their own economic welfare. So as we've observe Economics acts as the invisible hand in many political decisions.