Tuesday , 18 June 2024

Greek Fiscal Irresponsibility Is No Surprise! Here's Why

Is it a coincidence that Greece, a country with a 40% smoking rate, has dug itself into such a financial mess? What is fiscal irresponsibility, if not an unwillingness to deal with discomfort today in exchange for future financial health? [Let me explain why an analogy to a country’s addiction to smoking is so appropriate when considering the Greeks’ attitude to their country’s sovereign debt woes.] Words: 650

So says Vedran Vuk (www.caseyresearch.com) in edited excerpts from his original article which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited below for length and clarity – see Editor’s Note at the bottom of the page. (This paragraph must be included in any article re-posting to avoid copyright infringement.)

Vuk goes on to say, in part:

Recently, Bloomberg had an interesting article on Greek cigarette smokers titled Cigarette Taxes Can Help Cure Two of Greece’s Ills. The piece focused on the extremely high rate of smoking in Greece and the ability of taxes to lower both the country’s deficit as well as its bad habit. Here’s an excerpt of the some startling statistics:

“In 2009, a shocking 40 percent of Greeks smoked. That is almost twice the Organization for Economic Cooperation and Development (OECD) average of 22 percent. In France and Spain, the smoking rate was 26 percent. In the U.S., the rate is half that in Greece. The Greek rate was six percentage points higher than even Russia, the only other developed economy whose rate was more than 30 percent. In Greece, smoking rates exceeded 30 percent even for medical students, a study by Constantine Vardavas and Anthony Kafatos of the University of Crete found.

Perhaps even more troubling is that, in the past decade, the share of adult Greeks who smoke rose by almost 6 percent. Over that period, in the OECD as a whole, smoking prevalence declined by 18 percent. The only other developed country that experienced an increase in smoking was the Czech Republic – but Greece’s rise was larger…

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One of the causes of high and rising smoking rates in Greece has been relatively low cigarette prices. In 2011, a pack of 20 premium cigarettes cost a little more than $5 in Greece, compared with more than $8 in France and more than $11 in the U.K. and Ireland, according to the Tobacco Manufacturers Association. In the U.S., prices vary significantly by state; in New York, a pack costs more than $10.

The prices in Greece have reflected relatively low tax rates compared with other European countries. Before the recent policy changes, that pack of 20 cigarettes carried a tax of less than $4. In France, the tax exceeds $6. In the U.K., it amounts to almost $9.”

There are other factors to consider – healthcare costs, for example. With a universal healthcare system, the average Greek smoker has little concern for the financial impact of his habit [on the cost of such care to the state and, in addition,]… many smokers will pay big out-of-pocket expenses for the habit. The other issue is a cultural one involving tobacco. [In much of Europe, there is a]…café culture of coffee, beer, and cigarettes as a daily social activity for practically everyone aged thirteen through death…

To sum up tobacco addiction, it’s an unwillingness to face discomfort today in exchange for future health and years of life. I don’t intend to demean any smokers among our readers, but that’s just the honest truth – I’ve been there myself as a former smoker. So, what’s that got to do with Greece?


With today on their minds rather than tomorrow, the Greeks spent like crazy on universal healthcare, pre-60 retirement benefits, and innumerable other government programs. This is really the same as the mentality behind smoking. You put off quitting because it isn’t convenient. Then, you half-heartedly quit for a week only to find yourself smoking again. Similarly, with its finances, the Greek government kept smoking through piles of money and kept putting off its responsibilities for a later date.


Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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