Who are the Real PIGS?


As Europe continues to flounder, and as people continue to wonder whether (or more likely, when) Greece is going to default on its sovereign debt, various commentators have bandied the epithet “PIGS” (or “PIIGS”, depending on which nations a commentator wants to include).

By this acronym they refer to a group of countries — Portugal, Ireland, (Italy), Greece, and Spain — that have borrowed profligately, unlike such disciplined places as France, Germany, and the United States. What the miserable PIIGS need to do is start getting their snouts out of the troughlearn to manage their economies efficiently, as their betters do.

It’s obvious that the PIIGS need to liberalize their economies and better manage their fiscal houses. But the morally supercilious tone of the commentary annoys me. I don’t think the US or the major European states are in any position to be giving lectures. Their own levels of debt are outrageous, too.

A recent report brings the point home. If you don’t look at sovereign debt by sheer amount, but look instead at per capita debt — that is, take the aggregate national debt and divide it by the number of citizens in a country — you will see that the PIIGS aren’t as piggish as we are.

Spain’s per capita debt is $18,395. Portugal’s is slightly more, at $19,989. But France’s per capita debt exceeds these two by a wide margin. It’s $33,491.

Again, Greece is outrageous at $38,937, Italy at an amazing $40,475, and Ireland — Erin go Bragh!—at a staggering $43,887.

But the US, the paragon of fiscal rectitude, already stands at $44,215 per capita — more porcine than any of the PIIGS. And under Obama’s latest budget plan, that debt will reach $75,000 per capita (in current dollars) within a decade.

Americans can truly join the PIIGS as they squeal “Oink! Oink!”

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By "apocolyptic scenario" I mean the scenario statists, ans socialists have been using using for the last 100 years.

You know the one. "If "we" don't resdistibute wealth from the undeserving wealthy, to the undeserving poor, the poor will riot, overthrow "democracy" and install an even more severe form of socialism than "we" are advocating."

There are many that are trying to betray the protesters in Athens as just those kind of people. But, a great many are not. A great many of them just want the EU and Greek governments to just leave them alone, stop taxing them at incredible rates, and let them live their lives free of statist intrusion.

John Richardson

Per capita debt is a perfectly reasonable statistic as long as it is not viewed in a vacuum. Debt as a percentage of GDP is the more usual stat cited for good reason. Debt per se is neither good nor bad. Default risk - and the risk of idiotic policies being put in place to stave off default when you can't prevent it by simply making payments - is what matters. Right now, the US is not in good shape, but the situation is also not yet dire. But as you project out, it's hard to be terribly optimistic that all will remain well and downright irresponsible to assume that all will be well forever, or even for long.


A couple of key differences between the US's debt and Greece's.

1) the US is paying almost no intrest on it's debt, at the moment. Greece is paying around 7% 2) the US GNP is growing and not in the negative like Greece's is. So, the US can pay back the money it borrows, unlike Greece, which has little chance of paying off it's debt.

Gary Jason

I find your view overly sanguine.

First, we are paying a low interest on our sovereign debt for now only because we look more stable than Greece. That may change quickly, if our economy stumbles or the bond market starts to realize just how deeply in debt we are--something like $100 trillion in unfunded liabilites (between social security, medicare and medicaid). As that becomes apparent, you can bet we will have to pay higher interest to keep borrowing.

Second, we are at the height of our recovery cycle from the recession that ended three years ago, and our growth rate is less than three percent....What happens when the next recession hits, and our economy shrinks again?

But my thanks to you for reading my piece.

Mark Ian Uzick

First, we are paying a low interest on our sovereign debt for now only because we look more stable than Greece.

That's not true; it seems that you're too sanguine as well: The real reason the rates are low is the Fed policy of "financial repression"; they're probably going even lower, to negative rates.

With current debt levels, allowing rates to rise will cause treasuries to default. Barring a Ron Paul presidency, the future course of Fed policy will be to bail out the banks, their creditors and government at all levels via financial repression's devaluation of all dollar denominated debt. They can, in effect, hide debt defaults by embedding the defaults within the default of the currency itself. They then, of course, try to cover up the devaluation of the dollar by manipulating, in a dishonest way, how the CPI is calculated.

Mark Ian Uzick

Sorry, I used "creditor" where I really meant "debtor".


I enjoyed your article.

However, the monetary, and economic system of the US is far more complex, and successful, than that of Greece, or Ireland, or Portugal. For the immediate future, at least.

Apocolyptic scenarios must be excluded, just as utopian scenarios must. The most likely course of events in the next 15-30 years is that the US continues to borrow heavily, the US economy continues to earn just enough to pay off this debt. And the Fed tries to manage the debt.

This is very far from an ideal economy. And it is a slow decline into mediocrity. But it's what the US populace wants. And it's what we shall receive. The one thing that will really hasten this decline is the current attempts to deny immigration.

Gary Jason

I thank you again for your comments. And I certainly concur that allowing immigration--especially, allowing immigrants with technical degrees--is essential to halt our decline.

But I still think you are too sanguine. I would ask you to consider the fact that as the Baby Boomers--all 78 million of us, i.e., well over a quarter of the population--retire and stop paying taxes even as we start to consume massive amounts of government resources, the strain will dramatically accelerate. The last estimates I saw put the unfunded liability of the three main entitlement programs--social security, medicare and medicaid--at over $100 TRILLION dollars. This will be on top of welfare spending, education spending, defense spending, spending on interest on the national debt, and on the vast array of other programs upon which the federal government spends.

For the record, I don't predict "doomsday." Herb Stein put it best: if something is unsustainable, it will eventually stop. I see the U.S., like Greece, eventually simply defaulting on its sovereign debt and having to slash programs. A lot of pain, a lot of economic recession, a lot of inflation, a lot of population decline, and a lot of riots. But no "doomsday," if that means the nation collapses and dies.

Mark Ian Uzick

The most likely course of events in the next 15-30 years is that the US continues to borrow heavily, the US economy continues to earn just enough to pay off this debt.

How can you predict that something will continue to happen when it's not currently true? The Fed has been printing money to pay off the debt plus the current growing deficit by buying new debt.

The "apocalyptic scenario" that you speak of is no scenario; it's just an apocalypse that's currently happening.

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