The Greek government is discovering quickly how imprisoned they are by all the accumulated debts and the Euro they inherit. Being part of the iron discipline of the Eurozone makes things worse. Argentina, Venezuela and others show that whilst having you own currency can help with devaluation staving off disaster for longer, you can also come badly unstuck as a country if the state spends and borrows too much even with its own currency. If you devalue too much overseas debt becomes very expensive, and imports too become much less affordable.
There are some who think it is always caring for the state to spend more. There is always more poverty to relieve, more good works the government might like to undertake, more public service to increase and improve. The problem is if you overdo it, far from being more caring, the government ends up making brutal cuts at the insistence of its creditors. I doubt Greece wanted to cut public sector wages and make large cash reductions in what they spend on their health service, but they were driven to that by poor financial management.
There are others who think that it is always good for an economy for the state sector to run large deficits. They argue that the private sector or the overseas sector can easily lend a surplus to the state, so isn’t it better if the state deliberately overspends so there is more spending and activity in the economy? Unfortunately this doesn’t work out either. Greece has just shown you can have a recession which loses you 25% of output whilst continuing throughout that period to run much larger deficits than more successful countries. If running up large state debts produced good growth and wealth increases, then we should expect countries like Greece, Argentina and Venezuela to be amongst the richest in the world.
I hope the UK is reminded of the lessons of prudence by the parlous Greek state. Borrow too much and you reach the point where no-one wishes to lend you any more. Borrow too much and you have to spend more and more of your income on interest charges, leaving less for what you need. Borrow too much and you end up having to cut drastically as your creditors insist.
In each case there is also all the spending which is not as advertised. Governments spend too much on themselves very often, and are commonly inefficient and badly managed. In a country like Greece tax collection is very difficult, as so many people scorn the state they live in, regarding the taxes as unfair or avoidable.