Has this actually happened?

Chance would be a fine thing.

This is the usual brain rot excuse - what if wages outstrip productivity?

Well - what if they do? Profits and dividends can always be cut to keep prices level. It's not as if leaving profits and dividends to accumulate is actually going to drive investment.

But apparently this realisation is unpossible. Spending on wages must always be cut first, and must be cut more and more severely, until - er - only millionaires have anything left to spend.

At this point austerity can be applied, the state can be bought, and the cycle can repeat elsewhere.

It's specious nonsense. We know that wages and productivity have been disconnected since the 70s - which is, incidentally, when this idea first became something that "everyone knows" i.e. that paying people too much was the primary cause of the inflationary shocks that were actually caused by energy price increases and by Nixon's default on US obligations.

And for the proponents - in what sense is what's happening to Greece now significantly better economically than what happened to Weimar Germany?

A great idea is to avoid massive wage inflation that is completely disconnected to productivity increases...

No, this has not actually happened... I've quoted Erik Jones many times, here's one more:

Let's start with some data - all of which is taken from the Annual Macroeconomic Database of the European Commission and is freely available on-line.  The most damning data against Greece is the movement in real compensation per employee.  If we set the year 2000 equal to 100, then by 2009 Greece was at 122 while Germany was at 102.  This would suggest that Greek real wages have risen by 20 percent more than Germany - and they have - but that tells us very little about competitiveness.

What matters in terms of a head-to-head competition is how Greece and Germany compare in the cost of labor per unit of output and not the real compensation of employees.  Moreover, we should look at their performance across the European marketplace as a whole.  By that measure, if we set the year 2000 equal to 100, then by 2009 Greece was at 98 while Germany was at 95.  Germany is still doing better than Greece, but only by a little and both have improved against the rest of Europe.

In fact Greek (inflation adjusted) wages lagged behind productivity increases all through this whole bubble period. And mind that the wages themselves were increasingly unequal... Inflation in Greece was profit driven.

As for productivity increases, check at this EUKLEMS report, p. 14

The road of excess leads to the palace of wisdom - William Blake