Worse still, where are the voices on the left who share my outrage that Greek democracy is overridden or ignored by the EU authorities? What part of the Greek condemnation of austerity policies did the EU not understand?
The left and I might not agree on what would propel Greece back to prosperity. What I think the remedy for the Greek economy might be is less relevant, as I am neither a voter nor an adviser to the government. Where we should agree is that the single-minded policy of cuts in the public sector, membership of the euro, strict monetary and banking controls, and an uncompetitive exchange rate is not working and needs revision....
Were the EU truly democratic, or were it still an association of democratic states, it would listen to Greek voters – the voters who have already crushed the parties of government that presided over the crisis. The tragedy is that they seem to have no impact on the rest of the EU, which now holds the fate of the Greek people in its hands. It is not just the Greek economy that faces a major challenge, Greek democracy itself is on trial.Rather than saying, "Greek democracy itself is on trial," I would put it that democracy in the EZ and EU are on trial given the institutional arrangements and a neoliberal leadership that doesn't value democracy and sees it as an obstacle to economic liberalism based on propertarianism.
The Guardian | Comment Is Free
The Greek people voted against austerity – why is the EU ignoring this?
John Redwood
ht Neil Wilson
12 comments:
"Rather than saying, "Greek democracy itself is on trial," I would put it that democracy in the EZ and EU are on trial given the institutional arrangements and a neoliberal leadership that doesn't value democracy and sees it as an obstacle to economic liberalism based on propertarianism."
That's exactly It. It needs to be dismanteled. They are trying to kick the can once again and they might but this has to end in some time. Hardship in Greece is probably going to damage the credibility of EU institutions, may be beyond repair. it is now clear that this monetary union is not breaking up without EU breaking up.
I have read this kind of argument before, and it seems to be an argument Tsipras himself leans on, but the argument makes no sense whatsoever. The people in one democratic community are in no way obligated to respect the democratic preferences of another democratic community when the preferences of that second community have external ramifications that impact the interests of the first community.
Suppose the people of Texas voted "yes" to a referendum that said that Texas should henceforth dump all of their garbage in Vermont. Should Vermonters then say, "Oh well, the Texas democracy has spoken, so I guess we have to take all their garbage." Of course not; the very suggestion is absurd.
The fact that Greeks voted for a government that thinks Greece should not have to pay some of its debts to foreign countries in no way requires the people in those foreign countries who hold those debts to accept and cooperate with the Greek position.
To see how absurd the argument is, suppose the situation was reversed. Suppose Luxembourg, the richest EZ country, voted for a government that believed it should default on any debts it owes to Greece or Greeks. Would anybody say that defending the cause of democracy requires Greeks to accept Luxembourg's welshing? Of course not.
The argument for forgiving Greeks debt is based on the moral case that Greece cannot grow out of its present misery so long as it has its current debt burden, and has nothing to do with the Greek's democratic "wishes" that all of their problems be solved.
By the way, Greece can default on its debt and convert back to drachmas any time it wants. It's capacity for democratic self-determination is intact.
"By the way, Greece can default on its debt and convert back to drachmas any time it wants."
It can just default on its debt - no need to leave the Euro at all.
Which leaves Greece in precisely the same nominal position as them cancelling the debt.
However the former is a unilateral position and the latter is an agreed position. And that matters in terms of avoiding real recriminations like sanctions and other stupidity - stupidity being a hallmark of European politics as we can see.
The economic position is straightforward. Starving Greece of liquidity is creating real losses in Greece that cannot be recovered. Resetting the 'losses' in the accounts is a nominal operation that can be recovered by the ECB by inconveniencing a few electrons for the odd nanosecond. There is no comparison between the two positions.
The ECB, IMF and the rest of the motley crew have already bailed out all the private sector entities that could be affected by the operations and we already know in Europe what extracting reparations from a country that cannot pay leads to - millions of people dead in a World War.
The problem here is that the Eurozone was constructed specifically to eliminate governments as a significant player in the economic structure - essentially to make them corporations or town councils. Unfortunately they didn't have the foresight to put in place a Chapter 11 procedure for these new corporations.
The Greek government is bankrupt and should go through an agreed bankruptcy procedure to reset things in the same way and for the same reasons that we allow corporations to do that.
The ECB is issuing €60bn a month in QE. The bilateral loans to member states from Greece at €52bn - i.e. less than one month's QE funding. All of it is less than 4 months QE.
"The people in one democratic community are in no way obligated to respect the democratic preferences of another democratic community when the preferences of that second community have external ramifications that impact the interests of the first community."
Doesn't that also apply to Greece in terms of it having to alter its pension system, the way it runs its government and the way it runs its country?
Why should Greece do what Germany tells it? In the Eurozone the ECB is supposed to be neutral, not a German puppy dog. Yet the ECB refuses to do QE with Greek government bonds.
The European Commission is supposed to enforce the Stability and Growth Pact. Where are the sanctions against Germany for running an excess surplus?
So it works both ways. This is a war between a powerful country and a smaller country using Euros as bullets. The result is the same as a hot war - people dead for no good reason.
"Doesn't that also apply to Greece in terms of it having to alter its pension system, the way it runs its government and the way it runs its country?"
The rest of Europe is not forcing Greece to alter its pension system. It is demanding Greece alter its pension system IF it wants to continue getting credit from the rest of Europe. Greece is perfectly within its sovereign rights to keep its current pension system; and Europe is perfectly within its sovereign rights to stop giving Greece credit.
Right - Europe is not forcing anything.
They're just politely asking : "could you please go on cutting wages and pensions so that your economy can keep shrinking after having undergone a 25% reduction in GDP? Believe it, it's for your own good. If not, you'll be isolated from the rest of the world and condemned to a future of even worse poverty. Now just make the right choice while exercising your inalienable sovereign rights".
Jose,
Tsipras seems to have no actual plan for Greece. He wants some debt forgiveness so the Greek economy can continue muddling along in its dysfunctional way through years of extremely low employment and poor economic performance. If he has a serious plan for turning this around, I'd sure like to hear it.
Clearly he would like less "austerity" which suggests he wants a more activist government with more spending. But what is it exactly is it he wants to do beyond continuing to pay pensions? The label "Anti-austerity" is not an actual policy program.
The leverage Europe has is due to the fact that Greece wants to stay in the EZ and wants more European credit while keeping everything else the same. But creditors often impose requirements on borrowers as a condition of the credit. If Greece doesn't want to accept those requirements, then they should stop seeking foreign credit. And if their current debt burden is too onerous to couple with a growth strategy, they should just repudiate that burden and take charge of their own country. Otherwise, they are just going to have to collect more taxes from the rich.
Even if Syriza were to "win" in their standoff with The Institutions, we're still talking about a country where a spectacularly low percentage of the population is employed, and where capital development is laughably low. I have not gotten the impression that Tsipras has any coherent ideas about what is structurally wrong with his country. Greece is facing a Great Depression; but instead of putting these debt negotiations in the context of a left-style structural transformation plan to counter the neoliberal structural transformation plan coming from Europe and end the Great Greek Depression, all he's doing is haggling over credit conditions that will ultimately make only a small difference at the margin.
Unfortunately, it´s no doubt true that many Syriza leaders – especially Varoufakis – have been enthusiastic believers in the “European project” since at least the 1980s.
Without the active involvement of such left-wing persons in the pro euro camp there´s no way the European electorates would have accepted the single currency. It was born with a guarantee given by the left that it would mean more social democracy, better standards of living for the Europeans and more independence from the U.S. model. As it turned out, precisely the opposite of what happened. The "left" was either dishonest or schockingly naive.
Presently, the divergences in the negotiating positions between the eurozone and Greece amount to only 900 million euros, that is, some 0.5% of GDP. Small change if compared to the 25% drop in GDP that the EU has already imposed on the Greek people.
So it’s just a matter of one extra step by the once true believers in the euro - and they can have the much sought agreement with the beloved EU.
It´s just a question of a few more cuts to pensions and rises in the VAT – in exchange the EU will perhaps concede some debt restructuring as a face saving concession to facilitate the capitulation of Syriza. But the neoclassical economists at the IMF had already demanded (in 2010!) a deep debt haircut as a precondition for a bailout. (Sadly, they were overruled by Mr. Strauss-Kahn). The difference is that those economists defended a much larger restructuring than the one likely to be offered by the EU right now.
Thus, if an agreement is reached in the next couple of days, we’ll watch a depressing outcome in which a “radical left” government accepts conditions well to the right of those defended by orthodox economists years ago.
Politicaly, of course, it will be a sort of death warrant for Syriza and the European left in general.
To think this is about economics is naive. It's political through and through.
Look at the difference between the way Greece is being handled and Ukraine. It's transparent, and this is no small reason that the Greeks are rightly outraged.
Both Greece and Russia are being subjected to economic and financial warfare. No mystery why they are making nice to each other.
…. never take out a loan from the Camorra!
I think the Greek ethos will prevail – the 'Hero, Adventurer, Wanderer' seeking citizenship. A military coup would stir the Warrior. Perhaps the Russians will be fairer ….?
The left has become degenerate in a destructive Groupthink of its own.
You are not allowed to suggest that the EU is anything less than wonderful, you cannot infer that unlimited immigration is anything other than life improving for all, you cannot ask people to work for a living, you must be obsessed with private debt and eliminating it instantly, you must believe that the central bank can solve all problems Wizard of Oz style.
Otherwise you just don't get invited to parties.
And the ineffectiveness of the left means that the political future belongs to the right.
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