On one level, the recent financial agreement between the European Union (EU) and Greece makes no sense: not a single major economist thinks the $96 billion loan will allow Athens to repay its debts, or to get the economy moving anywhere but downwards. It is what former Greek Economic Minister Yanis Varoufakis called a “suicide” pact, with a strong emphasis on humiliating the leftwing Syriza government.
Why construct a pact that everyone knows will fail?Dispatches from the Edge
Europe’s New Barbarians
Conn M. Hallinan is a columnist for Foreign Policy In Focus, “A Think Tank Without Walls, and an independent journalist. He holds a PhD in Anthropology from the University of California, Berkeley. He oversaw the journalism program at the University of California at Santa Cruz for 23 years, and won the UCSC Alumni Association’s Distinguished Teaching Award, as well as UCSC’s Innovations in Teaching Award, and Excellence in Teaching Award. He was also a college provost at UCSC, and retired in 2004. He is a winner of a Project Censored “Real News Award,” and lives in Berkeley, California.
ht Clonal
14 comments:
It sounds like Robert Mundell's euro is successful beyond his wildest dreams!
Good article, thanks for posting.
Social and economic integration and cooperation require convergence of rules, laws and customs. The Greeks overwhelmingly want to remain part of Europe and that means adopting the European rules but also to some extent, Greece will change the rules of Europe. There is no avoiding it and pretending otherwise.
The privilege of winning elections means that for a time, the winners get to impose their ideology on the rest of the population and change a few of the laws. Get over it! No one gets everything they want in any social interaction.
Compromise is easy in words alone. In reality there are losers and there are winners and the negotiators aren't ever the ones who bear the burden of losses but we accept our fate for the alternatives aren't any better. We all know that during the next election, we can change things in our favor.
What are you even talking about? What does winning an election have to do with anything going on in Europe? The left "won" an election in Greece and ez policy toward Greece changed how? If anything the "troika" were motivated to punish the Greek people for voting the wrong way.
The Syriza mandate was to stay in Europe, stay in the Euro and negotiate to try and get a better deal. They did it. It didn't win anybody any popularity contents at home or abroad. But Greece has agreed to the terms and will continue to become more European. As their economy converges to that of the rest of Europe, then their economy will perform more like the rest of European countries which is better than it has been doing.
Europe has an ace up their sleeve too, all the millions of immigrants fleeing middle east conflict will ultimately give them a economic boost and increase growth rates. 80% of economic performance can be explained by population growth, the other 20% is policy. Being European though, Europeans will fight it tooth and nail and try to make it as difficult and painful for the FOTB immigrants as possible
The travail of neoliberal globalization aka neo-feudalism, corporate statism, transnational corporatism, and neo-fascism
The question is whether TPTB can pull it off without blowback severe enough to dislodge them. The US has already geared up for massive suppression of dissent, but it doesn't seem that Europe has other than the UK.
In other words, can the Empire of Chaos (ht Pepe Escobar) be built based by increasing geopolitical instability?
Ryan Harris, you are incorrect in saying that the rule apply equally - they don't appear to - not when the debt trick has been pulled on you. In the article, note particularly the segment on pharmacies. That should tell you that rules are being applied selectively.
EZ's actions in Greece are a pure power play on part of Germany/Belgium/Netherlands Axis (I deliberately chose that word) is designed to put the fear of God into France and Italy by the Germans.
It's not just about corporate capitalism, because in theory, it's the bottom line that matters for corporations.
Making the pie bigger would mean a bigger bottom line, but that's not the point. Austerity reduces the pie, everyone knows that, I can't believe for a second that anyone truly believes austerity works (well maybe jeffrey sachs, but he's kinda dim). Reducing the pie is the point, it's punitive. Workers got too big for their britches, wanting health care and a pension, thinking they're equals to the elite (quelle horreur!)... Give corporations and financial elite control and put workers back into their peasant places.
Europe is the land of kings and queens, is it any surprise we're seeing the rise of neofedualism there? Social welfare was the most developed there, so it's no surprise the elite's backlash is the fiercest there.... Divine right is gone, replaced by german rule based living. Gotta follow the rules right?.. otherwise we'll run out of money..
Right, the way the pie gets bigger is by increasing demand, which means increasing workers incomes and providing benefits so they don't have to save everything they earn.
But in the eyes of the TPTB this increases labor share to capital share and that is the antithesis of capitalism to them, which is about prioritizing capital over labor and the environment because "growth" and "a rising tide lifts all boats (read "trickle down").
It's also a matte of control. Everything flows from power and losing power is the elites worst nightmare, which is why all the security.
Until the skeptic parties can muster a majority of people to change the law, the best course of action is to fall into line, increase productivity and export more to maximize employment. To do anything else is counterproductive and hurts people that need jobs.
I think it is important not to forget that the world got along just fine before fiat with pegged currencies, convertible currencies, monetary unions and other configurations. Of course having sovereign fiat is better. And chartalism/mmt management of fiat is better than traditional monetary fiat. But as Tom says, if the governments within Europe can withstand the political turmoil and hold the monetary union together despite the neoliberal design, they can increasingly focus on creating convergence among the economies in the countries, and they can succeed.
Whether or not it is optimal, whether we like it, or dislike the politics is irrelevant. The rules can never be applied 'fairly' because markets for any goods, and investment decisions are rarely fairly decided upon social justice principles. Those who sell the most exports in a monetary union win. They get the money and jobs and are not dependent on the charity of neighbors.
Greece is a small part of Europe, both demographically and economically. They don't get to change jackshit.
Like most minorities they will be ostracized while they pretend to be Europeans. Damn, even within Greece the part of the population which is neoliberal will push to get their way (ie. pariah party New Demcoracy).
"Deal with it." is what both the European elites and the population will tell the Greeks. They can keep pretending that they will get their way to go back to the previous status quo, dreaming and voting idiot politicians which sold them lies ("stay with the euro and stop austerity"). Sue as hell that is not going to change anything.
Ryan: Until the skeptic parties can muster a majority of people to change the law, the best course of action is to fall into line, increase productivity and export more to maximize employment. To do anything else is counterproductive and hurts people that need jobs.
No, the best course of action for a state like Greece is to just leave the EZ, not the EU. Accept Schauble's offer. Syriza's problem was not tactics without strategy, but strategy without tactics - i.e. noticing they had won. One can make a good case that Syriza's mandate was NOT to stay in the Euro, but get out of austerity - that is what the referendum rather clearly indicated. The majority had been convinced. There is no evidence that passes the giggle test that Greeks overwhelmingly want to remain in the EZ if that is what "remaining in Europe" means.
I think it is important not to forget that the world got along just fine before fiat with pegged currencies, convertible currencies, monetary unions and other configurations.
No, it didn't - particularly monetary unions, which are always short-lived. These were always unstable. And the deeper reason is that there isn't any other kind of money than fiat money. Fiat money is the reality, which hasn't changed for millennia, can't change, the other things are just appearance, dross put on top of it. Commodity money means (somebody's) fiat money is backing a commodity, not the commodity "backing" fiat money. The right way to look at things, the Mitchell-Innes way is that there has only been, can only be one monetary system, which arguably humanity has been using for 40,000 years: "Fiat" "Credit" money. The world has become ever richer somehow, and the richer the country, the more it has to be run by MMT / Keynesian principles See Keynes or Wray following Vatter & Walker on the inevitability of bigger government- the only way to stop this is mass impoverishment.
And chartalism/mmt management of fiat is better than traditional monetary fiat. What does this mean? Yes, if you mean a JG.
But as Tom says, if the governments within Europe can withstand the political turmoil and hold the monetary union together despite the neoliberal design, they can increasingly focus on creating convergence among the economies in the countries, and they can succeed.
That's what they're doing right now- creating convergence. Let us all hope they fail soon & the monetary union either changes or collapses (most likely). It is a very old story: Solitudinem faciunt, "convergence" appellant. Sure, they'll converge: not from Greece to the rest of the EZ, but from the rest of the EZ to Greece. That's the game plan. :-)
Whether or not it is optimal, whether we like it, or dislike the politics is irrelevant. The rules can never be applied 'fairly' because markets for any goods, and investment decisions are rarely fairly decided upon social justice principles. Those who sell the most exports in a monetary union win. They get the money and jobs and are not dependent on the charity of neighbors.
A fiscal union monetary union, the only kind that has ever succeeded is not the "exporters" giving charity to the "importers." New York does not give charity to Arkansas. "Fiscal transfers" are fiscal, but they AREN'T transfers. In the long run, social justice principles decide everything. The EZ could work, if it changed its rules to sane ones - if it had a JG, or if it had a unified pension/health system. It can't work in its current form without creating depression after depression. That the Greeks could change this by becoming more "European" is absurd. If / when Greece leaves the EZ - it will change things - because its economic boom will expose the masters of the Euro as charlatans.
" the best course of action is to fall into line, increase productivity and export more"
Export to where? What happens when every country is a net exporter, and everyone's Fx is "above average?"
If the promised outcome makes no sense, how does participation in getting there make sense?
Roger I believe our allien overlords need more imports. Funny thing is that Germany was pretty balanced just 15 years ago, wonder what happened back then...
Ignacio, look at the history of ordoliberalism, and you will get the answer. Se - The decades-old tension threatening to rip Europe apart
Ordoliberalism started the path to non functionality on August 15, 1971 - courtesy Richard Nixon - A First Ever Default? Closing the Gold Window, Forty Years On
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