Tuesday, 7 July 2015

The Power of No: The Greeks Expose Neoliberalism's Anti-Democratic Agenda.

No! The decision of the Greek people has shown us that Neoliberalism can be challenged. Whether it can be beaten will require more than the bravery of a single nation. To defeat the neoliberals’ greed and cruelty, not just Greece but the whole world will have to find the courage to say: “No!”
 
THE UNFOLDING CRISIS in Greece has stripped Neoliberalism of its protective disguise and the world is recoiling from its ugliness. In normal circumstances the true purposes of the world’s neoliberal elites are masked by their use of opaque economic jargon. In the case of Greece, however, the social science of economics has been turned against them by some of its most impressive exponents. Nobel laureates Joseph Stiglitz and Paul Krugman have told the world that what is being done to Greece has nothing to do with economics, and everything to do with politics. A whole country is being driven to the wall in a desperate bid to destroy its left-wing government. Neoliberalism simply cannot allow the Greek Prime Minister’s, Alexis Tsipras’s, powerful lessons in democracy to go unpunished. If his Syriza Party is allowed to defeat austerity in Greece, what is there to prevent Podemos from defeating it in Spain? Or Sinn Fein in Ireland?
 
Hence the ugliness. Deprived of credible economic arguments for insisting that the Greek government persist with an austerity programme that has already shrunk Greece’s GDP by 25 percent and kept upwards of 60 percent of her young people out of the paid work force, the EU’s neoliberal elites – particularly the German holders of the neoliberal franchise – have been forced to resort to outright lies and childish insults.
 
Germany’s 72-year-old Finance Minister, Wolfgang Schauble, has clearly been unable to cope with his 54-year-old Greek counterpart, Yanis Varoufakis. Everything about the free-wheeling Greek economics professor offends the unyielding German ideologue. Varoufakis has been unsparing in his criticism of Germany’s inability to grasp the necessity for Greek debt relief (which even the IMF now acknowledges). It’s an act of insubordination which Schauble and his colleagues are resolutely determined to punish. So unchallenged has neoliberalism’s ideological hegemony been since the collapse of Soviet-style socialism that it finds itself unable to adequately respond to Varoufakis’s neo-Keynesian populist critiques. Their greatest fear is that, like the little boy in the Hans Christian Andersen fairy tale, the Greek Finance Minister will draw the world’s attention to the fact that the neoliberal German Emperor is wearing no clothes.
 
With Schauble and his neoliberal colleagues forced on to the defensive by the combined diplomatic and intellectual onslaught of Tsipras and Varoufakis, mobilisation orders were swiftly issued to neoliberalism’s reserve units located in the global news media. These latter lost no time in launching vicious attacks against the Syriza leadership – especially Varoufakis – and redoubled their blatantly racist denigration of the Greek people as a whole. This latter tactic had been in operation ever since Greece’s creditors had forced successive Greek governments into slashing the living standards of their own people. Cast as indolent Mediterranean grasshoppers (so unlike the hard-working Teutonic ants, whose borrowed Euros they had fecklessly frittered away) the Greek victims of neoliberal extremism were told that they had no one to blame but themselves.
 
Even at a distance of 17,000 kilometres from Athens, New Zealand’s neoliberal journalists and commentators have been working hard to maintain the two central arguments for neoliberalism’s assault on Greece. That the Syriza Government’s position is economically untenable; and that, in any case, the Greek people had it coming and richly deserve everything they have got. To pull this off they have had to studiously ignore the highly critical contributions of leading economists, while attempting to preserve the fiction that Greece has no alternative except to swallow still more of the austerity poison.
 
The most disturbing aspect of the mainstream news media’s adherence to the neoliberal line has been its willingness to go along with ethnic defamation. Just substitute the word “Maori” for “Greeks” in these neoliberal tirades and the full racist character of the attacks becomes clear. Newspapers and networks that would never allow contributors to get away with calling Maori lazy, good-for-nothing, ne’er-do-wells with no one to blame for their poverty but themselves, were quite happy to have it said of the Greeks.
 
It was, however, Tsipras’s decision to put the question of whether or not to persist with the EU’s austerity programme to a referendum that stripped away the last vestiges of Neoliberalism’s technocratic disguise. Now they were required to openly disparage not just Syriza, not just the Greek people, but democracy itself. In extremis, the neoliberals had no choice but to demonstrate, in a fashion that people who value democratic principles could not miss, that the interests of those who are both empowered and enriched by their control of the markets; and the interests of the people whose lives are cheapened and constrained by the operations of those same markets; have always been, and are still, on a collision course.
 
The decision of the Greek people has shown us that Neoliberalism can be challenged. Whether it can be beaten will require more than the bravery of a single nation. To defeat the neoliberals’ greed and cruelty, not just Greece but the whole world will have to find the courage to say: “No!”
 
This essay was originally posted on The Daily Blog of Monday, 6 July 2015.

50 comments:

Anonymous said...

The Greeks have said no to repaying they're debts, they have also implicitly said no to using the euro as they're currency. The Greeks seem to believe that by voting no they're debts will be forgiven and they can simply start again as euro members and everything will be fine and dandy, Chris Trotters addition to this is to label anyone who disagrees with this rosy daydream a 'Neo-Liberal'.

The reality is that the Greeks will now experience austerity just hard fast austerity instead of the slow moving variety being imposed by the reviled troika (or neoliberal if your surname is Trotter). Greece's banks have no money and will need to be recapitalized by drachmas, Greece has no money and either there will be tax increases or at the very least taxes paid and or spending cuts - unavoidable even if they are 'Neo-Liberal'.

In a nutshell Greece has democratically voted to default on her debts and face complete collapse of her banking system and internally directed austerity - which as long as its not imposed by german pupeteers is'nt the evil 'Neo-Liberal' austerity.

I accept the Greeks decision and applaud it they are masters of they're own destiny now - but lets not call a pig with lipstick anything other than a pig, even if its not a really naughty bad and nasty 'Neo-Liberal' pig mr Trotter

For any readers of this blog who are not sold on the idea that the world is run by shaddowy neo-liberal idealogues, who are shamelessly keeping secret the blueprint to eternal prosperity hinted at by Mr Trotter you might be interested in a slightly more informed analysis (without reference to the neo-liberal puppeteers of Chris's nightmares) check out: http://www.economist.com/news/europe/21657003-greek-voters-have-rejected-austerity-eu-may-think-they-have-rejected-europe-no-what

Anthony Rimell said...

Excellent analysis Chris. All hail the Greek people, who have the courage to stand for determining their own future.

And all hail the voices of reason (such as your own) who ensure we see this side of the coin, and not simply the morally corrupt voices of neo-liberalism.

Lessons here surely for we in Aotearoa/ New Zealand!

Anonymous said...

How on earth do you get from 'Greeks were living beyond their means' to 'Maori are lazy'?
It says a lot about your though processes, none of it complimentary.

Mark said...

Still confused by your championing of utterly stupid decisions by the Greeks. Nothing to do with neo-liberals trying to teach a socialist government a lesson. Antonis Samaras' New Democracy government was conservative and the Germans were just as critical of him. You seem to be celebrating a country's mass tax evasion, corruption of government and proliferate public spending and ineffective bueraucracy. Far be it from me to accuse you of receiving a hefty fakelaki to write this ....

greywarbler said...

Spiegel on line from 2011 on Germany as national debtor.
... economic historian Albrecht Ritschl comments.
http://www.spiegel.de/international/germany/economic-historian-germany-was-biggest-debt-transgressor-of-20th-century-a-769703.html
and
http://www.capx.co/germany-has-no-right-to-lecture-greece-on-debt-transgression/

and an objective right-wing capitalistic view from USA:
http://www.bloombergview.com/articles/2015-01-27/germany-deserved-debt-relief-greece-doesn-t-i5fdca2y
I think that the rather sympathetic approach to an enemy which had suffered much annihilation, leads from this:
Part of the reason West Germany was granted debt relief lay in the Federal Republic's importance as a Western bulwark in the fight against Communism. As Jurgen Kaiser wrote in a paper for Friedrich Ebert Stiftung last year,

In contrast, Greece when it got out from under the despotic reign of
their armed forces, splurged on socialist principles offering social welfare and spent up without curbing their enthusiasm. And then they apparently lied about the state of their finances to get into the EU.

But that surely could be called 'an economic operational matter'? We know economists are always shedding annoying externalities as some chicken entrails experts, or those specialising in mystic crystal balls (FYI called scrying!), study and prepare prognostications. What's this 'lying' bloomberg talks about?

and Wikipedia overview
https://en.wikipedia.org/wiki/Economic_history_of_Germany

greywarbler said...

German debt connected with their wars, has been raised as a contrast to Greek debt. Quartz are a business news outlet, and their salient facts on European wars debt are clearly shown in this link.
http://qz.com/290183/in-2014-countries-are-still-paying-off-debt-from-world-war-one/

The Telegraph presents some gathered facts about national debt stating that 92 years after, Germany's remaining debt has just been paid off.
http://www.telegraph.co.uk/news/worldnews/europe/germany/8029948/First-World-War-officially-ends.html
That is an example of the stupidity of our sovereign debt system. It could be that after half is paid off the rest should be written off, in an effort to keep the world financial system buoyant. Or interest be calculated but stated as a separate debt to be written off when agreed, and not become a compounding crushing burden.

Another Telegraph piece on Britain's WW1 debt.
http://www.telegraph.co.uk/finance/economics/11269739/UK-government-to-pay-back-all-World-War-One-debt.html
This appears to be within-Britain debt still carrying on!
In October, the Chancellor George Osborne said that he was planning to redeem £218m of so-called "4pc Consols" - bonds that were first issued by Winston Churchill in 1927, partly to refinance National War Bonds originating from the First World War. This was the first planned repayment of this kind of perpetual bond by the UK Government for 67 years.
Today's news extends the repurchasing programme to include all of the debt that the UK incurred during the Great War.
The Government says that it wants to take advantage of current low interest rates to refinance this debt with new, more conventional, bonds.

Nick J said...

Interesting concept that the voice of the people of a national state can challenge the established international hierarchy. History gives some precedents of how small ideas and actions can overflow upsetting the status-quo. Luthers theses undermining the authority of Rome, Voltaires ideas challenging the Ancient Regime leading to the French Revolution. Keynes challenging classical economic theory.

Anybody with half a brain can see that the ideas of Hayek and Friedman would lead to this impasse. Lots of individuals have stood tall and criticised but to no avail. Now a collective people, a nation have said what I am sure most of us think: the system s mad, the emperor has no clothes.

What we will see now is an attempt to isolate the contagion aka the challenge to the orthodoxy and hierarchy. Lets see how big and powerful the idea becomes.

david Stone said...

Go Chris
Cheers D J S

Guerilla Surgeon said...

The right hate to the point of vilification, anyone who understands economics who doesn't toe the party line. Picketty, Krugman, Stiglitz, Warren. If they use their knowledge to speak truth to power, they always receive the full tuneup treatment from the right wing press.

Anonymous said...

You used the slur neoliberal eighteen times in the essay.

Meanwhile corruption is endemic in Greece, no one pays their taxes, and seventy percent of the population are employed by the state.

Guerilla Surgeon said...

I love all this stuff about "the Greeks". Most of them had no say in the policies of their governments, or in the amount of tax they paid. Incidentally, self-employed Greeks were facilitated in not paying taxes by Swiss banks among others who refuse to allow governments access to accounts that could be taxed. Let's not forget that. And no one has yet come up with a convincing argument that leaving the euro would be any worse than staying in.
Incidentally, if you take issue with the idea of Greeks being vilified you obviously don't read your own right wing press. They've been called "junkies" by the Dutch press (God help me I thought the Dutch were nice.) And have been called lazy, when in fact they work longer hours than anyone else in the EU if I remember rightly.
Lastly, it would seem that not just Greeks but even right wing Europeans are beginning to be wary of Germany and Merkel's 'education project'.

Victor said...

Getting away from all the ethnic stereotyping, I've gained the impression of a really expert poker hand being played in Athens.

My respects to Syriza:

https://www.youtube.com/watch?v=6X7Sx62plCw

Davo Stevens said...

The problem I see with those of a rightish persuasion is that they live on their little Atlas Shrugged planet somewhere out there near Jupiter. It's a place with waterfalls in the clouds, nymphs plucking harps and the green and pleasant land is where the peasants and servants know their place and keep out of sight.

Why was Germany so instrumental in setting up the Euro? Could it possibly be so they had a captive market for their manufactured goods? Nah, couldn't be because the Germans are magnanimous! No problem with Greece borrowing huge amounts of money from Germany so the Greeks could buy the German machinery and cars but then Germany didn't want anything that Greece produced in return.

The IMF and the ECB Economists have stated that the debt repayments are at an impossible level and beyond Greece's ability to pay. Funny how the MSM has studiously avoided that little gem of information! Furthermore the German Bankers were just as culpable in the lending they did (and are still doing!) but Gosh, those in the finance industry are pure as the driven snow. They never do anything wrong or even criminal do they?

The IMF, and other top Economists have stated publically the Austerity doesn't work and never will yet the Rightie wingnuts still cling on to their little delusion that it does, Hell, even the Brit. money man George Osbourne has stated publically that the Austerity imposed on countries can't work. He' right!!

Look at our own economy; the thing that has fired up the NZ economy is a series of earthquakes in Chch. That imported a huge amount of money into the local economy that spread out into the greater one.

Davo Stevens said...

For Anon at 10.18

Here is a video of exactly what has caused this issue with Greece. They spell it out in simple terms that even a right wing child can understand! Note that Goldman Sachs are involved!

https://www.youtube.com/watch?feature=player_embedded&v=U_AnI5dutGk&list=PLhvPB4lyc4dTIaS6FyeiQDHaYn4sN7pP3

Anonymous said...

Here is an interesting take on the situation: http://www.kiwipolitico.com/2015/07/loansharking-greece-and-odious-debt/

Guerilla Surgeon said...

Jesus anonymous – that figure is 17% not 70%. Common sense should suggest that any country that has 70% of its employees working for the government would be a communist country. And that figure is still less than Britain or France. It's about on a par with "no one pays their taxes." Yeah right. And if you want slurs, try this: "This site is for adults, we will look up your figures and see if they are correct."

John Buckley said...

Great article! Predictably many comments focus on the outrageous level of tax evasion by the Greeks. Alexis Tsipras, has promised to tackle tax evasion and is trying everything he has to get this under control. It is certainly in Syriza’s interest to do so. It won’t happen overnight. As the Guardian said “Tsipras has repeated that combating tax evasion is one of his key reforms. France has already offered technical assistance in this field…. As a source close to Tsipras puts it: ‘We should see tax as a tool for regaining our national sovereignty.’” One sticking point is that the Troika and the hard-line Neo-libs (yes, they are neo-libs) in the Dutch and German governments, among others wants to push through even higher regressive VAT (GST) taxes while loosening up on the (harder to retrieve) progressive taxes.

Davo Stevens said...

It is Anon 16.18. I especially refer to this paragraph which is what I have been saying all along:

"Let’s be clear: this is not a Greek crisis; it is a crisis of European finance capital. The demand for more Greek austerity is not about servicing the debt but about humiliation, punishment and deterrence of others who might dare to do the same."

greywarbler said...

@DavoStevens at 14.50.
The para about German machinery and what do they buy from Greece reminds me of early 1970s driving from south Italy when I met a 'convoy' of Mercedes from Bari the southern port for the Greek vehicular ferries.
There were kilometres of these, progressing majestically up the only highway. I got a grateful wave as I slowed and created enough space for a local to dart his car across and continue with his life. How long he would have had to wait otherwise? I didn't notice the German drivers being thoughtful enough to care.

So Greeks mainly sold the sun and beaches - tourism in exchange for well-made machinery.

A thought, business and economists being objective, when viewing the rise in business stats caused by reconstruction after the earthquake,
must note that the similar destruction of buildings by b.mbers meets their needs for ongoing projects to boost business activity. Economics seems almost a religion with odd beliefs and strictures, and the destroying malfactors consider themselves in a holy war. There is a strange symbiosis here, an unhealthy one.

Simon said...

Lol sounds almost exactly like Nigel Farage. Replace the neo-lib with what it really is Statist economic totalitarianism and its a UKIP press release.

OneTrack said...

Maybe you could clarify your terms somewhat. It appears you think a NeoLiberal is someone who pays their debts, and expects other people to pay their debts. What evil bastards. And democratic freedom fighters are people who spend other peoples money until it runs out, then complain it was the lenders fault for giving them money in the first place, and then complain again that they need to be lent more money, to never be paid back.

In other words, Boxer just needs to work harder so that the freedom fighters can continue to live in the style to which they have become accustomed. Well, they had a vote so the Eurozone should just send the money trucks. There, democracy wins again.

thesorrow&thepity said...

Misses the bit where the Greek papers in turn openly refer to the Germans as Nazis, & the now former Greek finance minister calling the Eurozone creditors terrorists, but oh well can't use all the facts to balance an argument. Of course the negotiations are highly political, each Eurozone member has the opinion of their own domestic constituency to be concerned about. For the Eurozone's part there's always been an unwillingness to accept the truth that they needed to write down or extend the payback period for the Greek sovereign debt they held. However blaming "Neo-liberal cruelty" is outer nonsense! The Eurozone has been pumping money into Greece for the last 5 years to keep the Greek govt & banking sector from collapse, the real problem comes from an inflexibility on the part of Eurozone creditors, as well as a refusal by successive Greek govts to put in place necessary reforms. The truth about Syriza is that if they wish to get a new bail out deal (the No vote was a vote on a deal which was no longer on the table) they'll have to be willing to implement reforms somewhere. By all means blame the Germans for their inflexibility, but also equally blame Syriza for childish antics & pointless grandstanding which has put the Greek economy on the verge of collapse. Greece is still a country where rich oligarchs control the economy, with politicians AND unions being utterly corrupt co-conspirators in ripping off the Greek people, I know that last ugly fact might upset people here but then they might wish to look into the Greek tax collectors union if they still wish to delude themselves that Greek unions are all blameless sugar n spice. The root cause of the Greek peoples suffering is a lot closer to home than this article would like to make out. If Syriza was really a true populist party then they would have tackled tax evasion, corruption, & a bloated public sector a long time ago & been able to use that as leverage in negotiations for debt reduction. Five years of Eurozone inflexibility & Greek govt charades has led to this sad moment

Anonymous said...

"Paradoxically, the point Varoufakis and Tsipras are making repeatedly is that the Syriza government is the only chance for the debt providers to get at least part of their money back. Varoufakis himself wonders about the enigma of why banks were pouring money into Greece and collaborating with a clientelist state while knowing very well how things stood – Greece would never have got so heavily indebted without the connivance of the western establishment. The Syriza government is well aware that the main threat does not come from Brussels – it resides in Greece itself, a clientelist corrupted state if there ever was one. What the EU bureaucracy should be blamed for is that, while it criticized Greece for its corruption and inefficiency, it supported the very political force (the New Democracy party) that embodied this corruption and inefficiency."

www.newstatesman.com/politics/2015/07/Slavoj-Zizek-greece-chance-europe-awaken

Greg

Richard McGrath said...

I seem to remember the Greek government promising that whatever the outcome of the referendum, banks would be open today. Oh dear, breaking promises already?

Davo Stevens said...

At no time do I defend the actions of subsequent Greek Govts but at the same time I am not defending the 'Troika' either. Both are equally culpable. The 'Troika' knew some years ago that Greece was in the doo-doo but kept on pouring money in. When a lender knows the the client can't pay they should have stopped paying, they didn't.

This crazy idea that somehow a country's finances are like a family is wrong. A family who finds themselves in dire straits, stops spending 'Tightens their belt' when a country does that it's economy shrinks which, in turn, reduces revenue, that reduces it's ability to pay and it can start a downward spiral.

@Richard; When Tsipras called the referendum the ECB immediately stopped the drip-feed liquidity funding to the Greek banks. Does that not smack of political interference to you?

Davo Stevens said...

Incidentally, the popular conception that Greece is sun, sea, and sand Tourism in only party true. Tourism is only part of the Greek economy, they had a vibrant manufacturing sector as well which has been all but destroyed. They made high quality furniture and fittings, Wine production and lately Organic Farming amongst other things.

The previous Govt of Samaras could have hit the tax evaders too but didn't. Time will tell whether Tsipras can and will clamp down on them. It's interesting to note that Christine Legarde of the IMF is against that crack-down. I wonder why that is?

Guerilla Surgeon said...

I seem to remember the national government promising no new taxes. Politicians break their promises all the time these days. Shamelessly. No matter what party they belong to.

Simon said...

"We had arguments which might persuade both the Germans – who would be worried about the weakening of anti-inflation policies – and the poorer countries – who must be told that they would not be bailed out of the consequences of a single currency, which would therefore devastate their inefficient economics." (“The Downing Street Years” 1993)

Thought you lot would appreciate (now in 2015) this from Margaret Thatcher.

The left are increasingly reactionary whereas those on the right know and understand that the market ie the people are always correct.

Nick J said...

There is a bear in the corner In a further signal that Greece’s financial woes could spark a wider geo-political crisis for the West, Greek Prime Minister Alexis Tsipras yesterday held talks by phone with Russian President Vladimir Putin. Moscow said the call had been arranged ‘at the request’ of Mr Tsipras, with the two men discussing the outcome of the referendum. Some observers believe Moscow could agree to bail out Greece in return for Athens blocking further EU sanctions against Russia. from The Daily Mail UK.

Theres a bigger picture that the press and the EEC are too frightened to acknowledge.

Anonymous said...

The vicious and ugly attacks on Syriza from the local right excoriate Greece's high levels of tax evasion. Those very same rightwingers are happy to boast on Kiwiblog of how little tax they themselves pay, and say that it is a libertarian's duty to pay as little as possible.

Guerilla Surgeon said...

The problem is, how do you tax money that is hidden in foreign banks? Perhaps people who have non-taxable foreign accounts could be put in jail until they allow the government to assess their accounts for taxation? :-)
Simon, if you think the market is the people I have a bridge I'd love to sell you. I suspect even the hardest core of right wing commenters on this site don't really believe that.

Victor said...

Simon

".....those on the right know and understand that the market ie the people are always correct."

So were the Greeks, whom I hope you acknowledge as people, right to tap into the relatively cheap credit the Euro made available to them?

Victor said...

Another point, Simon, is that the Euro wasn't invented for left-wing purposes but to further integrate the EU.

Euro-nationalism, like all nationalisms, is inherently neither right nor left. It just is!

Moreover, having a currency union without a fiscal(and hence political)union is almost always a bad idea whether viewed from right or left.

Thatcher's fellow conservative, Helmut Kohl, went along with the Euro only because it was the price France was demanding for sanctioning German unification.

In contrast, Maggie, rightly on this occasion, saw it as an occasion to don her Boadicea robes.

BTW I can't imagine a Labour government in London ultimately signing up for the Euro either. Britain isn't Germany just as Germany isn't France.

Davo Stevens said...

The father of the Euro was Professor Robert Mundell. It’s important to mention the other little bastard spawned by the late Prof. Mundell: “supply-side” economics, otherwise known as “Reaganomics,” “Thatcherism” – or, simply “voodoo” economics.

The imposition of the euro had one true goal: To end the European welfare state.
Here’s how it works. To join the Eurozone, nations must agree to keep their deficits to no more than 3% of GDP and total debt to no more than 60% of GDP. In a recession, that’s plain insane. By contrast, President Obama pulled the USA out of recession by increasing deficit spending to a staggering 9.8% of GDP, and he raised the nation’s debt to 101% from a pre-recession 62%. Republicans screamed, but it worked. The US has lower unemployment than any Eurozone nation.

As Obama scolded the European tormentors of Greece: “You cannot keep on squeezing countries that are in the midst of depression.” Cutting spending power only leads to less spending which leads to further cuts in spending power – a death spiral we see today in the Eurozone from Greece to Italy to Spain—but not in Germany.

“Not in Germany.” There’s the rub. Normally, a nation such as Greece can quickly recover from debt-induced recession by devaluing its currency. Greece would become a dirt cheap tourist destination once more and its lower-cost exports would zoom, instantly increasing competitiveness. And that’s what Germany can’t allow. Germany lured other European nations into the euro in order to keep them from undercutting Germany’s prices in export markets.
Restricted by the 3% deficit rule, the only recourse left for Eurozone debtors: pay the piper with “austerity” measures.

That cutting pensions, privatising and closing industries, slashing wages — in other words, “austerity” — or, to use the latest jargon, “reform” — is not just cruel, it’s plain stupid: it can only push a nation in recession into depression.

That’s not just theory. The Troika first imposed their vicious austerity measures on Greece in 2010. Greeks watched their annual salaries plummet to half of a German’s paycheck. Greece’s supposedly generous pensions have been cut eight times during the crisis, while two-thirds of pensioners live below the poverty line. Everything from Greece’s airports to harbours, the national lottery to prime publicly-owned real estate was sold off, while schools and hospitals were shuttered. And, for the first time since World War II, widespread starvation had returned. 500,000 children in Greece are said to be malnourished. Students fainting from hunger in frigid schools which cannot afford heating oil is now a common phenomenon.

This cruel “belt tightening,” the Troika promised, would restore Greece’s economy by 2012 (and then 2013, 2014, and 2015). In reality, unemployment went from a terrible 12.5% in 2010 to a horrendous 25.6% today.

Now, the Troika demands more of the same, a continuation of this disastrous policy.

Guerilla Surgeon said...

Nice summary Davo, but I'm afraid it's wasted on them. No matter how many economists say it's wrong, no matter how much evidence you provide, their 'religious' beliefs will override it all. It was amazes me though that they have no thought for the consequences. Maybe because the wealthy are insulated from them. You never hear them mention malnourished kids, all the diseases that spring from poverty. I guess it helps to think that the poor are responsible for their own condition. As Steptoe senior once said "Depression? I made a fortune then – selling everything they were."

Victor said...

Davo

I'm not sure Jacques Delors would agree with your explanation.

Loz said...

A comment above was that "the right know and understand that the market i.e. the people are always correct". Interesting remark.

Instead, Greece has highlighted the fractures between the benign market euphemisms that have been core to the neoliberal discourse, and the evidenced reality that its power brokers are promoting something entirely different. The people of Greece, through democracy, overwhelmingly rejected more neoliberalism. The "will of the people" and "will of the markets" have clearly been completely opposed in Greece and yet, some people can still suggest that markets and democracy are the same, oblivious to reason and common sense.

If a million unemployed people arrived at a market and had to vie for goods against a single millionaire, the millionaire will get what they want every time. Markets always take direction from those holding cash... there is nothing democratic about that at all.

Also laid bare has been any suggestion that neoliberalism can aid an ailing economy. For years the nation has been under a ruthless neoliberal prescription which has left the economy and social fabric of the nation shredded. With 60% youth unemployment and staggering suicide levels attributed to lack of government support for those in need. Only Iraq has been subjected to the savage level of neoliberal "reforms" currently advocated for Greece.

The disclosure that the economists of the IMF secretly acknowledged that the compounding debt burden is impossible for Greece to ever pay off, display that the motivations behind negotiations were never about fixing the economy of Greece.
The insistence of a savage Scorched Earth approach to the state while claiming the wealth and resources of the nation (for now and the future) by foreign interests is purely a struggle of power and dominance. This isn't about repaying debt - this is about the local mafia shooting the livestock and burning down the barn while calmly saying how generous and patient they’ve been in claiming what’s theirs.

Richard McGrath said...

Davo: "@Richard; When Tsipras called the referendum the ECB immediately stopped the drip-feed liquidity funding to the Greek banks. Does that not smack of political interference to you?"

Davo - maintaining OR stopping the flow of other people's money into Greek banks by the ECB is political interference. The ECB should cease this interference, and allow private sources to be the sole funders of any Greek recovery. The respective governments should get out of the way.

Richard McGrath said...

"The vicious and ugly attacks on Syriza from the local right excoriate Greece's high levels of tax evasion. Those very same rightwingers are happy to boast on Kiwiblog of how little tax they themselves pay, and say that it is a libertarian's duty to pay as little as possible."

When the Greek government is perceived as being corrupt by the vast majority of its own people, it's hardly surprising that the citizenry will wish to withhold contributions from it. Likewise while there is a progressive tax system where high earners are punished disproportionately for their success, there will be resentment. Reform of the Greek system of taxation with introduction of a low flat rate of income and corporate tax (forgetting for a moment that taxation is collected using implied threats of violence) would probably result in increasing revenue for the government. But firstly the whole corrupt system of government in Greece must be eviscerated and the worst of the thieves, bribe-takers and embezzlers put on trial, and if found guilty they should have their assets seized and be thrown in jail.

Davo Stevens said...

Europe has some distinct issues that other combination of countries don't have. What was envisioned in Europe was a European version of the US. Where all the states would work together to a common goal. But Europe is be-set with underlying animosities that have not been fully put to rest. These go back centuries.

The Euro as it was set up was a mistake because each country was and is able to set it's own agendas as far as taxation and fiscal controls were applied. This has created a series of issues that split the states apart not bringing them together. Simply put: One currency -- one set of rules!

Yes Victor I am aware of Jacques Delor and his sometimes fiery debates with Mad Mags!

I agree, Greece was in the wrong for it's mis-management of it's financial affairs but so is Germany as the primary lender who knew that Greece was getting into dire straits but stll kept on lending money to it. Both are equally culpable. So both have to bite the bullet so to speak.

Davo Stevens said...

Firstly Richard it's not what the ECB did that is the issue, it's the timing. When Syriza called the referendum The ECB cut off the trickle funding in the hope of imfluencing the vote. THAT IS POLITICAL!

Yes, Greece needs to crack down on the tax evaders and that is what Syriza wants to do. The Troika want to lumber the debts onto the poorest Greeks not allow Syriza to collect the taxes that are due, I wonder why that is? Why is Christine Legarde and to a lesser extent Hollande (both French) so anti that course? What's in it for them?

As I have said so many times; when a lender lends money knowing the the borrower can't pay it back, are they not at fault too? Yet we always blame the borrower.

This rightwing ideology of increasing Flat Taxes doesn't help, it tends to flatten the economy. There is nothing fair about a Flat Tax and there never was, it's designed to shift money upward, Progressive Tax is a fairer system but needs to be well regulated. Something that Greece failed at.

Guerilla Surgeon said...

It depends what you mean by a flat tax of course, but the evidence on flat taxes is not particularly conclusive. I suspect most American proponents are contrasting it with their own tax system which from what I can gather is labyrinthine, and expensive. According to at least one source although the administrative costs of a flat tax are less, "the equity, efficiency, and yield considerations remain suspect." And of course many countries with flat taxes – like Russia which apparently has an effective flat tax rate of 13%, also have fairly high sales taxes – in Russia's case 20%. There goes your equity right out the window for a start. Richard I can't understand your point about taxation being collected with "implied threats of violence." A suggesting we rely on voluntary contributions? If so I have a bridge....... oh fuck it – I'm running out of bridges.

Victor said...

A flat tax might make sense if allied with Universal Basic Income, which works on the same principle of cutting back on administrative costs through universality.

Any takers to my right?

No, I didn't think so.

Victor said...

Davo

My point is that the Euro was essentially a product of idealism concerning closer European integration, something subscribed to by both left and right in some continental countries.

The people who championed the Euro also, by and large, championed strengthening the European Social Charter, which they likewise tended to see as a huge step on the road to Federalism.

It could well be that the idea of a common currency was originally thought up by neo-liberal economists. But I'm not sure that's why it was adopted.

And, as mentioned earlier, the then CDU-led German government primarily accepted the Euro as a trade-off for unification.

I would, however, agree that the Euro was a mistake and an obvious one at that.

Meanwhile, I also agree with you that Greece, Germany and several other countries and institutions share the blame for the current impasse.

But what get's me about this issue and how it's being debated, is all the effort that goes into finger-pointing and moralising when it's solutions that matter.....not who caused the sickness but how to cure it, with the least harm to the people of Greece, to the EU's institutions and to the spirit of peace and reconciliation on which that largely (if not wholly) benificent Union was built!

Where's the pragmatism and common sense of 1953? Is it only in the aftermath of a horrendous war that people can behave sensibly? If so, what future can there be for our species?

Davo Stevens said...

Flat Tax as in GST/VAT GS. The US Tax system is a nightmare to wade through. State Taxes, Federal Taxes, Social Security taxes, Payroll taxes, the list goes on.

I hear that Simon Bridges has a few ex-Northland bridges for sale mate!

Richard McGrath said...

GS said: 'Richard I can't understand your point about taxation being collected with "implied threats of violence."'

Ever tried not paying what the gummint say you owe them in tax? Your bank account will be frozen, or people will come knocking at your door. With guns, if you show signs of principled resistance.

Richard McGrath said...

GS: when were purely voluntary contributions ever tried as a revenue source for the gummint?

Guerilla Surgeon said...

Probably never Richard, but governments in the past have relied on voluntary contributions for charity and found that they were insufficient. In fact several studies have shown that the rich don't actually give a great deal to charity, so I doubt if they'd give a great deal for taxation either. In fact "IRS data suggests that, globally, U.S. nonfinancial companies hold at least three times more cash and other liquid assets than the Federal Reserve reports, idle money...." So they tend to squirrel money away. Can you honestly see them giving it to the government to help fund stuff? Try giving me a statement rather than a question. And please try not to quote Ayn Rand, she's been thoroughly debunked. As Greenspan said, selfishness actually destroys society :-).

Davo Stevens said...

@ Victor 19.30;

I get your point and I agree in the most part. There is too much blaming going on and not enough common sense negotiations.

The Euro was deliberately set up to take the money out of the hands of the pollies and keep it in the hands of bright, brainy "Experts". Works alright when things are going well but collapses when things are going down the gurgler, especially when they were the very people who caused the gurgler to open up!

The Euro will survive but not in it's present form and it will be a leaner, meaner form of currency.

Richard: ~"when were purely voluntary contributions ever tried as a revenue source for the gummint?~" They didn't because they were aware that voluntary contributions to charity were not meeting the needs of the people it was supposed to help and the Govt. had to step in.

greywarbler said...

Good points
the enigma of why banks were pouring money into Greece and collaborating with a clientelist state while knowing very well how things stood – Greece would never have got so heavily indebted without the connivance of the western establishment Greg 22.10 7/7

Tourism is only part of the Greek economy, they had a vibrant manufacturing sector as well which has been all but destroyed. They made high quality furniture and fittings, Wine production and lately Organic Farming amongst other things. Davo s 6.58 8/7

Sounds a bit like us doesn't it?