27 January 2015

Europe -- the roots of rebellion

Oh what a surprise for Frau Merkel, she's fearful,
She can't put it over the Greeks.....

To understand why Sunday's election in Greece was so significant, it's necessary to understand what has been happening in Europe for the past few years -- how horrifically the south has been savaged by the twin scourges of the euro common currency and the austerity policies imposed by the German-dominated European Union.  Unfortunately even many American liberals tend to simply parrot the northern (German, creditor-centric) talking points which dominate the MSM, at least in the Anglosphere -- "Greece just doesn't want to pay its bills" and suchlike.

The reality is that as a condition for the loans that kept the southern countries afloat, the EU has imposed a regime of austerity -- deep spending cuts and a fixation on deficit reduction despite economic contraction (similar to what conservatives advocate for the US) -- which made it impossible for the southern economies to recover.  Paul Krugman explains the problem in clear language:

But European austerity also reflected willful misdiagnosis of the situation. In Europe as in America, the excesses that led to crisis overwhelmingly involved private rather than public debt, with Greece very much an outlier. But officials in Berlin and Brussels chose to ignore the evidence in favor of a narrative that placed all the blame on budget deficits, and simultaneously rejected the evidence suggesting — correctly — that trying to slash deficits in a depressed economy would deepen the depression.

The US, by contrast, pursued Keynesian stimulus policies and is now clearly in recovery, though the recovery would have been much faster and more vigorous if the stimulus had been larger and if Democrats had conceded less to Republicans' deficit obsession.  As I've said before, worrying about the deficit when you have double-digit unemployment is like obsessing over water conservation when your house is burning down.  But that's what happened in Europe.

The euro currency has shut off another route to recovery.  If the southern countries still had separate currencies, they would be dropping in value against other currencies, making those countries' exports and tourism sites cheaper and more competitive without cutting wages or other expenses.  Locked into a common currency with the north, this cannot happen.

Krugman assesses the Greek election (seriously, it's worth the read), ending with some good advice the Germans won't take:

So now that Mr. Tsipras has won, and won big, European officials would be well advised to skip the lectures calling on him to act responsibly and to go along with their program. The fact is they have no credibility; the program they imposed on Greece never made sense. It had no chance of working.

If anything, the problem with Syriza’s plans may be that they’re not radical enough. Debt relief and an easing of austerity would reduce the economic pain, but it’s doubtful whether they are sufficient to produce a strong recovery. On the other hand, it’s not clear what more any Greek government can do unless it’s prepared to abandon the euro, and the Greek public isn’t ready for that.

This is not going to stop with Greece.  Syriza's victory has electrified anti-establishment parties across the south and even in northern countries which have been in similar straits, such as Ireland.

To understand the exuberance, you have to understand the anger in the south, not just at prolonged suffering but at the years of arrogance and condescension and sheer bloody-mindedness displayed by Berlin and Brussels as they flogged the captive nations with economic dogmas which they knew could not produce the results they claimed to want.  Krugman has some further observations:

If the troika had been truly realistic, it would have acknowledged that it was demanding the impossible. Two years after the Greek program began, the I.M.F. looked for historical examples where Greek-type programs, attempts to pay down debt through austerity without major debt relief or inflation, had been successful. It didn’t find any.....

Nor was this an innocent mistake. The thing that strikes me about Europe’s archons of austerity, its doyens of deflation, is their self-indulgence. They felt comfortable, emotionally and politically, demanding sacrifice (from other people) at a time when the world needed more spending. They were all too eager to ignore the evidence that they were wrong.

It's very reminiscent of the mentality of our own Republicans who exult in subjecting the least fortunate to endless benefit cuts, mandatory drug tests, forced ultrasounds, and suchlike indignities more intended to degrade and humiliate than to serve any expressed policy goal.

George Orwell's novel 1984 contains the following exchange:

"How does one man assert his power over another, Winston?"

Winston thought. "By making him suffer," he said.

"Exactly. By making him suffer. Obedience is not enough. Unless he is suffering, how can you be sure that he is obeying your will and not his own? Power is in inflicting pain and humiliation....."

This, I think, tells you more about the real roots of the German/EU policy prescriptions imposed on southern Europe than a thousand pages of conservative economic crackpottery could do.

5 Comments:

Anonymous Zosimus the Heathen said...

An interesting piece on a subject I have to admit I still don't know a lot about. One can only hope that the election results in Greece do indeed lead to an abandonment of failed austerity policies, both there and elsewhere, and maybe even a wider revolt against economic neoliberalism in general (though that may be hoping for too much).

While the dreaded A-word (austerity) hasn't been mentioned much here, there's a widespread belief that the current government is intent on pursuing something very much like it. Last year, for example, they came up with a "budget emergency" (largely believed to have been made up - “confected” was a word commonly used to describe it for a time) that supposedly called for the implementation of a raft of unpopular policies that sank the boot into the poorest and most vulnerable members of society (if all that wasn’t bad enough, they're now saying we need to have a "discussion" about such things as whether the minimum wage is too high). They've encountered a lot of opposition in implementing those policies, however, and I can only hope that that continues to be the case. Really, though, they're like conservatives everywhere in that they seem to believe there’s no problem that can’t be solved by privatization and deregulation (and no doubt tax cuts too, though only for the well-off).

Re your mentioning of Keynesian policies being pursued in the US, one thing that never ceases to amaze me is how much of a hate-on so many on the Right seem to have for Keynes (I often hear him mentioned in the same breath as other bêtes noires of the Right as Marx, Freud and Darwin). I remember learning a bit about Keynesian economics in high school, and failing to find anything particularly shocking or controversial about it. Then again, my high school economics classes also taught me such dangerous Marxist notions as the idea that some government functions shouldn’t be entrusted to the private sector, so what would I know?

It's very reminiscent of the mentality of our own Republicans who exult in subjecting the least fortunate to endless benefit cuts, mandatory drug tests, forced ultrasounds, and suchlike indignities more intended to degrade and humiliate than to serve any expressed policy goal.

A few years back, I received, from someone who’d somehow come into possession of my e-mail address, some ghastly chain e-mail which called for mandatory drug tests of those on welfare to be brought in here too (along with various other terrible ideas). The writer of the e-mail then informed me that if I didn’t inflict their missive on everyone in my address book, I was pretty much a traitor to my country. “There’s only one thing to do then!” I thought, before hitting the delete key.

29 January, 2015 04:11  
Blogger Shaw Kenawe said...

Thanks for this detailed account of what's happening in Greece. You've saved me a lot of time in trying to sort out what just happened. Good for them.

29 January, 2015 08:14  
Blogger Infidel753 said...

Zosimus: The seeds of a rebellion are there. It's been nightmarishly bad in the south for years and they're losing a lot of young people to emigration looking for jobs, especially from Spain and Portugal (they go to Latin America which has the same languages).

I've gathered Australia has a sort of nasty-for-nasty's-sake right-wing element rather like ours -- less religious and less extreme, but still pretty unpleasant. Tragic that so much of the world is plagued by this.

Keynesian economics, along with evolution and anthropogenic global warming, make up the "evil trinity" of evidence-based reality that you pretty much have to reject to be a proper American conservative these days. I don't know if Marx and Freud belong in the same category since to the baggots they're pure bogeymen, names to brandish as curses without even the feeblest glimmer of understanding of what they actually said or did.

Shaw: Thanks! If I can add a little clarity, it's all worth it.

30 January, 2015 02:41  
Blogger MrsSmeej said...

Dear Infidel;

I've posted the following response to your article and included links to your blog over at Dr. Seussilitis. I'm sorry... It was either this or the Super Bowl and my rhymes seem to jinx my team, so I picked on you instead. Please let me know if you have any objections. :)

There's a blog I like to read; a recent topic: Greece
And how its new government announced that it will cease
Efforts at austerity imposed by the E.U.
Author felt that was the sanest thing the Greeks could do.

Mounting unemployment; their economy's a wreck...
Greeks feel like the E.U.'s hung a noose around their neck.
Article blames Germany (who finances the debt)
But, though I respect this blogger whom I've never met,

That seems too simplistic to me; see the Germans' side.
Why are they responsible for stopping Greece's slide?
Germans work and save and squeeze a Deutschmark 'til it squeaks;
They don't want to finance better lifestyles for the Greeks.

Puts the German Chancellor, Frau Merkel, in a bind;
Can't ignore her voters or they'd fire her behind.
I agree austerity is not the way to go
But, do I believe it's fair to blame the Germans? No.

30 January, 2015 07:01  
Blogger Infidel753 said...

The Germans are not obligated to do anything, and everyone would be much better off if they had never gotten involved in the first place. The point is, the German government and the EU are requiring the austerity policies which make recovery impossible and just create worse and worse suffering. That's why it's their fault.

30 January, 2015 09:23  

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