Like PIIGS to the slaughter

by Chris Bertram on May 8, 2010

Just about every article in this morning’s Financial Times seems to include a paragraph or two about how governments need to “deliver” debt reduction, to satisfy the markets, investor expectations etc. They then typically note that said investors are anxious about whether democratic politicians can “deliver” the austerity measures that the markets “require”. So here’s the question: how long before the Economist, the Murdoch press and similar give up on democracy on the grounds of its incapacity to “deliver” firm government? We’ve been here before, of course, in the 1970s, when the Economist and the Times backed the Pinochet coup in Chile. Of the PIIGS, only Ireland has escaped dictatorship in living memory and some of the southern European countries still contain contain authoritarian rumps (with special strength in the armed forces and law enforcement). My guess is that we’ll be reading op-eds pretty soon that raise the spectre of “ungovernability” and espouse “temporary” authoritarian solutions. Maybe such columns are already being written? Feel free to provide examples in comments.

{ 92 comments }

1

Utisz 05.08.10 at 11:17 am

Agree with you here Chris, it’s like a gun being held to the head, the currency markets dictating domestic politics via Murdoch mouthpieces. And you know that what they want when they demand ‘decisive leadership’ to ‘steady the markets’ is the Tories, i.e. the LibDems should forget their PR demand and support the ‘winners’ of the election.

2

Steve 05.08.10 at 11:26 am

http://mpettis.com/2010/05/are-you-ready-for-the-united-states-of-germany/

“Spain will almost certainly have to choose. Either it gives up fiscal sovereignty – including, most importantly, taxation authority – to Brussels, or it gives up the euro. The alternative, several years of difficult adjustment borne mostly by workers, is politically unlikely.”

Hardly an endorsement of dictatorship but its the first mention (in light of recent evens) I’ve heard of the idea of a country being forced by economic contingency to surrender aspects of democratic mandate.

3

Luis Enrique 05.08.10 at 11:55 am

I think the chances of The Economist or the FT advocating temporary authoritarian solutions are roughly zero, and this post demonstrates the warped lens though which you view the world.

4

Chris Bertram 05.08.10 at 12:03 pm

Luis @3 – I agree that there is no chance of the FT advocating such solutions, which is why I wrote the post as I did. The _Economist_ and the Murdoch press were the organs I had in mind (as they have form for this kind of thing), whether or not I view the world through a warped lens.

5

otto 05.08.10 at 12:16 pm

Democracies I think pay back their debts more regularly than autocracies, so I doubt the logic would really hold here even for a debts-must-be-paid obsessive.

6

Guido Nius 05.08.10 at 12:22 pm

When terrorists hold hostages, everybody thinks it is obvious to avoid rewarding that behaviour. But when speculation drives whole countries into poverty, the set opinion, promoted by most of the press, is that we should beg the speculators for forgiveness if they do not get their just reward.

It’s as unthinkable nowadays that one would be able to escape the wrath of the market without sacrifices as it was unthinkable one would escape the wrath of Gods.

Unfortunately, what I said is simply true.

7

belle le triste 05.08.10 at 12:24 pm

I have to say watching Lord Owen on election night — sat glowering darkly beside a pixyish David Steel, who he plainly loathes — that I felt he was thinking PRECISELY this when he exploded at Paxman: “Do you take me for a fool? Why are we footling around talking to Alex Salmond? We need strong decisive government, and we need it now.” I am not sure how representative he is these days though. I was slightly hoping he would go on to say “fudge and mudge” but he was too angry.

8

Harry 05.08.10 at 12:53 pm

That sounds right about Owen. I’m sorry I missed him sitting next to Steel. A dwarf who thought he was a giant beside a giant who pretended to be a dwarf (that’s how it seemed when they worked together, and Spitting Image played beautifully into Steel’s hands).

9

notedscholar 05.08.10 at 1:09 pm

This is a little dramatic, don’t you think? If Glenn Beck was a philosopher, and had a blog, and was on the Left, he would warn about something like this!

NS

10

Chris Bertram 05.08.10 at 1:20 pm

@9

No, alternative Glenn Beck would be warning of the danger of military coups.

I’m anticipating that certain sections of the press start featuring op-eds speculating darkly about democracy being a luxury because democratic politicans “can’t deliver” etc.

This kind of thing was pretty routine in the 1970s, I’m not sure why you think it is “dramatic” now.

11

Luis Enrique 05.08.10 at 1:29 pm

I interpreted the “and similar” to include the FT, which I’m not sure counts as failing to pay attention to how you carefully wrote the post. So anyway, scratch the FT.

If such things as “unpopular but necessary” measures exist, then democracy, by definition, has trouble “delivering”. Eminently sensible people are worried about the problem of achieving social consensus. I wouldn’t be surprised to see The Economist make observations along those lines, but if it publishes an editorial espousing “temporary” authoritarian solutions, I’ll eat my hat.

12

bob mcmanus 05.08.10 at 1:35 pm

9: No, the Baltic states and Greece are what is dramatic.

I think the New Model of neo-liberal hegemony presumes enough corruption and co-option of elites, with slightly more inclusion and broadening, that the illusion pf democracy will be maintained. The masses will be distracted with identity politics.

13

P O'Neill 05.08.10 at 1:37 pm

A related meme worth watching is one coming from the US conservatives, that Greece today = USA tomorrow. Here’s the Tea Party-preferred candidate for US Senate (Fla) at it.

14

Enzo 05.08.10 at 1:38 pm

I wouldn’t be terribly surprised either.

15

Matt Heath 05.08.10 at 1:38 pm

Not the press and not right now, but back in 2008 the centre-right opposition leader in Portugal, Manuela Ferreira Leite, said a six month suspension of democracy might be good for passing necessary reforms

16

alex 05.08.10 at 2:07 pm

I don’t see why authoritarian solutions are going to even be suggested – except by nutters who long for the breakdown of social order, of which there are some both right and left. In Greece, and elsewhere no doubt, payments to individuals that are unsustainable will be cut. If they’re not, lending will dry up, and that way lies ruin. It’s not like said individuals will be able to break into the national bank and take more money. Misery will be widely shared, come what protest may. If such protest actually turns really violent, it will be met with escalating force – but that is always and everywhere the case, unless a state has already collapsed and lost its Weberian monopoly. And if that happens, public-sector pensioners, for example, will have a lot more to worry about than a delayed retirement-date.

17

a.y.mous 05.08.10 at 2:12 pm

Wikipedia informs us that the correct spelling is PIIGGS. http://en.wikipedia.org/wiki/PIGS_%28economics%29

18

praisegod barebones 05.08.10 at 2:25 pm

Utisz @1: Nobody’s mentioned it that I noticed, but opening the bond markets at 1am struck me as a pretty blatant attempt to put a thumb on the scales in the event of a hung parliament.

19

bob mcmanus 05.08.10 at 2:30 pm

16″:except by nutters who long for the breakdown of social order, of which there are some both right and left”

There are plenty of ongoing examples to watch. Latvia, Iceland, Ireland, Greece, the US to learn what the plutocrats have learned since the 60s. If I am not mistaken, this is the only recession in the 20 century in the US in during which the top 1% has increased its income share. They have it down. As long as they get the wealth without social disorder, they don’t need the public power.

The liberal passivity and fear shown in 16, or the appeals to liberal identity, which has become an identity as strong as race or gender, helps them a lot. “We must bail out the banks, we must balance our budget, we must pass this HCR or people will die, we must work within and support the system, and find our own marginally more compassionate millionaires to elect to Congress. And avoid social unrest. We just need more time and hopeychange will come someday”

20

Barry 05.08.10 at 2:36 pm

Alex, re Greece: “Misery will be widely shared, come what protest may.”

That’s actually true – misery will be *widely* shared – but not *deeply*; the elites will be safely above the squeeze zone.

21

bob mcmanus 05.08.10 at 2:37 pm

Perlstein’s Nixonland vastly underestimates how many variations of the “Southern Strategy” are accepted and used in the States, and maybe the world.. Obama is no different.

Read Greenwald on Elena Kagan. But she is a woman, and the center-left won’t fight her nomination.

We need to worry much less about fascism, and look at what is actually going on. And stop sneering at people like Naomi Klein and David Harvey and Michael Hudson.

22

Bruce Baugh 05.08.10 at 2:53 pm

I’m expecting a lot of this in the US press. It’ll go nicely with the mythology of ACORN as national election stealer – Democratic failure to stop Republican crimes will become evidence that we must give up this or that to stop those dangerous Dems. Actual Democratic culpability when it comes to financial unaccountability will just make it an easier sell.

23

mollymooly 05.08.10 at 3:03 pm

I think right-wing anglophone media are unlikely to advocate antidemocratic measures as the solution to the problems of the PIGS. More likely they will simply sigh and say there is no solution, or rather that the solution is unimplementable.

24

alex 05.08.10 at 3:50 pm

@20: it’s rather likely that the Greek ‘elite’ of tax-evading mansion-owners will have to be squeezed, if a practical solution to the long-term problems of the country is to be found. But first, of course, the nation’s public servants will have to be persuaded to stop taking bribes from them to ignore their legal responsibilities. Let’s not forget that Greece wouldn’t be anywhere near this situation if politicians, some of whom claimed to be socialists, had not lied through their teeth for years on end about the state of their public finances.

And bob, what’s this “liberal passivity and fear” thing? I mean, bring on the total collapse of the existing order, if you want. I’ve got my shotgun and 6 months’ stockpile of canned food, have you? Or do you expect the Supreme Soviet to be able to restore imports before we’re eating dogs and cats? This island has over 60 million people on it; most of them have no independent resources, or skills at doing anything except playing the part in the capitalist machine they play now. Nearly half of them are children, pensioners, people with various disabilities, etc, who one way or the other are dependants. The transition to ANY other kind of social and political order would be traumatic even if done slowly and consensually. You may ‘bravely’ embrace the idea of a conflagration to bring on the new order, but I think you just haven’t thought it through. Or maybe I’m overestimating your implications, and you just mean that we should embrace a more rigorous regime of regulation of international banking?

25

Guido Nius 05.08.10 at 4:14 pm

24- I honestly wonder about the ‘lied through their teeth’-bit. All of this was very technical, and all of it defended as technicalities that made the best of ‘the markets’. Maybe, just maybe, this is not the personal blame of anyone in particular but the collective construction of something that is entirely wrong but keeps supported because it turns out to be right for those with the money?

26

Sebastian 05.08.10 at 4:52 pm

“If I am not mistaken, this is the only recession in the 20 century in the US in during which the top 1% has increased its income share. “

This is an interesting statistic. Do you have a reference?

27

ajay 05.08.10 at 5:12 pm

how long before the Economist, the Murdoch press and similar give up on democracy on the grounds of its incapacity to “deliver” firm government? We’ve been here before, of course, in the 1970s, when the Economist and the Times backed the Pinochet coup in Chile.

Pinochet’s coup was in 1973. The Times was purchased by News International in 1981.

History FAIL.

28

Joshua Holmes 05.08.10 at 5:18 pm

I would be surprised to read The Economist saying such things. A few years ago it backed Prodi over Berlusconi exactly because it thought Berlusconi would have too much power being both PM and head of his conglomerate, despite Berlusconi being nominally center-right.

29

bob mcmanus 05.08.10 at 5:35 pm

You may ‘bravely’ embrace the idea of a conflagration to bring on the new order, but I think you just haven’t thought it through.

I don’t have to do much thinking, I can look at Latvia or Iceland or more clearly Greece, and try to choose between the horrible options. Liberals are by default choosing to support the oligarchy. I don’t pretend the fear isn’t justified. It is the incrementalist hope that is the delusion.

A great quote:”The rich will never allow you to vote to take away their money.”

26:Go to hell.

30

Tom Hurka 05.08.10 at 5:36 pm

Without for a minute supporting authoritarianism, the following seems to me plausible: democracies, for all their other virtues, aren’t that good at accepting short-term sacrifices for long-term gains. Democratic governments depend on voters who, being human, tend to be myopic, or to care more about benefits and harms in the present or near future than ones farther away. So the governments also tend to be myopic in their policy choices. (Look at the great job they’re doing on climate change.)

Debt reduction is a policy that, when it’s justified, involves short-term pain for long-term gain, so democratic governments may have difficulty implementing it even when it’s the right thing to do. That’s not to say authoritarian governments are better here; generals too can be myopic. But I don’t think the FT, Economist, or whoever is being irresponsible in pointing to a specific worry about whether democratic governments can make tough choices.

For my British friends about to enjoy a minority government: my reading of the Canadian experience, where we’ve had lots of minority governments — and some have been terrific — is that they can be very suspect on this point. Both the governing party and its junior partner tend to think there will be another election soon and gear themselves to that, which often involves turning on the spigots of short-term spending and avoiding anything unpopular. Certainly the government that eliminated Canada’s federal deficit and significantly reduced the national debt in the 1990s — which has helped the country come through the current recession better than any other in the OECD — was one with a huge parliamentary majority and no need to call another election for five years.

To repeat, though, this isn’t an argument for authoritarianism. The other virtues of democracy may far outweigh its tendency to myopia. It’s just that there is, I think, that tendency.

31

dsquared 05.08.10 at 5:54 pm

The editorials that will be written are going to be authoritarian in a slightly different direction – basically that of demanding German control over Greek fiscal policy. Since this is what’s actually going to happen (when Henry writes his posts about “stronger European institutions”, that’s what it means), I think we’d all better a) get used to it and b) start b)i) taking the European Parliament more seriously and b)ii) demanding that something is done about the catastrophic democratic deficit at the EP.

By the way, Latvia has already enacted something like the kind of fiscal austerity program that Greece needs, showing that it can be done under democracy. Lots of people seem to assume that Greece can’t do what Latvia has managed, seemingly on the basis of not much more than some rather crude ethnic stereotypes.

32

Chris Bertram 05.08.10 at 6:12 pm

ajay@27 I’m perfectly well aware of when Murdoch purchased the Times. Perhaps you think that, post-acquisition, it became a more reliable backer of democracy.

33

Henri Vieuxtemps 05.08.10 at 6:34 pm

democracies, for all their other virtues, aren’t that good at accepting short-term sacrifices for long-term gains.

Who will be making these sacrifices? That’s the question.

In the US the top tax bracket in 1931 was 25% and in 1932 it was 63%. By 1944 it’d grown to 94%, and yet FDR remains one of the most popular presidents in history.

Liberals only see one way out: ‘austerity’; but there is, of course, another way: take it from the rich. But for that to happen, yes, some sort of conflagration is necessary.

34

bob mcmanus 05.08.10 at 6:54 pm

31.2:Good effing grief

Michael Hudson

“MH: That’s right. Their assumption is all the debts have to be paid. And they have to be paid by labor and industry. The financial class will use these payments to lend out even more credit to labor and industry, making them even more indebted, causing yet further collapse, requiring larger bailouts, requiring yet further taxes to carry the “socialization” (I should say, feudalization) of bad financial-sector debts.

So the basic modus operandi is self-destructive and will shrink economies. You’re seeing this happening in Latvia and Iceland. Icelandic mothers are telling their kids, “You’d better emigrate because there aren’t going to be more jobs here for the next generation.” Latvian labor has been leaving for the last five years.”

35

Sebastian 05.08.10 at 7:03 pm

“26:Go to hell.”

So is that an agnotological no?

36

bob mcmanus 05.08.10 at 7:12 pm

More Hudson from 54. The interview is long and covers the terroitory comprehensively

“It used to take an army of occupation to do this, but the dream today is to do this financially, by promoting a neoliberal junk economics that countries adopt voluntarily, and indeed even by democratic vote. And that is where the seeds of a looming geopolitical problem are developing. It is much harder to wipe out official government debts than private ones. Debts to private banks are wiped out when their debtors default.

Fortunately, an excellent argument is open to debtor countries: “Tell us how solving the problem in your way will enable us to achieve economic balance, without sacrificing our countries to foreign ownership and control, without forcing our labor to emigrate, without shortening our life spans and destroying civil society.”

Europe has a killing reply. “We don’t care.”

dsquared at 31 says:”I don’t care.”

37

geo 05.08.10 at 10:30 pm

Tom @30: Democratic governments depend on voters

Yes and no. Or rather: “Yes, but what do voters depend on?” I don’t mean anything profound or paradoxical here, just that in every society the structure of economic and other sorts of power constrain the choices available to voters. Also that the extreme inefficiency and bias of the American Constitution and electoral machinery pose many obstacles to the transmission of voters preferences into policy. I know you know all this, but I mention it because there seemed to be a bit of “blame-the-shortsighted-democratic-public” language in your comment.

38

Chris Bertram 05.08.10 at 11:18 pm

geo @37

Well yes indeed. A lot of the rhetoric holds people responsible as if they were full participating citizens of the Rousseauvian republic. “You took the loan, now pay up!” But, of course they (we) didn’t, in any meaningful sense. A fortiori for their (our) children.

39

Sebastian 05.09.10 at 12:32 am

“Lots of people seem to assume that Greece can’t do what Latvia has managed, seemingly on the basis of not much more than some rather crude ethnic stereotypes.”

Well it could just be a reporting problem, but I didn’t see Latvian protests that involved burning people alive in banks so it might be a little harder in Greece.

40

Jim Harrison 05.09.10 at 1:52 am

The EU has no monopoly on democratic deficits: the low political participation rate in American elections is a pretty good indication of the alienation of the population from the government. It isn’t just the teabaggers who don’t feel that it is their government. The normal bitch about genuine democracy is that the people will raid the treasury, but over the last several decades we’ve seen that the real pattern is quite different. Oligarchs are quite willing to run up huge deficits in order to bribe the population into passivity: the nearest thing we’ve had to a democratic government in the last few decades was also the last one to embrace something like responsibility and it wasn’t that much like responsibility.

A genuinely popular government can legitimately ask for sacrifices from the people at large; but it’s hard to imagine such a thing today , especially since there is no credible organized opposition to the entrenched combine of pluto- and technocrats—who knows what to do after you’ve seized the acropolis? At this point the very idea of an alternative is apparently beyond our powers of imagination as witness the flaccid rhetoric of academic lefties. Things are not necessarily better for the elites, though. The Reagan solution, i.e. running up the national credit card balance, is no longer available and the talented political monsters necessary for an authoritarian response aren’t obviously available. Ought to be interesting as standards of living decline in many countries.

41

novakant 05.09.10 at 2:55 am

The editorials that will be written are going to be authoritarian in a slightly different direction – basically that of demanding German control over Greek fiscal policy.

I make you a deal: Germany won’t pay for anybody else’s mess anymore and in return they will cease to demand a say over anybody else’s fiscal policy.

42

bob mcmanus 05.09.10 at 3:06 am

41:Doesn’t quite work. Capital flight. The elites are playing the arbitrage between the mobility of capital (nearly infinite and instantaneous) and the relative immobility of labor and the social institutions that protect and empower labor.

What is really needed is for Greece to determine German (countercyclical) fiscal policy.

43

Sebastian 05.09.10 at 6:25 am

“What is really needed is for Greece to determine German (countercyclical) fiscal policy.”

That would be very good for Greece. It would also be great for the US if it got to determine Chinese fiscal policy. They might whine about that though…

44

Guido Nius 05.09.10 at 8:03 am

41- Wow, that sounds awfully … German.

42- Indeed which is why the first to be done is slow down the movement of capital e.g. by correlating it with movement of capital owners; including the cutting it up bit ;-)

45

ejh 05.09.10 at 8:56 am

I suspect that editorials calling for the suspension of democracy will be fewer than the original post, but that if democracy is suspended, editorials supporting that suspension will be common. But my guess is that there will be a lot of editorials calling for governmens of national unity, i.e. ones in which all the major parties support deep cuts in social programmes, pensions and public sector pay (but not increased taxes for the wealthy and well-off).

I also think that we will see a lot of use of the term “realism”, which will be taken to mean that it is realistic to expect people down the lower end of the income scale to accept these cuts, however deep (and how often repeated) they may be, and that it’s realistic to expect them to accept them without a great deal of complaint. It will also be considered realistic to expect that the markets should dictate government policy regardless of their (rarely-acknowledged) responsibility for the crisis.

There’s going, I think, to be a lot of fights between liberals and socialists over all this: because I don’t think that most liberals are generally opposed to the sway that the markets hold over governmental economic policy, and I think that most socialists are. These are general terms and don’t appply to everybody, but I think they hold as a rule: and we may see a lot of arguments about what democracy means in an era such as this and circumstances such as these.

46

Jordan DeLange 05.09.10 at 9:06 am

Well, the Pinochet coup happened a good ten years before I was born, so I might lack some familiarity with the bad old days, but I’d bet quite a bit the Economist doesn’t do any such thing. As Josh Holmes above points out, they have been regularly anti-Berlusconi, and they were also one of the few right-wing types to oppose Uribe’s attempts to amend Colombia’s constitution and go for another term. Unless “‘temporary’ authoritarian solutions” just means “something unpopular,” there is no way today’s Economist comes out in favor. Other right-wing commentators? Different story.

47

aretino 05.09.10 at 9:45 am

@33

In the US the top tax bracket in 1931 was 25% and in 1932 it was 63%. By 1944 it’d grown to 94%, and yet FDR remains one of the most popular presidents in history.

So your point is that FDR was so popular becasue his predecessor made the top rate two and a half times higher in peacetime, while he made it only one half higher, and that during wartime?

48

Daniel 05.09.10 at 11:23 am

democracies, for all their other virtues, aren’t that good at accepting short-term sacrifices for long-term gains.

I don’t think there’s much evidence that this is the case in practice. Democracies make the most extraordinary sacrifices. The USA sent millions of its people to die in a war in Europe that couldn’t possibly have threatened its short term interests. Israel has all sorts of flaws, but it’s the one state in the Middle East that doesn’t sacrifice long term interests for short term gains.

I think I’d even argue that this is the wrong way round. Dictatorships, because they lack legitimacy, are more worried about being overthrown and more inclined to take short termist measures. Certainly if you pick your favourite out of a wide variety of economic indicators, it’s not obvious that military dictatorships in general have a good track record of paying their external debts and executing noninflationary monetary policy. Pinochet was very unusual in this regard.

I make you a deal: Germany won’t pay for anybody else’s mess anymore and in return they will cease to demand a say over anybody else’s fiscal policy.

Well thanks for that, but the deal has actually been done via the treaty of Rome, the formation of the EU and the creation of the EMU, and the position taken was diametrically opposite to the one you suggest.

49

Laurel 05.09.10 at 12:41 pm

Israel has all sorts of flaws, but it’s the one state in the Middle East that doesn’t sacrifice long term interests for short term gains.

Wait, are you serious about this? The whole settlement deal is about sacrificing long-term interests (credibility, relations with Palestinians) for short-term gains (political support from the right wing, creating cheap housing for Israelis). Hard to see that as a long-term strategy for anyone other than the right-wingers looking to reestablish biblical Israel.

50

hix 05.09.10 at 3:27 pm

@28 Berlusconi and the Italian right in general is very close to the rich family clans which stand in opposition to the Anglo American finance industry. When the Italian left wins and starts to break the power of the family clans through better minority shareholder protection and the like, which i think they did to some extend when they were in power, the fund managers in London will profit a lot.

51

tom bach 05.09.10 at 4:05 pm

The Economist on Salvador Allende from September or 1973. No need to guess.

52

tom bach 05.09.10 at 4:07 pm

53

Arvind 05.09.10 at 7:17 pm

how long before the Economist, the Murdoch press and similar give up on democracy on the grounds of its incapacity to “deliver” firm government?
“Firm government” as in government of the firms, by the firms and for the firms?

54

mds 05.09.10 at 7:32 pm

It’s very gratifying to see all these lectures about the contrast between German fiscal rectitude and other euro members’ spendthrift ways, in light of the BBC’s story on regional elections in North Rhine-Westphalia:

The campaign has been overshadowed by the government’s decision to contribute to a huge rescue package for Greece.

Meanwhile many cities in NRW are on the brink of bankruptcy.

Our correspondent says local councils in NRW are sinking into debt, with rising kindergarten fees, and libraries and swimming-pools closing. She adds that in Wuppertal, even the theatre is under threat.

So opposition to the bailout is in part rooted in the fact that the German government is letting places like North Rhine-Westphalia swirl down the drain, all while posturing about how much more responsible their deflationary anti-Keynesian policies are than all those nations with “red ink.” Meanwhile, international creditors must be rescued on the backs of poor Germans and Greeks. Good look with that Tory-LibDem coalition, UK. You’re going to need it. (And no, given the likely electoral results in November, and the existing fevered zombie economics rhetoric about “deficit reduction” a la 1937, those of us in the US have no room to be smug. Consider it schadenfreude, which seems especially appropriate.)

55

hix 05.09.10 at 9:33 pm

Those bankcrupt municipalities get showered with billion after billion in public for their the local coal industry ever since it became uncompetitive 40 years or so ago.
If theres a lesson for Greece then its that bailouts that delay structural reforms are of no good for anyone.

“She adds that in Wuppertal, even the theatre is under threat. “

Note the priorities, even the 90% subsidy financed decadent entertainment for the upper class is under threat! Nono, we cant shut those down, better to find some tax new regressive tax.

56

ajay 05.09.10 at 10:36 pm

ajay@27 I’m perfectly well aware of when Murdoch purchased the Times. Perhaps you think that, post-acquisition, it became a more reliable backer of democracy.

Well, you obviously weren’t aware, otherwise you wouldn’t have cited it as an example of the Murdoch press opposing democracy in 1973, at a time when it was not, in fact, a Murdoch paper. If you have an example of a Murdoch paper backing the Pinochet coup in 1973, you should have cited it.

I’m with 46. There will be no editorial in the Economist, the Financial Times, the Times, or any UK broadsheet calling for the overthrow of a democratic European government and its replacement by a dictatorship, on the basis that a dictatorship will be better at assuring financial or economic stability, not in Italy, Greece, Portugal or anywhere else, not soon, not this month, not this year.
If you’d like to bet, you can pay £50 to Cancer Research UK on `31 December 2010, when you lose.

57

ajay 05.09.10 at 10:45 pm

The USA sent millions of its people to die in a war in Europe that couldn’t possibly have threatened its short term interests

Not actually true. Millions of Americans didn’t die in Europe. Total war dead were 300,000 and many of those were in the Pacific. And they certainly had a national interest in making sure that Europe and the North Atlantic were not dominated by a highly aggressive empire that had, if you remember, just declared war on the US, and was (conceivably) about to acquire one of the largest and most advanced surface and submarine war fleets in the world (ie. the combination of the Kriegsmarine and the surrendered Royal Navy).

58

Barry 05.09.10 at 11:56 pm

“Certainly if you pick your favourite out of a wide variety of economic indicators, it’s not obvious that military dictatorships in general have a good track record of paying their external debts and executing noninflationary monetary policy. Pinochet was very unusual in this regard.”

IIRC Pinochet wasn’t successful at all with overall economic growth – he’s had Chicago rooting for him, and doing his PR, and they tend to have the economics professoriate kissing their *sses.

I’d second the notion that dictatorships have a lousy track record in economics, for obvious reasons. And if they’re reasonably secure in local power, they might decide to ‘renegotiate’ the agreements, secure in the knowledge that they won’t be overthrown in a coup, since they control the only forces able to do that.

59

Bruce Baugh 05.10.10 at 12:19 am

Jim Harrison: The normal bitch about genuine democracy is that the people will raid the treasury, but over the last several decades we’ve seen that the real pattern is quite different. Oligarchs are quite willing to run up huge deficits in order to bribe the population into passivity: the nearest thing we’ve had to a democratic government in the last few decades was also the last one to embrace something like responsibility and it wasn’t that much like responsibility. All of this is so right on I just wanted to repeat it with a big “What Jim said!”

I’ll make another entry to my projection file – that is, the list of things right-wingers rant on about that turn out to be their own faults projected onto others, along with fiscal incompetence, sexual hypocrisy, love of tyranny, and all the rest.

60

Socrates 05.10.10 at 3:33 am

You don’t read The Economist, do you?
Did you know they backed Obama’s recent Health Care Bill?
They are generally positive towards markets (of course) and couple this with an intelligent balanced social and political outlook. They are a million miles from the ignorant American right wing.

61

Sebastian 05.10.10 at 4:44 am

I’m not sure why you think that “bribing the population into passivity” and “raid the treasury” should be considered particularly different.

62

novakant 05.10.10 at 5:54 am

the deal has actually been done via the treaty of Rome, the formation of the EU and the creation of the EMU, and the position taken was diametrically opposite to the one you suggest.

Well, it should be beyond obvious that I wasn’t seriously suggesting Germany shouldn’t live up to its treaty obligations. I’m just tired of people painting those countries that foot the bill as bullies, while the one’s that caused this whole mess are exonerated by default. If you want to hold banks to account, why go easy on governments. As for the poor Greeks, yes they will be having a hard time, but so will the citizens of countries that bail them out, who are dependent on the funds that will get diverted to sort out this thing – no free lunch.

And where exactly does the Treaty of Rome or any other such document provide us with clear instructions on how to deal with such crisis or forbid Germany to throw its weight around – oh, right, nowhere.

63

derrida derider 05.10.10 at 6:37 am

I think there is a definite distinction between the claim that a country is in chaos and this will lead to an authoritarian regime and the claim that the country is in chaos so this should lead to an authoritarian regime. I agree the Economist in its journalistic excitement may end up saying the first; I think it unlikely that it will say, or even think, the second. I often think its reporting is no up to scratch, but its classic liberalism is mostly sincere.

The Murdoch press, now – well it depends on how Mr Murdoch sees his commercial interests, doesn’t it?

Jim Harrison is spot on above – it’s not democracy per se that led to Greek improvidence. In particular the decision to deliberately lie to the EU and the markets about government finances was not made democratically.

64

Chris Bertram 05.10.10 at 7:03 am

_you wouldn’t have cited it as an example of the Murdoch press opposing democracy in 1973_

I didn’t. You need a remedial reading class.

I wrote:

_how long before the Economist, the Murdoch press and similar give up on democracy on the grounds of its incapacity to “deliver” firm government? We’ve been here before, of course, in the 1970s, when the Economist and the Times backed the Pinochet coup in Chile._

65

Chris Bertram 05.10.10 at 7:07 am

_There will be no editorial in the Economist, the Financial Times, the Times, or any UK broadsheet calling for the overthrow of a democratic European government and its replacement by a dictatorship …_

My specific claim

_we’ll be reading op-eds pretty soon that raise the spectre of “ungovernability” and espouse “temporary” authoritarian solutions_

Obviously an op-ed that does that can be somewhat different from an editorial calling for dictatorship. Still confident that, say, Dan Hannan, won’t write something like that?

66

ajay 05.10.10 at 8:38 am

64: so “here” didn’t mean “the Economist and the Murdoch press giving up on democracy”, it meant… something else. OK then.

Still confident that, say, Dan Hannan, won’t write something like that?

For all I know, he has already. But not in the Economist or any UK broadsheet. What Dan Hannan writes on his blog, or his newsletter, or his letters to Santa is not relevant.

If you like, I’ll amend the bet: there will be no op-ed published this year in any UK broadsheet, of whatever ownership, or in the Economist (which doesn’t run op-eds anyway) which advocates a “temporary authoritarian solution” (or indeed a permanent one) as a response to a purported failure of democracy with regard to fiscal or economic problems in any democratic European state.
£50. Cancer Research UK.

67

Chris Bertram 05.10.10 at 9:18 am

Well Dan Hannan’s blog is published on the Telegraph website.

I’ll take a bet that says that someone writing in a forum published by a UK broadsheet, or the Economist, or the Spectator (except for commenters on blog posts) will engage in dark speculation about whether a temporary authoritarian solution might be necessary to achieve the kind of fiscal and budgetary changes demanded by the creditors, the markets etc. Such dark speculation to be pro-authoritarian, even in a more-in-sorrow way.

Deal?

68

Chris Bertram 05.10.10 at 9:21 am

novakant:

_the one’s that caused this whole mess_

But according to. e.g. Martin Wolf, the Germans do bear some causal responsibility for “this whole mess”. Do you disagree?

69

Z 05.10.10 at 10:19 am

My guess is that we’ll be reading op-eds pretty soon that raise the spectre of “ungovernability” and espouse “temporary” authoritarian solutions. Maybe such columns are already being written? Feel free to provide examples in comments.

My impression is that such columns are actually quite common in the french press, at least under the favoured guise of “people don’t understand and an enlightened strong man is what is needed in these situations”, whenever the population is vigorously opposed to a political choice backed-up overwhelmingly by the ruling party and/or the super-rich. I have no particular example regarding the financial crisis, but I would guess one week of reading the op-ed pages of Le Figaro will provide (“France is the next Greece” is the slogan en vogue there and “Hence we should support/reelect N.Sarkozy” is the timeless corollary).

For specific examples, I remember very distinctly that the No vote for the referendum on the European Constitutional Treaty produced an outburst of “abolish referendums” which morphed more often than not in the more sinister “abolish elections bearing on european policy”, which is not too far from “abolish elections” in the french context.

70

Current 05.10.10 at 1:33 pm

Writing as someone I’m sure you guys would consider “right-wing” I’m sure some moron or other will call for suspension of democracy.

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chris 05.10.10 at 1:48 pm

64: so “here” didn’t mean “the Economist and the Murdoch press giving up on democracy”, it meant… something else. OK then.

Clearly, he was analogizing Murdoch to unspecified past media owners, and saying Murdoch was one of the most likely to say in the present what others said in the past. Have you really never seen a present-day public figure compared to historical events before? It doesn’t require a claim that the present-day figure was literally involved in those events.

72

ejh 05.10.10 at 1:51 pm

The next time I see somebody talking about “Greek improvidence” without referring to the improvidence of the financial institutions that turned it into a crisis, I shall make like Violet Elizabeth Bott.

Talking about the Greeks, as in just the Greeks, is an easy and not particularly honest way of avoiding various important issues, these being that there would be no Greek crisis without the general economic crisis, that there is no entity called “the Greeks” who caused even their local crisis, and that the crisis is going to be paid for, in very painful manner, not by “the Greeks” but, by and large, by those Greeks who are least able to afford to pay for it.

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Current 05.10.10 at 2:21 pm

I think that trying to reduce debts using inflation would be even worse than taxation. There is probably some demand for money holding currently, so probably some money can be issued without causing price inflation later. But, if a lot of money were issued in order to water-down state debt obligations then that’s a completely different matter. Every other contract denominated in money would also be similarly watered down, not least salary contracts. Wages are stickier than retail prices, so if inflation starts to take off then initially ordinary people will suffer.

Taxation is probably the safer option.

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mds 05.10.10 at 2:57 pm

The next time I see somebody talking about “Greek improvidence” without referring to the improvidence of the financial institutions that turned it into a crisis, I shall make like Violet Elizabeth Bott.

Indeed. In the US, the comparable version was to blame the Community Reinvestment Act for forcing banks to lend money to unqualified minority borrowers, to blame Fannie Mae and Freddie Mac for causing the meltdown by belatedly adopting the profliglate practices of other lenders, etc, etc. Never mind that all of this is objectively false; the important thing is to make it the responsibility of low-income people who have had their homes foreclosed on, rather than the financial institutions who kept blowing more gas into the real estate bubble while taking their clients’ money to the CDO / CDS casino.

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chris 05.10.10 at 5:45 pm

I’m just tired of people painting those countries that foot the bill as bullies, while the one’s that caused this whole mess are exonerated by default.

Who are you casting in which role here? ISTM that it takes two to make a loan contract (in ordinary finance, of course, the vast majority of loan contracts are written by the lender, but I’m not sure if that is still the case when the borrower is a government), and the vast bulk of “the bill”, including interest, will be footed by the Greeks — and not even the particular Greeks who made or benefited from the original arrangements, but just whichever Greeks can be made to pay for it.

And that’s not even counting the possibility that “this whole mess” includes the global real estate bubble and leverage crisis, which trashed most of the industrialized world’s economies in the first place, or that Euro monetary policy is aggravating the damage.

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novakant 05.10.10 at 9:48 pm

77

Barry 05.10.10 at 10:26 pm

And to continue that theme, Steve earlier quoted this tidbit (from: http://mpettis.com/2010/05/are-you-ready-for-the-united-states-of-germany/ ):

“Spain will almost certainly have to choose. Either it gives up fiscal sovereignty – including, most importantly, taxation authority – to Brussels, or it gives up the euro. The alternative, several years of difficult adjustment borne mostly by workers, is politically unlikely.”

It’s awe-inspiring how dishonest the right it – does anybody think that workers in Spain won’t bear the brunt of these ‘adjustments’?

78

Jordan DeLange 05.11.10 at 7:08 am

Dr. Bertram:

Sorry to be annoying, but you clearly included The Economist (“and” being conjunctive and all that) as one of those who will give up on democracy. This seems, in their current incarnation, to be pretty implausible. Are you walking back from that claim (and just discussing other British papers)? Is it now that either the Economist or the Murdoch press or similar rags that will do so? It seems your (quite plausible for all I know, I’m quite ignorant of other British publications) claim that someone will go in for “firm government” could be right, but the bit about the Economist seems a like a slur.

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Chris Bertram 05.11.10 at 9:29 am

_(“and” being conjunctive and all that)_

Yes, sloppy of me. I’m happy with “or”.

80

ajay 05.11.10 at 9:55 am

67: so your new position is now, basically, that some time, maybe this year or maybe later, someone will write a letter to the Times or a Comment is Free post speculating – without necessarily advocating it – that an authoritarian approach of some sort might have some fiscal advantages in some unspecified country, maybe in Europe or maybe elsewhere.

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Chris Bertram 05.11.10 at 10:22 am

ajay@80 No. My position is that sometime in the next year someone, paid to do so by the rag/website in question, will say such a thing in the Economist, or in an organ owned by either Murdoch or the Barclay brothers. So letter writers and blog commenters don’t count – obviously.

82

ajay 05.11.10 at 12:35 pm

And now the Spectator and the Sun are in there as well! This prediction just goes on evolving, doesn’t it?

The Economist and, no, wait, not “and”, or the Murdoch press, oh, or maybe some publication owned by the Barclay brothers, or a website associated with one of them, will publish op-eds, or maybe just one op-ed, or maybe a website article, or a blog post, this year, or soon, or next year anyway, completely giving up on democracy, no, wait, calling for an authoritarian takeover, no, wait, maybe not calling for one as much as raising the possibility more in sorrow, or just speculating about it, or pointing out that it might have some fiscal advantages, in a European country, or maybe elsewhere.

83

Chris Bertram 05.11.10 at 2:15 pm

You can scratch the Sun, and any tabloid if you like ajay. The reference to op-eds was in the original post. I can’t see how you reasonably object the blog posts in the case where the blog is hosted by the Telegraph (Hannan), Times (Kamm) or whatever, especially since the Press Complaints Commission in the UK has now included such entities within its remit.

84

Barry 05.11.10 at 2:20 pm

Chris Bertram:

“I can’t see how you reasonably object the blog posts in the case where the blog is hosted by the [publication]”

I second this; any publication which doesn’t allow random people to blog on their site is treating bloggers as columnists (albeit second-class, and probably less-paid).
The comments I’ve seen from Bloomberg and other places about somebody just being a blogger on their site are trying to have their cake and eat it too.

85

Current 05.11.10 at 2:20 pm

I don’t think Telegraph blogs works like that. AFAIK anyone can sign up, it’s a service like wordpress or blogger.

Though, only the ones the Telegraph sub-editors like come up on the main page.

86

Barry 05.11.10 at 3:15 pm

That’s what I’d mean; things which the publication endorses.

87

Lemuel Pitkin 05.12.10 at 1:24 am

Folks seen Dani Rodrik’s latest?

“Deep down, the crisis is yet another manifestation of what I call ‘the political trilemma of the world economy’: economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance.”

Of course to predict (cuz honestly which horn of the trilemma do we seem likeliest to end on?) is not to endorse.

OT, but I feel obliged to express my happiness with the recent direction of CT in general, and John Q.’s posts (of which I know this is not one) in particular.

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Substance McGravitas 05.12.10 at 1:36 am

OT, but I feel obliged to express my happiness with the recent direction of CT in general

You may enjoy Bryan Caplan’s Libertarian Purity Test which I found at Roy Edroso’s place.

http://www.bcaplan.com/cgi-bin/purity.cgi

89

Bill Gardner 05.12.10 at 1:24 pm

Check out Dani Rodrick:

‘Deep down, the crisis is yet another manifestation of what I call “the political trilemma of the world economy”: economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance.’

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Bill Gardner 05.12.10 at 1:46 pm

Lemuel — SORRY THAT I MISSED YOUR COMMENT.

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Current 05.12.10 at 4:12 pm

Dani Rodik is full of cr*p. The example he gives of Britains return to the gold standard is silly, even at the time it was accepted that the rate used was a poor policy decision. Even Ludvig Von Mises said it was at the time. Like most economists these days he doesn’t understand that even under the gold standard the banks of issue have the power to satisfy the demand for money.

In general why should democracy be that fragile? I’m a libertarian and even I don’t think it’s that dysfunctional. If a state passes a plausible balanced budget amendment, or even a system just to keep deficits reasonable, then it won’t get into the same situation as Greece.

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chris 05.12.10 at 9:24 pm

Even assuming that Dani Rodrik is correct (without reading in full, I’m going to take a wild guess that the main argument is based on cross-border regulatory arbitrage and capital flight), isn’t it obvious that the institution that gave us World War I is the one to scrap? Nation-states exist in order to justify discrimination against people born on the wrong side of a border — and that’s the relatively benign ones that aren’t actively exalting one ethnic group within their nation over others.

Although you could make an argument that a return to capital controls and moderate trade barriers (i.e. enough to prevent sweatshops from outcompeting domestic industry on price) would be preferable, I guess. At least it would have less drastic upheaval costs.

But even if you accept the trilemma argument, IMO it’s clear that democracy is one of the least, if not *the* least expendable of the three allegedly inconsistent concepts. (What profit all the wealth of globalization if you’re living in a high-tech dictatorship, etc.)

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