What’s left of the European Union?

When the up-front pitch is that the poor (and everyone else) will be protected by bureaucracy and some variation on the state, who will purportedly use its power to crush oppressors, re-educate traditionalists, and coerce charity from the wealthy, one can be certain that the real outcome will involve crushing, re-education, and coercion – but that Orwell will have his prophetic voice made relevant once again.

The only protection of the unfortunate is the virtue of the fortunate. Bureaucracy denies individual virtue, undermines the spirit of charity, and ultimately exists to serve only itself.

I’m committed to the ideal (especially the cultural ideal) of a united Europe, to the extent that if the UK votes to leave I’d be seriously considering emigration – but the current reality falls well short of that ideal, as Chris notes, and it’s now all too easy in retrospect to spot some really terrible decisions, especially when it comes to the Euro. I would say, contra MPAVictoria, that the idea was always to remove the threat of a third German attempt at European domination by binding the country tightly into transnational institutions, and that remains an undeniable success; if anything, in the current crisis German politicians (most obviously Merkel) have shown a lack of leadership, a refusal to accept or wield their actual power, that can’t be wholly explained by fear of the anger of German voters if they agree to ‘subsidise’ the Greeks (ignoring the enormous advantages of a devalued Euro for their own exports). Not easy at the moment to see a good, or even less bad, way out of the current mess, but I’d still vote ‘yes’ in the UK referendum, regardless of the fact that Cameron’s concessions will be paltry at best.

Voting to stay in is also a vote to keep Scotland in the UK.

It doesn’t make the analysis any less bleak, but Silvio Berlusconi was also forced out by a creditors ‘ coup.

” I still remember the lectures of visiting German graduate student leftists in the 60s, absolutely convinced of the superiority of their political analysis to that of (naive, juvenile, pick your demeaning adjective) American new leftists.”

Well, did they have a point ? Considering the present condition of the two countries ….

After nearly 60 years of the Common Market/EEC/EU, discourse still hasn’t passed the juvenile stage. The EU represents a political arena that can be occupied by various constellations of political forces, in a not radically different way to a nation-state. There is no reason why people have to ‘take or leave’ the institutions of the EU, in the same way that the constitutions of states are sacrosanct and immune from change. Why an anti-elite European policy is beyond the grasp of people is hard for me to understand. I wouldn’t expect the UK state to provide the Left with a favourable outcome without organising politically for it. Until progressive and democratic forces start campaigning on a Europe-wide level, then change is unlikely to be favourable. To opt-out of the EU is hardly likely to improve things in a country like the UK, and even Syriza in Greece have been determined to stay in.

And some of the anti-German sentiment in these comments is worthy of the Daily Mail.

So P O’Neill is saying that the rest of us will get a referendum on Scotland after all? Tempting, tempting, but I’ll still vote to stay in the EU.

“… if anything, in the current crisis German politicians (most obviously Merkel) have shown a lack of leadership, a refusal to accept or wield their actual power, that can’t be wholly explained by fear of the anger of German voters if they agree to ‘subsidise’ the Greeks (ignoring the enormous advantages of a devalued Euro for their own exports).”

I think this is almost entirely wrong. German politicians like Merkel are leading, they just want a different result than you think they want: Greece as an object lesson to other EU countries. The lesson is, of course, ‘no challenges to the center-right corporatist agenda of the EU elite will be tolerated.’ Thus far, they’ve led beautifully to that end, and seem poised to win no matter the outcome. Either Syriza will fall and Greece will accept more beatings, or Greece will be forced out in the most painful manner possible.

I really think that is a mistake to concentrate so much on Germany. There is precious little evidence that the political and economic elites of other countries are being dragged against their will. That’s why a European response by the people is needed.

Germany has done very nicely, of course.

Actually, the euro has been a disaster for German working people. The labor share has fallen from around 70 percent of national income in the early 1990s to 60 percent today. That may be the largest fall in the labor share in any European country over the period.

One of the biggest lies about the current crisis is that the fundamental conflicting intersts are between nations.

Ronan(rf)

“I don’t see why there’s any dilemma on it. Outside the eu ,UK immigration policy gets worse , domestic “European solidarity” probably weakens and the position in Greece stays the same”

Completely agree. Far from freeing the UK from the EU’s brand of neoliberalism, it would just lead us to attempt to ape the US’s far more noxious version (sorry guys!). And a Brexit (especially following a Grexit) could easily be the beginning of the end for the whole EU – how long then until the countries are once again at war (or worse, Putin decides to take full advantage of the chaos and start his own)?

OT I agree with Igor and Josh.

The Arguments for Federal Union

Slightly modified from Charles Sisson

1. As Westminster knows what is best for Yorkshire, Brussels will know what is best for England.

2. As we are adequately represented by our Parliament, and the Italians are adequately represented by their Chamber, we will both be perfectly represented by the Federal Parliament.

3. As every elector understands the government of his country, he will still better understand the government of the Union.

4. As no one is at present distracted from the affairs of his own town by the voices of politicians in London, no one will be distracted from the affairs of his country by the voices of politicians in Brussels.

5. As we have perfected the art of governing a small territory, we are proper persons to undertake the government of a larger one.

6. As there is no possibility of intrigue in the French Chamber, the example of France may be followed by the whole Union.

7. As men care most of all about ethical ideals, less for their country and least of all for money, there will be no conflict between inclination and duty in the minds of the central government.

8. As there is one philosophy to which all men give assent, the central government will easily agree on what principles their policy is to be decided.

9. As language is merely a vehicle for conveying abstractions, representatives ignorant of one another’s tongues will easily understand one another’s ideals.

10. As the nations of Europe have always been wonderful examples of docility, history will have left on their characters no trace of mutual suspicion.

11. As the most powerful nations have always been the freest, the largest state of all will be the freest of all.

12. As strong nations habitually respect the rights of weak ones, even when it is not in their interests to do so, a strong Union will inevitably be a just one.

13. As the tenure of office usually improves people in proportion to the greatness of the power they exercise, the central government will be a school of virtue.

14. As great office always produces magnanimous governors, there is no possibility that the power of the Union will be abused.

15. As the federated nations will always retain the power of the vote, they need not fear the central executive which disposes of the power of the purse and the gun.

16. As there is little inconvenience in fleeing to another country, there can be none at all in fleeing to another continent.

On a more positive note (for me anyway) I remember being told something similar (by Harry Brighouse I believe) about the question of abolishing private education

I think that the immigration issue is a thin thread to hang a yes vote on. With the anti-democratic direction taken by the ECB and countenanced by France, Germany and the Netherlands, a yes vote in the next couple of years is really not a vote for liberalized immigration rules, but for overthrowing democratically elected governments who contravene the neo-liberal economic doctrines of the elite.
Vote no, Chris.

Zamfir @ 27

From my perspective, neither of the above would be the better alternative. J.W. Mason’s point is the fulcrum, I think. If what’s happened to Greece is proof of anything, it’s that those principally responsible for the governance of the EU are more concerned with the stability in perpetuity of its admittedly flawed institutions than in the welfare of its people. In this they’re not substantially different from their opposite numbers in the U.S.

Regardless of the outcome of the Greek referendum, lesser-evilism and there-is-no-credible-alternative, it seems, are fated to be the plague on both our houses. What Bill Clinton did for the Democratic Party, and Tony Blair for Labour, Hollande is now doing for the PS, and Gabriel for the SPD. Maybe it’ll all turn out for the best in the end, but I very much doubt it.

In the present climate, it should surprise no one that Tsipras and Varoufakis had no chance at all of prompting a rethink of fundamental Eurozone economic policies. If, on the other hand, the UK should present a credible threat of leaving the EU, even for the wrong reasons, the mode of the music might really be forced to change.

Has anyone compared the first decade of the EU to the earlier history of Europe’s great successful project at integrating diverse states with multiple currencies? I speak, of course, of Switzerland. Both Switzerland and the EU bound diverse political entities, speaking multiple languages, with independent governments and political and religious traditions, into a single border. Aside from the odd inter-Cantonal war here or there, Switzerland seems to have made a go of it. What did they do differently?

Or does the difference in time scale simply cause the horrid deeds of the Old Schweiss Confederacy to blur together, while we can observe the minutiae of the EU’s travails?

Just one point to make on the general theme of”German domination” (really, gtfu).

The whole point of EMU was to allow peripheral and Southern European economies with a history of bad governance and inflation, which had not served them very well in the past, to borrow German credibility. This was literally its main selling point to them. Having placed an order for a container load of German governance, and been delivered it on time and to specification, and enjoyed the benefits of it in terms of low inflation and falling bond yields, it seems a bit much to start going on about how Germany is too cautious, austere and savings-obsessed when times get tough. Giving up the option to inflate and devalue your way out of trouble is literally the exact thing that the periphery wanted EMU for.

Sorry, that was a short cranky croak. The longer, more thoughtful version is in a post I am still working on.

Precis: it seems to me that instead of governing, both models act to preserve privilege and delay action until absolutely necessary. The end result is, well, the crises we are observing in both systems.

mordy @ 15: . . . do these failures of the Eurozone to produce left-wing outcomes on these issues (southern economies, refugees, etc) indicate a failure in leftism itself – a sort of detachment from reality such that even projects explicitly predicated on leftist ideas are unable to succeed? In the US we witnessed Obama’s elections on a tide of liberal optimism that ultimately became – at its best – settling for small pragmatic victories inside a wave of neoliberalism. In Greece they elected Syriza only to find out that actually putting a legitimate left-wing government in power makes no difference – and maybe even will end up generating poorer results than if a more moderate party had been elected. Maybe leftism is just a pipe-dream, a utopian gesture that suffocates the moment it is exposed to actual political mechanisms?

I think you mean actual economic mechanisms. But, yeah.

The left seems to be able to manage political mechanisms well enough, well enough to occasionally get elected. The rise of SYRIZA in Greece was textbook. Ditto for Obama’s elections. The british labour party looked pretty damn stupid last time out, but they had a good run within living memory. Political mechanisms, the Left can manage, at least from time to time.

It is the economic mechanisms that trip them up, time and time again: the neoliberal there is no alternative to what “serious people” judge the situation requires, etc. seems to be mere political sloganeering, but underneath the well-honed political rhetoric of neoliberalism, there are mechanisms.

As dsquared so solemnly notes, the Euro was an easy sell to the periphery. Monetary inflation was a safety valve for economic conflicts and sometimes palsied governance, and the aspiring middle classes of those countries were weary, ashamed or repulsed in a way by their own national currencies, bearing as those currencies did, the scars of past political failures in low status. The promise of the Euro was political maturity and stronger institutions. It was a vague and mystical promise, but the appeal of that promise was unopposed, in part, because the Left has no economists and no economics, beyond the vestiges provided by surviving labor movements. There was no effective pushback against the neoliberals and conservative libertarians, no negotiation in the institutional design. The answer to the few demurrals was a handwave at promise: the Euro would provide “discipline” and any future crisis would be met with goodwill and resolved to the further progress of European Union. No one asked what the role of national sovereignty would be in economic policymaking.

When dsquared @ 15 sweepingly declares, “. . . with a history of bad governance and inflation, which had not served them very well in the past . . .” he rather elegantly captures the spirit with which countries like Italy and Greece adopted the Euro, but he’s also describing a game of three-card monte. Classic three-card monte involves a dealer, who holds a wad of cash in his hand, to tempt the mark and to conceal his sleight of hand, while a shill pretends to help the mark cheat the dealer — only, of course, the mark ends up cheated.

The Euro came with the promise of better governance, but no institutional mechanisms of good governance. There was no provision for state bankruptcy — something of a logical necessity. There was no provision for a banking union, or regulation of banks. There was no provision for deposit insurance or other protections of the payment system.

In their history of bad governance, “inflation” actually served the countries of the periphery well, though perhaps bankers suffered. There was no one on the Left to call for two cheers for inflation, though, and no one on the Left to insist on institutions of financial repression to accompany the Euro. The Euro left bad governance in domestic national politics untouched, and added new forms of bad governance in Frankfurt, Strasbourg and Brussels.

The late-20th century Left came to hate the nation-state and to look down on the prejudices and bad taste of what used to be called the working classes. Maybe that has contributed to the blind-spot the Left has on economics.

dsquared is right on the money, and I don’t understand why this point is so often ignored. The *whole reason* countries like Greece joined the Euro was to credibly take advantage of German economic governance. Real GDP per capita in Greece more than doubled in the first decade under the Euro, inflation was absurdly low by Greek standards, and interest rates were absurdly low as well. The response of the Greeks to this windfall was to increase the size of the public sector, and otherwise make very few sensible investments.

And the failure to bail out Greece further is not a German problem. Germany cannot make such a decision alone. It should be quite clear that essentially no country in the Eurozone supports further bailing out Greece, particularly under its current government. Slovenia and Lithuania and Portugal and Ireland surely aren’t spiting the Greeks out of some “neoliberal” agenda. This isn’t to say mistakes aren’t being made on the EU side – clearly many have been made. But the situation is Greece is much more “Greece voluntarily gave up some local economic control, a decision which was very beneficial for nearly a decade, and now facing hard times are about to learn that they are still an independent country that the even poorer states of the EU have little patience for” than “Big bad Germans, oh my.”

If – probably correctly – no country in the Eurozone supports “further bailing out of Greece”, then what next? Greece is quite unable to pay and the demands of the troika are quite unable to generate ability to pay. Do Greeks emulate Latvians and just leave (Latvia’s population is down by a third since 1990)? Until the few left can survive serving drinks to tourists? Dsquared has a point, but a financial model that implicitly assumes that countries are disposable when they cannot pay their debts is unlikely to prosper over the longer term.

“dsquared is right on the money, and I don’t understand why this point is so often ignored. ”

Maybe because it’s irrelevant? Everyone involved understands that the Greeks can never pay back what they owe; everyone understands that the assistance given to Greece has largely come in the form of bailing out international banks, not Greeks; everyone understands that there’s no financial rationale for insisting that the Greek government operate at a large primary surplus during a depression. Yet they insist on it, for purely political reasons. The German leaders insist on it because they want to make an object lesson, originally of Greece, but more recently of Syriza, so that no other country will threaten the existing order. The Spanish, Portuguese, and Italian leaders insist because they can’t allow Syriza to succeed – they’re all threatened by their own domestic leftist political opposition.

The EU prescription to save Greece has created an economic disaster there which rivals the Great Depression. Everyone knows that, and still, they say Greece must do more. Who gives a damn about Southern European elite motivations for how they got into the Euro in the first place?

The culpability of the Greeks is hardly the end of the story. One could concede that point and still ask why some deal couldn’t be cut short of the crucifixion of the entire country. If that’s the only justification on offer for believing that no such deal is possible (other than the ever-popular “Tsipras is a fool, and Varoufakis is a communist/jerk”), then it shouldn’t be surprising that many of us are not persuaded. Vito Corleone could easily have offered the same justification in defense of his loan-sharking operations.

Sorry, 12 EUR each

everyone understands that the assistance given to Greece has largely come in the form of bailing out international banks, not Greeks

If you think about it this way, then you are ignoring the assets and consumption goods bought with the loans, which remain in Greece, owned by Greek people. When the international community stumped up the funds for the bailout, they didn’t take these assets away. That’s why the conventional view – that advancing Greece the money to pay off its debts, at well below market rates (Greece’s cost of debt service is lower as a proportion of GDP than France’s; the NPV of the reprofiled debt is equivalent to a face value reduction of as much as a half) was in fact a benefit to Greece – makes more sense.

Apparently dsquared has never heard of the risk premium…

“The consumption goods…remain in Greece”. So all that is necessary is to punch them until they cough up the tatziki? Or does the troika go around repossessing the washing machines? As for the assets, well they could tear up the highways and sell the rubble, I guess.

By the way, the “bailed out international banks” was itself a canard. The majority of the exposure that was measured in the statistics used to compile the charts that people post all the time came about through the ownership of Greek subsidiaries (Emporiki and Geniki being the biggest ones). If Greece had defaulted, Credit Agricole, SocGen and Commerzbank would just have allowed the local subsidiaries to go bust with it. Their losses would have been limited to a billion or so each, while the burden would have been borne by Greek depositors. The claim fails even in its own terms, which as I noted above, don’t make sense.

I don’t think any bank has done this with respect to Greece, although the troika might have been (although they’ve not said so publicly) aware that much of the last two programs have to be regarded as gifts rather than loans.

Daniel why do lenders charge a risk premium?

#60: Not biting. The facts about Greek debt service costs are what they are.

Unless Greece lacks a deposit guarantee scheme (which pretty much every developed nation has), then the burden would surely have fallen on the Greek government?

Also of course (forgot to mention this) even if you do then pass on the liability in this way, ex hypothesi the Greek government has just defaulted on its existing debt, so it is not in a really great place when it comes to the taking on of new €100bn liabilities.

Daniel

Fair points (and I learned something). But, then, is not it the mission of the ECB to avert just such an outcome? And maybe better the government than the smaller depositors?

But, then, is not it the mission of the ECB to avert just such an outcome?

Controversial point of EU treaty law but basically no. The ECB didn’t have any financial stability mandate until this year (I used to go on about this When To Do So Was Neither Popular Nor Profitable). Even if you stretch their monetary policy mandate to cover “keeping financial systems going so as to render monetary policy possible”, they are banned from monetary financing. So providing short term liquidity assistance, probably OK. Covering up for the consequences of a fiscal sector default – it’s not really the sort of close-to-the-line call that John McEnroe used to argue about.

I don’t really understand what you mean by ‘breaking up the creditor countries’. But does ‘best that could have been done’ mean “best that could have been done for Greece”? That seems unlikely doesn’t it?

Sorry, I mean “breaking the biggest solvent economies off from the coalition of creditors”. The scariest point in the whole crisis was when Finland, Germany and the Netherlands (I tried to get the acronym FinGerNls off the ground but no luck) made an independent joint statement after a summit. So yes I do mean the best that could have been done for Greece, subject to the fact that political constraints in creditor countries are real constraints.

But doesn’t even ‘just’ a destructive impact of 10-15% of GDP count as a huge failure of the very same technocrats who are asking us to trust them now?

It does, but less so once a) you blame the Greek governments’ intransigence for half of it and b) write off the other half as inevitable overshooting and debt deflation. I think this is too much, but I find my voice on that issue is unnecessary given that it would always be drowned out by the chorus of people who want to say that the Eurogroup destroyed Greece out of sheer cackling Cruella DeVille-style evil, or possibly deep pathologies embedded in German DNA.

“I think this is too much, but I find my voice on that issue is unnecessary given that it would always be drowned out by the chorus of people who want to say that the Eurogroup destroyed Greece out of sheer cackling Cruella DeVille-style evil, or possibly deep pathologies embedded in German DNA.”

Isn’t this precisely wrong? The technocratic side sees the people blaming them for sheer cackling evil or deep pathologies embedded in German DNA and says “that is clearly wrong”. But by focusing on that, they ignore their hand in the problem.

I can respect the idea that you tell people the truth you think they need to hear, if that is what you are doing. (I.e. many commenters on CT need to realize it wasn’t cackly bankers, and when you are talking to the bankers you point out that they put Greece in an intractable political problem by forcing them down a failing path and doubling and tripling down when it seemed to make things worse).

future?

Is it really right to say that peripheral countries wanted to borrow German (or core country of choice) credibility more than to say that peripheral countries wanted it not to matter that they were peripheral? Peripheral countries wanted the institutions that Germans backed, but they never really wanted the Bundesbank in charge. If they had, they’d simply have deutschmarked, Frankfurt-(or whereever)bond lawed their economy already, no EMU, ECB, or any other Euro structure needed.

In my mind, it’s hard not to see that the Euro project was always elite driven, and at heart fundamentally as predatory as anything France does in West Africa w/CFA franc.

Sorry I know two posts in quick succession is gauche but just saw this.

‘It doesn’t make the analysis any less bleak, but Silvio Berlusconi was also forced out by a creditors ‘ coup.’

Sorry but this is an unbelievable thing to say. The Italian coup was (in retrospect) the canary in the coal mine. The question is not ‘is the government right or left’? The question is: does it have democratic legitimacy of some sort? If ‘yes’ then you just have to accept it whether you like it or not . You can’t just sit back (as most of the left did) and say ‘well so what if we just saw, in Italy, a coup d’etat, I didn’t like the government there much anyway so who cares.’

In other words, you shouldn’t back anti-democratic actions in general (exemplified in situations where the result is pleasing to you) and then come crying when the same thing is done to you.

@79 That is true, but it remains to be seen how tenable this would be in the long term, assuming that Denmark eventually caved in. This would leave a situation where the UK (and only the UK) stayed outside the Eurozone. Not sure how long that would be tenable, politically, from a European perspective.

Of course this point is moot as, in the long term, the Euro is probably doomed.

Daniel, if “political constraints in creditor countries are real constraints” and political constraints in Greece aren’t (see, among other things, the undisguised campaigning against Syriza), then let’s all just admit that Greece is a colony.

It seems to me that the real question on the table is whether any political or institutional actors in the creditor countries have any desire and/or intention to change that. So far the answer has been a resounding and unyielding no.

The question was:

So, how to vote in that UK referendum?

and still I have no idea why anybody would think a “no” vote would help left wing causes.

“The whole point of EMU was to allow peripheral and Southern European economies with a history of bad governance and inflation, which had not served them very well in the past, to borrow German credibility.”

But did the EMS not provide this to a sufficient degree ? Wasn’t expanding that to monetary union more ideological than anything ? (these are genuine questions, not necessarily only to dsquared, as I dont really understand monetary policy with any sophistication.)
I’m also curious to know, leaving aside the wishful thinking that so often occurs in these conversations, is there an alternative to the EURO for ‘peripheral’* countries ? (Taking into consideration their domestic histories of economic mismanagment, their populations commitment to the EU (and to a lesser degree the euro), political realities in the rest of Europe etc.) Should there/could there be a mechanism for these countries to leave the Euro and stay in the EU? If so would it be in their interests to do so?

* ‘periphery’ taken as the southern european countries and Ireland.

A different Europe?–Yes; this Europe?–No. But it seems to me a different Europe isn’t on the cards in the foreseeable future.

“With the currency undervalued (compared to any hypothetical Deutschmark) by the presence of weaker economies, it can sell lots of manufactured products to the rest of the world. Meanwhile, the south, unable to devalue the drachma, lira or peseta, (…)”

… is then continuously subsidizing German exports.

Intriguing claim, and I wonder if it is possible/has been attempted to put a ballpark number to these implicit transfer payments from the south to the north.

My apologies for redundancy, if this has been covered (I’ve skipped forward a bit).

First, Bruce has pretty well shred dsquared’s theory.

Second, dsquared pretty much admitted as much, when he posted without allowing comments.

Third, Krugman disagrees with dsquared (see the quotes above, posted by MPAVictoria @38). When Krugman disagrees with X, the smart money is not on X.

@ Layman, I don’t see the link with lack of democracy. There is genuine popular support for harsher action against Greece – many politicians would probably be more flexible towards Greece if they didn’t have their voters to count for.

Zamfir @ 94, an organization which chooses to do actual and unnecessary harm to one part of its polity in order to placate another part of its polity – in secret, all the while pretending that they’re trying to help the former – can hardly be the democratic ideal, can it?

Indeed. I keep coming back to the same thing: shortage of political solidarity and the unwillingness of much of the Left to make populist appeals.

We’re not taking the DeLorean back to 1950.

Precarity as Activism … Sarah Charalambides , 1 July 2015, Mute magazine, on Isabell Lorey, State of Insecurity: Government of the Precarious 2015

Quote:

‘Even though it can only be carried out in the presence of others and often involves social cooperation, and though it is situated amid the materialisation of the social, a servile virtuosity concentrated in itself hinders common political action.’[13] In other words, only through non-servile and non-individualistic virtuosity a disobedience or rejection of capitalisable self-government can happen. Furthermore, Lorey states that it is only possible to intervene in struggles over governmental precarisation if political models are affected from within. Taking into consideration Virno’s call for a massive defection from the state in order to institute a non-state run public sphere and achieve a radically new form of democracy, Lorey posits a movement of exodus within power relations themselves. Instead of moving towards a completely new place where living together is reinvented, she suggests an immanent exodus towards a form of self-government that is not running away from precarisation but returns and reacts against it.

You’ve heard me speak of desertion-in-place and sabotage. Not saying that is what Tsipras and Varoufakis have in mind, and have no recommendations for Greeks, but staying tightly within the system (including professing loyalty) whilst throwing sand in the gears could be one applicable imaginary to the Syriza practice.

Layman 07.04.15 at 1:45 pm

” Should the UK remain in a loose political/economic union when it has been made clear that one possible consequence is that union might use its institutions to destroy an elected UK government? The question answers itself, doesn’t it?”

‘Yes’, might very well say The City.

Remember, the ruling elites are the financial elites. The idea of more leverage to crush problematic political parties and governments is appealing.

bob mcmanus @ 98

That quotation — Sarah Charalambides on Isabell Lorey — completely made my day.

In honor of the day, and in a spirit of non-servile and non-individualistic virtuosity, strike a blow for independency, all!

BW: “It is the economic mechanisms that trip them up, time and time again: the neoliberal there is no alternative to what “serious people” judge the situation requires, etc. seems to be mere political sloganeering, but underneath the well-honed political rhetoric of neoliberalism, there are mechanisms.”

I don’t understand what economics the left is supposed to draw on. First, theoretically it’s a mess. I don’t want to return to the same old historical-problem-of-the-left thing that people dislike me to keep going on about, so I won’t, but “the left” in economics is what, Keynesianism and its descendants? That’s not an economics that was intended to support the left: it’s an economics that was intended to save the center from a right-leading-to-left whiplash, and it doesn’t go along with any remaining politics of the left since the New Deal coalition is gone. I’m not familiar enough with the history of social democracy to say what the European equivalent is. Left economics now should be some mixture of environmental economics and something that takes on workism directly, but both are really sideshows. Although the left will support something like action against global climate change as something that needs to be done that the right won’t do, there’s no real theory involved for why it should be important in any common left economics.

As for institutional design! The institutional design of anything is highly influenced by the people who can work at it day after day, year after year. One of the critical advantages the right has is simply that right-wing institutions make money and they pay people to grind away at it. From environmental activism I remember a story an old co-worker of mine once told me: about how he did some research in a few off hours, managed to get it in a local paper, and caused so much trouble for a polluter that they had to hire a full time heavily staffed crisis management team. On the one hand, we are vastly more productive than they are on a per-hour basis: on the other hand, they get to grind away forever with huge resource advantages.

That’s very interesting. Although I was also involved in the groundwork of EMU (working in a minor role on the UK’s never-used plan for entry) and I remain of my own opinion. I certainly agree that they were warned over and over again about the lack of safety features and seemed that their only reply was to impute literally magical properties to the Stability and Growth Pact

Correction: “There is also a serious tendency [of our federal republics] to put people in power who ought not to be anywhere near it.” (duh.)

Bruce Wilder@39—
Me: “Something is very wrong with our federal republics, and I wish I knew what.”

Bruce: “I keep coming back to the same thing: shortage of political solidarity and the unwillingness of much of the Left to make populist appeals. There’s something disconcerting about, say, Scottish nationalism, or SYRIZA’s willingness to ally itself with an anti-EU nationalist party.”

Identity politics in conflict with policy. And now, as during WWI, identity politics wins. The mass public, so far, seems incapable of seeing itself both as a part of a group with a group identity and a federal republic with policies, and when the crunch comes, the group identity wins, often to the detriment of both the group and the wider republic.

Z@105: “The common answer at the time (again internally) was that a serious upheaval was unlikely thanks to the moderating effect of liberalized financial markets.”

That irrational faith in markets…

It may be that the unified currency is a thing of imperial power, not republican union. I suspect a unified currency is not appropriate for a multi-national, multi-cultural federation, at least when the cultures have such different ideas of work and saving. There’s a second Riksbank prize, building on Mundell’s work (if I understand it correctly), awaiting someone who can speak to this issue in any way more rigorous than “I suspect.”

What is going on right now? Class war (and anyone who says that the Troika’s extreme right-wing policies are just a politically neutral, ‘technocratic’ approach to solving an economic problem is simply on the more profitable side in that class war). What was the original purpose of the whole thing? That’s history, but I’d venture to guess – class war again (see e.g. Greg Palast on Robert Mundell). Admittedly, the southern elites were probably mostly looking for a shiny new utopia to sell to their populace – a grand utopian project that boiled down to an escape from freedom (and to an escape from a more localised class war that the elites might lose). The results have been predictable.

Blaming the northern electorates for what their elites are doing is dishonest. The northern electorates are constantly being deceived about the events in Greece by their own media, which are controlled by the northern elite and are presenting the right-wing narrative that the elite wants. If the northern establishment wanted the northern populations to think something else about Greece, they would think something else (and if there was a split in the establishment, there would be one in the populations as well). Anyone who at this point still seriously regards free public discourse as a powerful independent factor determining Western policies is seriously deluding himself.

In general, from a left-wing point of view, the EU should go (and that includes the UK leaving it). It clearly disempowers the people and empowers the elite. Now, it might be different if you value vague friendliness to ‘the Other’ (e.g. immigrants) more than things like democracy and a welfare state, but then you are not a leftist, you’re a contemporary ‘lib’.

One thing I forgot to ask earlier. The ECB has an inflation target of near but below 2%. When has it last successfully hit the target for say three quarters in a row? Or two? It is essentially the only major thing they are accountable for. Why is the failure not considered reason to replace a bunch of the people running it?

“Doing business” may be easier in the UK. Living is generally acknowledged to be easier in Italy.

More generally, criticism of the patronalism of the Greek state miss the mark. All states are patronal – that is what they are for. My memory recalls large payments by the German government to former East Germans, to firms setting up in the east, to farmers and to the mittelstand. Likewise payments by the France to farmers and some industries. By Australia to farmers, fossil fuel interests, home-owners. By the US to Wall St, the many firms in the military-industrial complex and so on. And, of course, the partiality of the British government to City interests goes unremarked.

The Greek state has to deal with a history of civil war, partition and displacement. Those who object to redistribution might reflect on Iraq, where the US paid very large sums in bribes so that it could exit in relative peace, and on what happened when the new Iraqi government stopped paying those bribes.

A purely economic analysis of balance sheets does not get us very far – and it is a disgraceful abdication of responsibility that all the other factors are kept out of the conversation. People arguing over the price of the fare, refusing to notice that the rails are loose and the bridge ricketty….

The insistence that the EU is a progressive leaning body or that it generally serves the interests of leftism is interesting. What would it have to do to Greece to convince people otherwise?

The important thing is not what it does to Greece but whether people can be persuaded that Greece ‘had it coming’.

@ Nick #43, thanks for link:

“One path involves many, many more years of economic hell, as ordinary households are slowly forced to absorb the costs of debt — sometimes explicitly but usually implicitly in the form of financial repression, unemployment, and debt monetization … it is the responsibility of the leading centrist parties to recognize the options explicitly …”

In the US, this process shows itself without the distraction of international boundaries, in the recent reduction of household worth in the lowest quintile, a result of transfers between economic sectors.

Daniel @56: at the time, you certainly thought Emporiki or Geniki going bust would have consequences much greater than a €1bn writeoff for each of Crédit Agricole and Société Générale.

In fact, in an e-mail you sent me on the 2nd November 2011, you described the possible bankruptcy of Emporiki and Geniki after a Greek sovereign default and/or Grexit as the “ultimate hellmouth”, with the two banks being “lovely little vectors of contagion from Greece to France” that would “make the chaos even more certain”. The particular kind of chaos you expected was a generalised bank run, first “all over peripheral Europe”, and then “in central Euroland”, i.e France and Germany.

That sounds a fair bit more than a billion for either bank, and in fact gives the impression that bailing out the Greeks was quite a good turn to the wider European banking sector. Unlike half the gang here I actually think it’s a good thing that the European banking sector exists and that we’d be in some trouble if it went away, but you’ve surely got to admit that being saved from a generalised bank run across France and Germany, contagion, chaos, and the ultimate hellmouth is worth quite a bit.

I belatedly realise that saying that “Blaming the northern electorates for what their elites are doing is dishonest” could be misinterpreted. Of course the northern populations are guilty, too, in that they are letting themselves be deceived and brainwashed with dehumanising propaganda; I was just trying to say that their attitude shouldn’t be used as an excuse by the elite, because it isn’t the cause, but the result of the elites’ actions.

Certainly, in the present context, complaints like Igor Belanov’s that “some of the anti-German sentiment in these comments is worthy of the Daily Mail” deserve nothing but scorn. The German people have let their state become the tool of the neoliberal agenda, and thereby they have made themselves deserving of anti-German sentiment as much as a sentiment against a whole nation can be deserved (which means – only as a generalisation about the undesirable behaviour of the group, but not as something automatically applicable to individual members of the group). Most Germans (and other northern Europeans) have let themselves be convinced by dehumanising propaganda against the Southerners and especially the Greeks – that those nations are culturally and morally inferior to them, so that their ordinary members in general deserve inhumane treatment, deprivation of freedom, misery and, as a result, in some cases, even death. This is a total moral failure, and it is in principle of the same kind as that of the 30s and the 40s, however fiercely the Germans now object to being reminded of those times. I would add that judging from my admittedly limited personal experience, this bigotted ideology of German (or sometimes even only northern German) superiority based on work ethic was prominent among ordinary Germans long before the crisis, and has replaced really nicely the earlier racial ideology of superiority in giving complex-ridden people something to feel good about, while also serving as a compensation for the defeat and condemnation of the 40s.

All of this has nothing to do with the Daily Mail, which certainly doesn’t object to Thatcherite and Reaganite policies on principle, and with a glorification of the Americans and the British. The American people in particular is guilty of allowing its state to commit infinitely more crimes since WW2 than Germany has been in a position to commit during the same period.

Oliver Rivers: ” The troika has used the debt crisis to try and make Greece something more like a boring, efficient northern European state. ”

I disagree; the troika has used the crisis to impose it’s will (or rather, the will of the northern elites) on Greece. Note that ‘boring, efficient’ things like raising taxes on the rich were specifically banned.

Daniel:

Also, there is a point which I have a lot of sympathy with, which is that starting the clock in 2008 or 2009 is a bit misleading, as it implies that the 2007 level of GDP is a realistic aspiration for Greece (I had a set-to with Brad DeLong over this – if you project trend lines incautiously, you can convince yourself that there was some set of policies which could have Greece with *higher* GDP than 2007 this year). In fact, 2007 GDP was way above capacity

I appreciate that you have more economics knowledge than me, and I wouldn’t be surprised if 2007 had some over-capacity in the GDP figures, however I’m confused by one thing – Greek unemployment is, what, 25%? But you’re suggesting that Greece is operating only 10-15% below capacity. Isn’t the more orthodox Keynesian point, as the man himself said “there is work to do; there are men to do it. Why not bring them together?” Obviously that’s a bit tricky to achieve (understatement), but are you really suggesting that those 25% unemployed might only be capable of making up 10% of the difference if they were in work?

Is there even any such thing as cackling evil available to technocrats? I mean, political leaders as such — Dick Cheney can say that he told people to torture, and he’d do it again, and I guess that qualifies as cackling evil — but Eurogroup?

Doesn’t their cackling evil have to be competence-based? If technocratic policies that you suggest result in years of national depression and, because of that, loss of life, shouldn’t the technocrat in charge be held responsible for that? Is it good enough to just say “Oops”?

It doesn’t help to keep discourse in this ‘billiard ball’ nation-state against nation-state argument. There is no point using Mussolini-style rhetoric and pretending that Greece is somehow a ‘proletarian nation’ battling against the evil imperialists.

The problem that Greece has is that it has clearly been screwed over by its political and economic elite, who have basically now given up and thrown up their hands, hoping that the left-wing will bash their heads against the wall instead. In this situation there clearly needs to be some kind of support given to the current Greek regime and its supporters, who are not responsible for the collapse of the Greek state and economy, and need to establish some kind of popular basis for reform. Instead, you have the European elite (not just Germany) demanding some kind of collective punishment and insisting that the Greek government carries out this punishment on itself!

Ultimately the Euro crisis has been due to the fact that European union has increasing taken place with the necessary socio-economic harmonisation of living standards and fiscal regimes. This required politicisation in a much more left-wing style, and was something that was inevitably rejected by the increasingly right-wing European elites of the 1990s onwards. What is needed is an anti-elite policy on a Europe-wide scale.

As for the UK leaving the EU, I hardly see how that is likely to benefit the left. It is a sign that the country is moving further rightwards, and the economy will become even more dependent on the City and on cheap labour and unproductive industry. The UK elite is every bit as eager to insulate itself from politics as that of the EU.

Igor Belanov: What is needed is an anti-elite policy on a Europe-wide scale.

Where do you propose to find an elite to carry on an anti-elite policy?

RP: Is there even any such thing as cackling evil available to technocrats? Doesn’t their cackling evil have to be competence-based? If technocratic policies that you suggest result in years of national depression and, because of that, loss of life, shouldn’t the technocrat in charge be held responsible for that? Is it good enough to just say “Oops”?

I think we are meant to forever hang up on “are they evil or are they stupid?”

Does dsquared strike you as either evil or stupid?

131: Well, re “cackling evil” we could review Carey Robin’s posts on Arendt and Eichmann.

For me, liberalism and neoliberalism have always been about technocratic absolution.

Roger Gathmann:It was a shortsighted and truly stupid thing to do.

Was it? I think if you were, say, a French apparatchik in 2009-10, you might be seriously worried, and not entirely without cause, about initiating a downward spiral in the French economy.

Prescribing austerity for little Greece was not so different from prescribing austerity for, say, Latvia. And, in the minds of Eurocrats, things worked out well enough in Latvia. I’m not saying that the “success” of Latvia corresponds to an objective truth, just that no one in authority has ever questioned that “success” — including, quite significantly, the Latvian establishment, which was very happy to use austerity to drive out a large part of the unwelcome Russian-speaking minority. There’s always been a Greek establishment, which was quite happy to pursue austerity, to “make the tough decisions” to use the American cliche, which aspired to be part of the Euro elite and did care that some fellow Greeks they did not like very much would suffer for it.

Yeah that terrible technocratic Greek political system, run by elites completely unresponsive to the people. That has been the problem with the Greek political system for the past 30 years.

Dsquared doesn’t strike me as evil or stupid; far from it. I do wonder though, if he’s had much experience at depending on the kindness of strangers. He appears in his writing to be someone who’s never encountered anything to shake his self-confidence, so much so that he almost seems to doubt the existence of anything which might.

An egregious, even impertinent assessment, to be sure. Does it have any relevance to the plight of the Greeks, or the future success of the technocratic project in Europe? I can’t be sure, but when I read the pronouncements of some of the people responsible for the future of that project, e.g. Juncker, or Schäuble, I detect in them the same sort of easy self-confidence. And when I consider the supposedly unintended consequences these folks have left in their wake, I see no reason to have as much confidence in them as they apparently do in themselves, nor am I disheartened that the Greeks have voted to cast their lot — at least temporarily — with Tsipra and Varoufakis instead.

Left nationalism is exactly what it says on the tin. Nationalism. Sinn Fein have absolutely zero desire to form a meaningful pan european alliance against austerity. They care about things like water charges and building more council houses. I assume the same is true of Podemos .

Rich Puchalsky @ 104

Yes. And also yes.

My only demurral would be that I do not think it is some timeless law of nature that prevents the leftish from having an economics or an institutional agenda. To some extent, it is just where we are, in the generational cycle of politics — the success of the New Deal or the ordo-liberalism of the European social model was bound to breed complacency and corruption; that much is in the nature of things. Destroying the institutional support for a technocratically competent left was a key part of the agenda of Reagan-Thatcher and their neoliberal successors, Clinton-Blair.

The cycle continues, so pointing out the need to think about institutional mechanisms or building (or destroying) institutions, seems like a service appropriate to our times, no?

Just a note to say I am not interested in participating in any discussions about whether or not I an evil, so basically go and look after yourselves, Crooked Timber comments.

Dsquared I know you are good! But this is a crowd that insists that it is irrational for people to believe in god even though it is not possible to prove that a god does not exist. So they pretty much make up their own rules of logic around here, and the conversations are motored by emotional animus. Remember too that I have always insisted that the European Union is primarily a psychological proposition, and they would always come down on the side of finding a way to keep it together.

F Foudling – I dont like Syriza, no. But have no opinion on Podemos. Sinn Fein I could warm too. Having spent decades fighting over nothing in particular and then negotiating competently with the creme dela creme of the British foreign office (and their own organisational hardballs), they have gotten all of that pointless radicalism out of them and have shown some level of political competence.
I’m also glad they care about building council houses. Im more ambivalent on water charges, I must say.

>Lee A. Arnold 07.06.15 at 12:35 am
> Dsquared I know you are good! But this is a crowd that insists that it is irrational for people to believe in god even though it is not possible to prove that a god does not exist. So they pretty much make up their own rules of logic around here, and the conversations are motored by emotional animus.

As far as I can see, it is not possible to prove that you, Lee A. Arnold, are not actually a penguin magically transformed into a human, with a fake birth certificate and false memories implanted in people who think they have ‘known’ you in their whole lives. I just happen to think that it’s not among the *more* plausible hypotheses that could be proposed to explain the appearance of your posts on this site, but then again, that’s just me. That said, now that you mention it, I guess I do find it difficult to believe in the existence of people who are both good, competent, and serve the neoliberal agenda, somewhat in the same way as I find it impossible to believe in the existence of an entity that is both good, omniscient-cum-omnipotent, and allows ebola / kills children for mocking a bald prophet. But I don’t think there’s a whole crowd here supporting both of these positions.

F. Foundling #154: “I do find it difficult to believe in the existence of people who are both good, competent, and serve the neoliberal agenda…”

No doubt, because at #110 you wrote that this is class war and at #122 you wrote that anti-German sentiment is deserved. But the problem is more fundamental than greed or hate.

Bruce, it was a short sighted and stupid thing for the EU to have not simply let Greece renege on the private debts and then made their huge “loan” of public money to countries like France who were affected by it. Making Greece the way station for a bailout of non-Greek financial entities – and, going by the Jubilee estimate of where the loans went to, we are talking about almost 90 percent of the money lent so far going to these entities – has both aroused the type of nationalism that imprisons the EU in a confrontational strategy that arouses all the nationalism the EU was supposed to dissipate, and it makes the EU look increasingly like jerks, since the troika well knows that their own projections are crafted to make it seem like Greece can pay back its debt when they are not so stupid as to think they can – see the latest IMF paper.
I’m not saying that there was a good way out of the Greek debacle. I’m saying that the worst way was the one chosen.

It’s odd because they keep missing the point. I don’t dispute the emotional sentiments, unless someone might be harmed by them (that’s rude, and it cheapens the place). And I love a spirited debate. I just wish people would use better observation, facts, and logic. Example, equating a believer’s concept of “god” with magical penguins (and dismissing a believer’s need for that concept) is not unlike equating the Troika’s belief in the system of money with some sort of evil “neoliberalism” (whatever that goofy word means, today). In either case, this argument is full of holes. Then pointing it, out incites emotions, not logic. Now, the fact that there is “a whole crowd here supporting both of these positions”, is both an indictment of that crowd, + argument by the fallacy of “appeal to authority” (however inauthoritative).

Dsquared is a brilliant and humorous man. I think he once wrote that Morton Feldman was not one of the great composers of the last half of the 20th century, so nobody’s perfect. It’s just sad to see the comments threads confirm Crooked Timber’s growing reputation as an echo chorus of overeducated knuckleheads. I don’t blame him for not putting up with any of this crap.

All Dsquared argues is that Syriza’s negotiating proposals have been unreal to its creditors, and I am arguing that it’s understandable, a side issue, and not the important point anymore. It hardly matters if Greece “brought it on itself”, because a more moderate position wouldn’t have worked for long anyway.

Underneath it all, and in general, the Left is once again blaming the rich for being greedy while the Right is once again blaming the poor for being lazy.

Both are wrong.

The system of riches and investment cannot provide economic growth for all. Meanwhile the poor can never turn into enough doctors, lawyers, bankers, software developers, businesspeople to be able to get ahead. It is all nonsense.

Meanwhile the left, including most of those here it seems, thinks redistribution will solve the problem. It won’t. At most it would be a stopgap, and set up even more resentments on both sides, if such a thing were possible.

We approach a unique historical crisis. Europe is only part of it. Europe is structured to show the problem in a unique manner, but it is showing in a thousand other ways too. The system of money and markets was useful for a few hundred years in spurring individual effort for technological innovation and growth, but now the system is putting itself out of business, as the culminating phase of 3000 years of the “social technology” of money. Nobody knows what comes next. Maybe nobody can know. But arguing in the old ways is increasingly a distraction.

All Dsquared argues is that Syriza’s negotiating proposals have been unreal to its creditors, and I am arguing that it’s understandable, a side issue, and not the important point anymore.

By arguing something you also implicitly argue that that thing is important. There’s no “just saying”, everything’s in a context and you say things to shape that context.

Often, of course, people have motives they don’t realise; “why do you think your point matters” is actually good for showing yourself your hidden motivations.

Your nephews and nieces may enjoy learning the difference between “rational”, “irrational” and “arational”.