What’s left of the European Union?

by Chris Bertram on July 3, 2015

The first few hours the atmosphere was hearty
With fireworks, fun, and games of every kind;
All were enjoying it, no one was blind;
Brilliant the speeches improvised, the dances,
And brilliant, too, the technical advances.

Today, alas, that happy crowded floor
Looks very different: many are in tears:
Some have retired to bed and locked the door;
And some swing madly from the chandeliers;
Some have passed out entirely in the rears;
Some have been sick in corners; the sobering few
Are trying hard to think of something new.

(From WH Auden, A Letter to Lord Byron)

One of the consequences of the Conservative victory in the recent UK general election was that there will be an in-out referendum of the UK’s membership of the EU at some point in the next couple of years (details yet to be finalized). How should people who think of themselves as being on the left, egalitarian, liberal, progressive vote?

Until recently there wasn’t really an issue about this. Although there had been a strong tradition of Euroscepticism in the the British Labour Party, it had been pretty much marginalized by the Blair years. The Eurosceptic right of the Conservative Party, UKIP and the tabloids (“up yours Delors!”) framed the EU as being a Trojan horse for socialism via the “social chapter”, the working-time directive etc, and though the left did not concur with that judgement, it did at least see the EU as championing some progressive ideals against the UK’s neanderthals.

Today, alas, things look very different. Though the UK had the good sense to stay out of the Euro (thank you Gordon Brown and Ed Balls) the consequences of Euro membership on indebted southern Europe have been horrible. Germany has done very nicely, of course. 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 forced into ever grimmer austerity and mass unemployment whilst being lectured from the north about virtue, prudence, hard work and the need to pay your debts. The ultimate expression of all this is Greece, now facing its own referendum and the prospect, either way, of a ruinous future. There is no sense of European solidarity, no desire to make large fiscal transfers from north to south, and, it now seems, a desire from German politicians to demonstrate what will happen to any country unwise enough to elect a moderately left-wing government. (Could Syriza have done better if they’d boxed smarter and cut down on the gratuitous references to WW2, I don’t know.)

Couple this to the migrant crisis in the Mediterranean, which now involves a total failure of European co-operation and the rejection of burden sharing. Again, it is the countries of the south who are bearing the greatest burden thanks to the Dublin regulation. The record of the northern states varies from passable (Sweden, Germany) to execrable (UK, Finland) and the former Eastern Bloc states show no willingness to recognize their obligations (with Hungary suggesting that its recent influx of refugees should return to the first country they entered … Greece).

So, how to vote in that UK referendum? I’ll probably vote to stay in, because at least that way we’ll retain the principle of free movement within the EU, even though that principle in practice is matched by an ever harder external frontier and will be watered down by any concessions Cameron can get from Merkel. So, yes then to a compromised and qualified zone of free movement with drowning migrants at its margins. Yes, to a single market, where the strong bully the weak, and labour standards are undermined. Yes, to a weak political union where left-wing governments can get forced out by a creditors’ coup.

It isn’t much to say yes to though, is it?

{ 167 comments }

1

MPAVictoria 07.03.15 at 4:11 pm

The EU has turned into (or perhaps it has always been?) a project for the German domination of the continent. Where is the respect for democracy? Where is the respect/concern for the well being of the people being sacrificed on their neoliberal alter of austerity?

I have no idea how I would vote and am glad I don’t have to make that decision.
/Nothing but blood for the Blood God in our neoliberal, grimdark, meat hook future.

2

BenK 07.03.15 at 4:25 pm

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.

3

Rich Puchalsky 07.03.15 at 4:34 pm

Welcome to Lesser Evilism! We did our bit to pioneer this in the U.S., but I’m sure you’ll like it too.

4

Neville Morley 07.03.15 at 4:36 pm

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.

5

Ronan(rf) 07.03.15 at 4:39 pm

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

6

P O'Neill 07.03.15 at 4:45 pm

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.

7

William Timberman 07.03.15 at 5:07 pm

What bothers me — has bothered me for decades — is the seemingly undiminished capacity of Germans for self-righteousness, regardless of their nominal political orientation. 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.

While admitting that we in the U.S. are as bad or worse in any number of self-congratulatory categories, I do wonder how long the rest of Europe can afford to tolerate a union governed by Swabian housewives and administered by a swarm of deracinated pan-European dirigistes.

8

Ronan(rf) 07.03.15 at 5:16 pm

” 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 ….

9

Ronan(rf) 07.03.15 at 5:16 pm

; )

10

Igor Belanov 07.03.15 at 5:24 pm

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.

11

Igor Belanov 07.03.15 at 5:25 pm

That should read ‘the constitutions of states are not sacrosanct’.

12

Salem 07.03.15 at 5:26 pm

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.

13

William Timberman 07.03.15 at 5:30 pm

Ronan @ 8, 9

Considering the present condition…..

Another anecdote. In a conversation with one of these characters, he carried on at length about the role played by the police forces of the two countries — this was at the point in time when U.S. police forces in Chicago and Madison and Berkeley were doing their thing, but before Kent State. Throughout, he invariably referred to the virtues of our police. OUR police I remember thinking. What kind of leftist thinks of the police as our police? A German leftist, obviously. After Rosa Luxemburg, after the unpleasantless all of us would admittedly prefer to forget, he still reflexively assumed proprietorship. False consciousness? And if not, what?

14

Layman 07.03.15 at 5:37 pm

“… 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.

15

mordy 07.03.15 at 5:47 pm

I don’t know how to ask this in a way that doesn’t sound polemical so I’ll just ask it: To what extent 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?

16

Igor Belanov 07.03.15 at 5:58 pm

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.

17

Sandwichman 07.03.15 at 6:50 pm

The question may become moot.

18

JW Mason 07.03.15 at 6:52 pm

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.

19

Pejar 07.03.15 at 7:17 pm

BenK:

“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.”

The NHS calls bullshit:

http://www.nhsconfed.org/resources/2014/07/uk-nhs-named-best-healthcare-system-by-the-commonwealth-fund

20

Pejar 07.03.15 at 7:24 pm

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)?

21

engels 07.03.15 at 7:32 pm

What kind of leftist thinks of the police as our police?

One who acknowledges that being a citizen, paying taxes, voting, benefiting materially from that citizenship, possibly in highly immoral ways including imperialism and racial oppression, means that you can’t just wash gour hands of the State when it starts doing things you’d rather it didn’t? Perhaps.

Or to put it another way, unless you’re black there’s a very real sense in which the police are ‘your’ police, even you didn’t ask them to be.

22

engels 07.03.15 at 7:35 pm

OT I agree with Igor and Josh.

23

novakant 07.03.15 at 7:48 pm

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

Agreed, very silly.

And what Neville and JW Mason said.

24

Stephen 07.03.15 at 8:33 pm

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.

25

Phil 07.03.15 at 8:36 pm

A few years ago, when I was teaching a class about sentencing, the question of bringing back the death penalty repeatedly came up (for very much the same reason that the question of making prisons less cosy and luxurious kept coming up). After I’d explained about miscarriages of justice and the Birmingham Six a couple of times, I came up with a simpler and more final argument: even if the British government wanted to bring back the death penalty, we can’t do it as a signatory to the European Convention on Human Rights. Course, in theory we could repudiate the ECHR, but it would almost certainly mean we had to leave the EU, and no British government was ever likely to do that.

I’ll vote for keeping a-hold of Nurse, for fear of finding something worse.

26

engels 07.03.15 at 8:57 pm

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

27

Zamfir 07.03.15 at 9:04 pm

As another perspective: the EU is going through its lowest point in reputation in perhaps ever, and there’s still a remarkable amount of support for it. Even in Greece. Is there really a place outside of Britain where there is such a casual attitude to leaving?

William Timberman above might inadvertently offer a clue – the alternative for Europeans to the self-righteous Germans isn’t bliss, it’s more of the self-righteous Americans. Brits seem the only people who consider that an attractive option, perhaps because Americans do listen more to Brits than to others.

28

Roger Gathmann 07.03.15 at 9:09 pm

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.

29

Collin Street 07.03.15 at 9:54 pm

> for overthrowing democratically elected governments who contravene the neo-liberal economic doctrines of the elite.

You’d think. But this is england we’re talking about, and I don’t think there’s ever been a non-pocket-handkerchief polity that’s been as firmly captured by finance interests as london has. For greece or france, leaving the eu could be held as a victory for democracy and equity… but london?

30

William Timberman 07.03.15 at 10:22 pm

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.

31

William Burns 07.03.15 at 10:33 pm

Perhaps John Major deserves a word of thanks as well?

32

Nick 07.04.15 at 12:08 am

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?

33

Nick 07.04.15 at 12:11 am

And, I agree with William Timberman above, who points out that J. Mason’s point is fundamental. This isn’t a conflict between countries! It’s a conflict between economic sectors — that this normal fact is being obscured, really should force people to ask themselves ‘Why?’

34

dsquared 07.04.15 at 12:19 am

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.

35

Raven on the Hill 07.04.15 at 12:20 am

I think the EU and US federal models (did the EU model itself on the USA?) are both upgefucked, and need a thorough review.

36

Raven on the Hill 07.04.15 at 12:23 am

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.

37

Raven on the Hill 07.04.15 at 12:28 am

There is also a serious tendency to put people in power who ought to be anywhere near it. Jamie Galbraith, writing about the Greek crisis: “It helps first to realize that the leaders of today’s Europe are shallow, cloistered people, preoccupied with their local politics and unequipped, morally or intellectually, to cope with a continental problem. This is true of Angela Merkel in Germany, of François Hollande in France, and it is true also of Christine Lagarde at the IMF.” I am unpleasantly reminded of the US Senate: for every Sanders, Warren, or even Cantwell, there are 10 Inhofes, Pauls, Cruz’s.

Something is very wrong with our federal republics, and I wish I knew what.

38

Bruce Wilder 07.04.15 at 1:08 am

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.

39

Bruce Wilder 07.04.15 at 1:15 am

Raven on the Hill: Something is very wrong with our federal republics, and I wish I knew what.

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. There’s something disconcerting about, say, Scottish nationalism, or SYRIZA’s willingness to ally itself with an anti-EU nationalist party.

40

afinetheorem 07.04.15 at 1:45 am

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.”

41

MPAVictoria 07.04.15 at 1:53 am

Shorter dsquared- they were asking for it.

Which is of course not true. Show me where any party campaigned on a platform of permanent austerity, the sale of public assets at fire sale prices and the theft of needed medical care from the sick?

42

Peter T 07.04.15 at 1:59 am

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.

43

Nick 07.04.15 at 2:12 am

Peter T’s comment just above shows (in my opinion, of course), the total irrationality behind the Troika’s position. Greece can’t pay; the troika’s demands won’t enable it to pay; so why are they making them? If a creditor won’t be paid under current conditions, then both parties should be able to work together as partners to develop conditions under which they can be paid. Why isn’t that happening? A banker isn’t a jailer, so why are they interested in punishment? Adjust the terms.

Unless, of course, the Troika’s position is rational for reasons other than economic or financial: political, or legal, or cultural, or whatnot.

And it’s worth pointing out that yesterday was the 61st anniversary of Greece forgiving Germany’s debt.

Here is my favorite analysis, apologies if everyone has read it already:

http://blog.mpettis.com/2015/02/syriza-and-the-french-indemnity-of-1871-73/

44

Layman 07.04.15 at 2:14 am

“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?

45

john c. halasz 07.04.15 at 2:16 am

“What’s left of the European Union?”

Umm… Syriza?

46

William Timberman 07.04.15 at 2:16 am

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.

47

engels 07.04.15 at 2:26 am

If the richest 25% of Europeans each gave 25 EUR to this we could all go home, I believe:

https://www.indiegogo.com/greek-bailout-fund.html

48

engels 07.04.15 at 2:27 am

Sorry, 12 EUR each

49

Bruce Wilder 07.04.15 at 2:31 am

German banks were bailed out, so of course Greece is not Germany’s problem; perhaps Germany is Greece’s problem? That is a political way to understand what is going on, as are arch comments on Tsipras as fool or Varoufakis as jerk. The economic problem, though, is that the Greek government has no levers by which to govern the Greek economy.

It is all well and good to speak knowingly of the Keynesian unwisdom of running a primary surplus in a depression, but where is the mechanism to do anything else?

50

dsquared 07.04.15 at 3:26 am

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.

51

Bruce Wilder 07.04.15 at 3:59 am

If you do not penalize lenders for making bad loans, they just repeat the injury.

I am afraid the benefit to Greece of a major depression has escaped my notice.

52

MPAVictoria 07.04.15 at 4:02 am

Apparently dsquared has never heard of the risk premium…

53

ponfed 07.04.15 at 4:11 am

Assets and compsumption goods are all well and good, but :

1) Assets tend to go to people who already have assets, and aren’t doing much good to the welfare of a country as a whole. If the argument is that corruption and profligacy were the main causes of the crisis, it’s hard to argue that assets don’t go to the same corrupt class that caused the problem.

2) Consuption goods from 2012 aren’t gonna help you eat next week.

54

Peter T 07.04.15 at 4:12 am

“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.

55

Daniel 07.04.15 at 4:20 am

The higher the risk premium you use, the greater the implicit NPV debt relief in lending to Greece at such long terms and low rates. Maybe find someone else to patronise when it comes to finance eh?

56

Daniel 07.04.15 at 4:24 am

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.

57

Sebastian H 07.04.15 at 4:46 am

When a bank makes a loan that it is certain cannot be repaid, is that ‘lending’?

58

Daniel 07.04.15 at 4:49 am

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.

59

Peter T 07.04.15 at 4:55 am

“the burden would have been borne by the Greek depositors’.

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?

And if the troika is aware that the last two programs are gifts, then they have an odd definition of the word.

60

MPAVictoria 07.04.15 at 5:09 am

Daniel why do lenders charge a risk premium?

61

Daniel 07.04.15 at 5:11 am

Unless Greece lacks a deposit guarantee scheme (which pretty much every developed nation has)

It would have made no difference – much too small. If you think about it, you can’t have a deposit guarantee scheme that covers the whole banking system – it’s just not practical to have a sum of money equal to your deposit base hanging around in a fund somewhere for a rainy day. Quite apart from anything else, where would the fund be deposited!

Deposit guarantee funds tend to be between 1% and 4% of the deposit base – they’re there to cover individual isolated failures, not systemic collapses. The only way you can cover a systemic collapse is for the monetary authority to print new currency…

62

Daniel 07.04.15 at 5:12 am

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

63

Sebastian H 07.04.15 at 5:18 am

Traditionally the saying was that you had to beware of Greeks bearing gifts.

I obviously don’t have any great solutions. It struck me when you charted the GDP, does anyone in the troika, or really anywhere in the EU governance structure see 2009-2013 as a serious failure of their program? From the outside it seems like it is only talked about (by the actors) as a serious failure on the part of Greece.

I guess I want to know if there is any accountability for the predictions of the troika? My google-fu on Greece is having trouble piercing the current crisis, but I would have sworn that in 2007 and 2009 there were all sorts of dire warnings that if Greece didn’t follow the program they might have an outcome which wasn’t even as bad as what happened when they did follow the program. And I would have sworn there were predictions that if they did follow the program they would see a return to growth by 2011, with strong growth certainly by 2013. But that didn’t happen.

64

Daniel 07.04.15 at 5:20 am

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.

65

MPAVictoria 07.04.15 at 5:26 am

66

Peter T 07.04.15 at 5:27 am

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?

67

Daniel 07.04.15 at 5:27 am

does anyone in the troika, or really anywhere in the EU governance structure see 2009-2013 as a serious failure of their program?

From my contacts, it’s seen as a frustrating, horrible failure but mainly the fault of the lack of institutions. There is a lot of rewriting of history whereby people who totally, totally believed in expansionary austerity at the time now claim to have never done so (seriously – it’s at the level of people who claim to have always hated Sting and/or Bono). But when you divide through by that, the new revised view of history is that even with the best economics in the world, the actual programs agreed represented the chilly limit of what you could get without breaking up the creditor countries, so it was the best that could have been done.

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. You had a negative output gap, large amounts of “investment” in overvalued construction, and a huge amount of transfer payments misclassified in the statistics as government employment. (By this last, I mean the payment of civil service salaries to people who were not producing useful goods or services). So the argument there would be that a) the destructive impact of the troika failure is more like 10-15% of GDP than 25%, and b) look at the size of that bubble, there had to be some overshooting on the way down.

When you ask them with respect to b) something like “why was the initial program so small then?” they don’t tend to have a good answer.

68

Daniel 07.04.15 at 5:31 am

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.

69

Sebastian H 07.04.15 at 5:45 am

“There is a lot of rewriting of history whereby people who totally, totally believed in expansionary austerity at the time now claim to have never done so”

I guess this is what is frustrating to me. How do the global technocrats learn from their mistakes if they don’t make them?

“But when you divide through by that, the new revised view of history is that even with the best economics in the world, the actual programs agreed represented the chilly limit of what you could get without breaking up the creditor countries, so it was the best that could have been done.”

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?

“So the argument there would be that a) the destructive impact of the troika failure is more like 10-15% of GDP than 25%, and b) look at the size of that bubble, there had to be some overshooting on the way down.”

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?

70

Daniel 07.04.15 at 5:58 am

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.

71

bob mcmanus 07.04.15 at 6:14 am

Steve Randy Waldmann

dsquared shows up over there too. busy boy, fighting for truth and justice all a sudden all over everywhere.

Wolf Richter on Panicked Hedge Funds

72

Sebastian H 07.04.15 at 6:36 am

“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).

73

John Quiggin 07.04.15 at 7:04 am

Coming back to the OP, the crucial fact about the Greek disaster is that membership of the eurozone, tied in turn to membership of the EU, has prevented Greece from adopting the standard response to such a crisis, default and devaluation. That responses has costs, of course, but most countries facing a situation as bad as that in Greece have worked out that it is the best way to go.

The power of the troika comes, not from the economic fundamentals, but from the fact that leaving the euro is just about impossible,. The same is true in spades for leaving the EU. In a situation where the EU itself has virtually no democratic legitimacy, and where its central institutions reject as irrelevant the wishes of democratic national electorates, this seems like a recipe for future disaster.

74

Bruce Wilder 07.04.15 at 7:07 am

future?

75

Hidari 07.04.15 at 7:36 am

It should not be forgotten that my understanding is that every member of the EU signs a binding declaration that they will eventually join the Euro, and there is no (permanent) ‘out’ clause.

So if you vote yes, in theory, you are stating that in the long run the UK should join the Eurozone.

76

shah8 07.04.15 at 7:42 am

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.

77

Bruce Wilder 07.04.15 at 7:45 am

As for Quiggin’s “standard response” of default and devaluation, that is not very helpful information. Technocratic competence means inventing mechanisms appropriate to the context of the single currency.

State bankruptcy was necessary — there should be a reasonable procedure, not an extortion racket run by right-wing ideologues on the fly. There should have been a banking union, repressive financial regulation, eurozone deposit insurance and protection for the payments system.

That Greece should pay should not be a central and dispositive issue. But, if Greece must pay, use an appropriate mechanism that leaves democracy intact. For example, the VAT could be structured to put an effective tariff on all Greek imports, including from the EU, to reduce Greek consumption and Eurocorporate profits and channel that amount into debt finance, without a campaign to reform labor law or eliminate pensions or sell state assets to foreign and private interests.

That the eurozone is very costly to leave is a design. A bad design.

It seems to me that we are suffering more than anything from a profound fail to imagine that anyone is responsible for the design.

78

Hidari 07.04.15 at 7:59 am

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

djr 07.04.15 at 9:36 am

Hidari @ 75: All countries which have joined the EU since the Maastricht Treaty have to sign up to joining the euro eventually, but the UK and Denmark have permanent exemptions.

80

Hidari 07.04.15 at 9:51 am

@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.

81

Metatone 07.04.15 at 9:52 am

Worth noting as well that by allowing hardline elements in Germany and other countries to define the status of things like Target2 and ELA, it is clear that the Euro is not a single currency. As a set of separate currencies under a single name, it likely to become exposed to more and more speculation and end like many currency arrangements that lacked proper backing… ERM, Scandi union, Latin union – history is littered with examples.

82

Ravi 07.04.15 at 9:52 am

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.

83

djr 07.04.15 at 10:23 am

@80: Denmark is only one tenth of the UK’s population or GDP, so it joining the euro would make relatively little difference in terms of %age of the EU economy outside the eurozone. Having said that, I appreciate that some things in Europe are counted by numbers of countries. Knowing next to nothing of the current politics of Denmark, I haven’t heard that they are likely to change their minds on the euro in the near future. Much the same could be said about Sweden (twice as big as Denmark, and totally committed to joining the euro at some time between now and the heat death of the universe).

In general I think that bringing in “well if X, Y and Z happen then…” into the referendum discussion is just adding confusion to what’s already likely to be a confused situation.

84

novakant 07.04.15 at 11:44 am

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.

85

Chris Bertram 07.04.15 at 11:55 am

@novakant it wouldn’t. But people vote according to some combination of ideals and interests. The interest-based reasons for staying the in EU are still there, imho, but the ideal-based reasons have been chucked out the window and we are compelled to face with sober senses our real conditions of life, and our relations with our neighbours.

86

Ronan(rf) 07.04.15 at 12:08 pm

“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.

87

engels 07.04.15 at 12:11 pm

I don’t think it’s reasonable to think EU entrenches neo-liberal (pro-capital, anti-democratic) international order, Britain leaving EU weakens EU, hence is set-back for neo-liberalism and capital

88

robinm 07.04.15 at 12:27 pm

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

89

engels 07.04.15 at 12:28 pm

‘Unreasonable’!

90

ogmb 07.04.15 at 12:37 pm

“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.

91

Hidari 07.04.15 at 12:42 pm

@84
How would a ‘yes’ vote (directly) help ‘left wing causes’?

And I don’t just mean the negative ‘It would hurt UKIP’ type stuff. I mean how, concretely, would a ‘yes’ vote help the UK move towards social democracy?

92

Barry 07.04.15 at 1:21 pm

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.

93

Layman 07.04.15 at 1:33 pm

For years I read complaints that the EU is by design an undemocratic body, without really understanding the complaint. The experience of Greece has helped me to understand it clearly. It isn’t just that the EU is determined to to destroy the Syriza government – it’s that the approach to Greece’s problems have always been guided by objectives which are antithetical to the Greek people.

From the NYT:

‘To Mr. Geithner’s dismay, however, Mr. Schäuble took the conversation in a different direction.

“He told me there were many in Europe who still thought kicking the Greeks out of the eurozone was a plausible — even desirable — strategy,” Mr. Geithner later recounted in his memoir, “Stress Test: Reflections on Financial Crises.” “The idea was that with Greece out, Germany would be more likely to provide the financial support the eurozone needed because the German people would no longer perceive aid to Europe as a bailout for the Greeks,” he says in the memoir.

“At the same time, a Grexit would be traumatic enough that it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union,” Mr. Geithner wrote. “The argument was that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall.”’

94

Zamfir 07.04.15 at 1:40 pm

@ 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.

95

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?

96

Layman 07.04.15 at 1:57 pm

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?

97

Ronan(rf) 07.04.15 at 2:04 pm

Continued from my 86 , and from an article “European Integration and the Incompatibility of National Varieties of Capitalism: Problems with Institutional Divergence in a Monetary Union” :

Article – “The domestic organization of different political economies in the North and South of Europe has interacted with transnational European monetary policy to produce a persistent and unsustainable divergence in trade and external lending, which has been cited by many as an underlying instigator of speculative divergence among EMU member states …. We trace this divergence to the incompatibility of two distinct growth models; domestic demand-led models, which predominate in the new democracies of Southern Europe, and exportled models, which dominate Northern coordinated market economies.

Prior to the formation of EMU, these two growth regimes were able to co-exist without
producing significant external lending and current account imbalances between
each other (see Figure 1). Rather, it was the political drive toward European monetary
integration which combined these distinct national varieties of capitalism into a single
currency and subsequently led to large, persistent, and ultimately unsustainable imbalances in trade and external lending. In this regard, the ultimate source of the euro crisis can be traced to the asymmetric effects of joining together qualitatively distinct growth regimes, or national varieties of capitalism, into a monetary union.
We argue that two factors explain why both growth regimes could co-exist prior to the
formation of the EMU but not afterwards.

The first is due to the presence of the nominal exchange rate safety valve within soft-peg or flexible exchange rate systems (i.e., euro periphery during the early days of the European Monetary System, EMS). Under this monetary arrangement, countries with different growth models had greater leeway in promoting economic adjustment through currency depreciations/devaluations.2
Second, in hard currency exchange rate systems where the nominal exchange rate is fixed between countries, competitive realignment between EMU’s diverse growth models was facilitated via inflation-averse central banks at the national level that promoted inflation and real exchange rate convergence among participating member states. Once the EMU removed the safety valves on the nominal exchange rate and the national central banks that promoted inflation and exchange rate convergence, imbalances in the real exchange rate, driven purely by divergences in national inflation, grew unchecked, leading to persistent external imbalances between the North and South of the EMU.”

Me – What does this mean for the future of EU integration and how can these issues be overcome ? Further integration, it seems, would exacerbate these problems, so is there any political possibility of not embarking on a further round of political and economic integration (or even rolling it back) ? Or finding a position outside of the Euro (but in the EU) for peripheral countries where they could peg their currencies to a north european currency ?

98

bob mcmanus 07.04.15 at 2:59 pm

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.

99

Roger Gathmann 07.04.15 at 3:03 pm

If the default in the UK is to neo-liberalism, it would seem to me that voting yes on the EU, given its policy of making neo-liberal economic policy mandatory and trumping any democratic vote against it, is a way of making the UK default even worse. After all, then the UK elite isn’t responsible itself for what it does. It can always blame the EU, which will, when the time comes, blame the people, and put in place their own managers.
Myself, I do think elections are not completely useless, even in the UK.
So I’d say that the vote in the UK should be for backing out. It would, at the very least, be a shot across the bow of the Euro technocrats. What’s the harm? If backbench tories want to get rid of the EU, well, it wouldn’t be the first time that an ideological faction acted blindly to bring about just those circumstances that it abhors.

100

Barry 07.04.15 at 4:31 pm

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.

101

Rich Puchalsky 07.04.15 at 4:54 pm

I should mention _Ruling the Void_ by Peter Mair, which I read because someone here recommended it. One of the points made was that politicians do a two-step of blaming the inability to get anything done at a national level on EU constraints, and the inability to change EU constraints on the problems of convincing national democracies to do so — and that problems are given lip service by politicians at whether level (national or EU) is in fact least suited to doing anything about them. It’s conceivable that having only one level might increase the ability to call them to account.

102

Bruce Wilder 07.04.15 at 5:24 pm

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!

103

MPAVictoria 07.04.15 at 5:25 pm

“Whatever it is, it ain’t democracy. It’s banksterocracy”

http://www.eschatonblog.com/2015/07/whats-it-all-about-then_4.html

“Bloomberg reports that Bulgaria, which is not a Euro member but backs its currency with Euro reserves, has just been allowed to borrow from the ECB at the same rate as Euro members, thus enabling it to firewall its banks from Greek contagion. This is a privilege normally only accorded to Euro members – and it has been WITHDRAWN from Greece. If this is true, then Bulgaria (non-Euro member) can obtain Euros from the ECB while Greece (Euro member) cannot. It is hard to see what benefit Greece’s Euro membership confers, apart from redistribution of seigniorage receipts.

And finally someone gets the logical endpoint of central bank “independence.”
For the central bank of a currency union to deliberately restrict the money supply in regions within the currency union is bizarre. No other currency union central bank on earth does this. It would, for example, be unthinkable for the Bank of England to deny liquidity to Scotland’s banks. But the ECB has denied liquidity to Greece’s banks, not because they are insolvent (which is a reasonable reason to deny liquidity to banks) but because the sovereign won’t toe the fiscal line. It has taken on a political role that it should not have.

Of course, the ECB’s shareholders are the member state governments. But those governments have bound themselves by laws and treaties that prevent them interfering with or in any way controlling the ECB. So the Eurozone is in reality a financial dictatorship run by bankers. I struggle to see why anyone would voluntarily join it, let alone want to stay in it. But that’s democracy for you.”

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Rich Puchalsky 07.04.15 at 8:07 pm

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.

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Z 07.04.15 at 8:58 pm

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.

FWIW, I was directly (though of course quite peripherally, considering my young age then) involved in a European Parliament mission in charge of the extension of the EMU towards southern European countries and I can testify that this was very much not the whole point. In fact, the description above, with its offhand remark towards a history of bad governance, manages to get it essentially backwards. The extension of the EMU towards southern Europe was in large part a quid pro quo in which Southern European countries were indeed offered the advantage of a monetary union with Germany provided the political and institutional structures-namely the power structures inherited from the years of dictatorships (for Spain, Greece and Portugal) or the years of lead for Italy-that were responsible for the “history of bad governance” were kept in place. Not in spite of them.

This was proposed not because the EU had some evil plan of supporting dictatorial institutions in mind, but because it was (rightly or wrongly) believed at the time that the project of European integration, which was already stalling in some core countries, could only move forward with the assent of as wide a political support as possible, including the beneficiaries of said former institutions (including the army; see submarines, Greece) and the center-right political parties which often represented the democratic descendants of the pro-dictatorship constituency.

I can testify from personal experience that many people at the time in the European Parliament warned (internally) that these countries would have to face any future economic crisis with no currency to devaluate, no lender of last resort and the enduring burden of the instituions the arrangement was designed to maintain to carry. The common answer at the time (again internally) was that a serious upheaval was unlikely thanks to the moderating effect of liberalized financial markets.

Giving up the option to inflate and devalue your way out of trouble is literally the exact thing that the periphery wanted EMU for.

Not my recollection at all. My recollection, and in fact especially in the case of Greece, was that they were OK with giving up this option in exchange for the political stability and national reconciliation the deal offered. Both for the core of the EU and for Greece, the extension of the EMU was first and foremost a political deal, not an economical one. Of course, my perception is probably tainted by the fact I was working with political, not economical, agents, but on the other hand, they were the actual people designing the EMU at the time.

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dsquared 07.04.15 at 10:06 pm

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

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Collin Street 07.04.15 at 10:12 pm

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

… more degrees of freedom is more ways for a system of non-linear feedback to wedge itself: if you want a system to stay stable, you need more, not less, regulation. What do they teach economists when they teach them their maths?

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The Raven 07.04.15 at 10:50 pm

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.”

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PaulB 07.04.15 at 11:22 pm

But the ECB has denied liquidity to Greece’s banks, not because they are insolvent (which is a reasonable reason to deny liquidity to banks) but because the sovereign won’t toe the fiscal line.

Are you saying that the Greek banks aren’t insolvent?

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F. Foundling 07.04.15 at 11:27 pm

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’.

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Sebastian H 07.05.15 at 12:15 am

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?

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Sebastian H 07.05.15 at 12:26 am

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?

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Oliver Rivers 07.05.15 at 7:41 am

Doing business in the UK is much easier than doing business in Italy. Part of what the EU is about is making doing business in Italy more like doing business in the UK. Were that actually to be achieved, it would mean a huge improvement in the way things go on, economically and politically, in Italy. If Italy were less corrupt, Italians would be better off. So I am in favour of that bit of the European project which tries (deregulation, standardisation) to achieve this kind out outcome.
I also like the boringness of that ambition. For peace and prosperity you need states to function with boring efficiency. The troika has used the debt crisis to try and make Greece something more like a boring, efficient northern European state. Unfortunately, because of the ineptitude with which it has gone about that, there is a non-negligible risk that Greece ends up, whether inside or outside the EU, being a far more dysfunctional society than it was pre-2008.
An interesting question is: if the European Project is failing, is that because the crop of leaders we have happen to be too inept to deal with the challenges of the task (a different crop might do better); or is it a task which of its nature couldn’t succeed (no-one, however talented, could do this)?

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Peter T 07.05.15 at 9:11 am

“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….

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Hidari 07.05.15 at 10:47 am

If anyone cares, here’s an article that puts forward my own view that the referendum is unlikely to solve any of Greece’s problems regardless of the result, and that this crisis will probably stagger on for months (or years) to come.

https://medium.com/bull-market/from-greferendum-to-grexit-8eca966bc459

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engels 07.05.15 at 11:05 am

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’.

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Rich Puchalsky 07.05.15 at 1:28 pm

Oliver Rivers: “An interesting question is: if the European Project is failing, is that because the crop of leaders we have happen to be too inept to deal with the challenges of the task (a different crop might do better); or is it a task which of its nature couldn’t succeed (no-one, however talented, could do this)?”

As far as I can tell, the analysis in Hayes’ book _Twilight of the Elites_ applies just as well to meritocratic Europe as the U.S. The problem isn’t an accidental one about the crop of leaders, or one about the difficulty of the task: it has to do with the crop of leaders being chosen through a method which systematically insulates them from the people and makes them identify with their small group of hyper competitive, falsely self-confident, self-dealing meritocrats.

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Marshall 07.05.15 at 2:30 pm

@ 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.

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Alex 07.05.15 at 2:36 pm

Not a lot of discussion about the UK referendum (understandable given the other referendum today) but I’d like to question an assumption in the OP by Chris:

So, how to vote in that UK referendum? I’ll probably vote to stay in, because at least that way we’ll retain the principle of free movement within the EU

But this assumes that a no vote will mean we will simply pull out of all European economic institutions altogether. This is unlikely for a number of reasons. David Cameron hasn’t specified what the consequences of No will be, so we don’t know if he would intend to take us out of the EU, but keep us in the EEA. The reason that is important is that EEA countries are still part of the single market and have freedom of movement, so this would not be lost.

Why is it likely he’ll go for that? Well for starters Cameron himself isn’t that anti-EU in the grand scheme of things, so he would see benefits to still being in the single market. A lot of business close to him will be pushing for us not to leave the single market, not to put up trade barriers, not to put up too many immigration restrictions, and it will be their lobbyists that will have the biggest influence on government policy in the coming years.

Also, if you listen to a lot of “smart” Tory Eurosceptics, they tend to talk about EU withdrawal as being a long process of unwinding, starting by moving to a Norway/Iceland situation, and only after a number of years could we end up in the same shoes as Switzerland. So even if there’s a bigger project at play, we’re unlikely to leave the EEA before 2020 and the next election.

Finally, think of this strategically. If you’re a prominent Tory looking for right-wing hegemony, how would you play this? You would encourage Euroscepticism and nationalism and try to win the referendum vote. But anti-Europe feeling plays very well in the media, just as complaints about Political Correctness and such like. If you’re looking for a perpetually angry base of voters to keep you and your allies in power for the long haul, why would you want to settle the Europe question permanently? If bad policies can no longer be blamed (factually or mythically) on the bogeyman of Europe, then the voters will start to blame you and your economic policies. So the smart thing to do if you’re a Tory seeking hegemony is to leave the EU, keep business satisfied by remaining in the EEA, and then blame all future problems on the EEA. And so the nationalistic ressentiment gravy-train continues.

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Alex 07.05.15 at 2:38 pm

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.

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Ronan(rf) 07.05.15 at 2:44 pm

I dont necessarily think that the problem is elites are insulated from the people. Polling shows Greeks still want to remain both in the Euro and the EU, and that the German public supports Merkel

http://www.wsj.com/articles/german-public-stands-behind-angela-merkels-tough-stance-on-greece-1435673522

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F. Foundling 07.05.15 at 3:58 pm

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.

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Ronan(rf) 07.05.15 at 4:08 pm

This is really quite nonsesical. There’s nothing unusually malevolent about ‘north europeans.’ There is quite a lot of support in Greece, after all, for an avowedly fascist party. There have been numerous attacks on immigrants, a recent history of ethnic and political conflict.
There’s also little support anywhere (North/south east or west, I havent seen polling but politically), for the Greeks. I dont agree with that position, but that’s how it is.

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Barry 07.05.15 at 4:39 pm

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.

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Alex 07.05.15 at 4:55 pm

There is quite a lot of support in Greece, after all, for an avowedly fascist party

Only 6.3%. Worrying, but hardly Weimar 1932. Meanwhile True Finns got 17.7%. And let’s not mention Front National in France.

126

Alex 07.05.15 at 5:10 pm

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?

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Sebastian H 07.05.15 at 5:13 pm

It seems to me that lots of people don’t want to be clear about how much of the timeline they think is relevant. It seems to me that it goes something like this:

1. Greece has history of defaults.
2. Greece’s application for the euro was doctored up by Goldman Sachs. Everyone knew it was doctored up, but went along with it for various reasons of their own.
3. Creditors issue debt to Greece on the supposition that if it all falls through they will get bailed out. This causes the debt to be issued with rather low interest rates considering Greece’s history.
3a. This causes a GDP boom in Greece that is bubbilicious.
4. The global recession hits exposing all sorts of crookedness by lots of banks, and by Greece.
5. The banks are bailed out all over the place (because of threats to the system) and the creditors who issued debt to Greece before the crisis are wholly vindicated in their view that they would get bailed out. (moral hazard for banks reinforced in spades).
6. It is clear at this point that Greek debt is unsustainable. Greece is convinced to roll over its debt rather than default. The argument at the time is something like “you’ll go through ridiculous amounts of pain if you default, but if you follow these steps under our watchful eye, you’ll have growth.
6a. (This one is not a fact, but is a plausible interpretation). The troika decided to save their banking system through bailouts, but did not want have that bailout also save Greece. They knew that there was a very strong possibility that Greece would need to be pushed out of the euro, but the euro was too fragile to have it happen now. So they sold Greece on the pretense that it could limp along with the euro because it would be too damaging *to the euro* for Greece to be pushed out at that point.
7. Contrary to the public projections, the austerity measures pushed Greece even further into depression.
7a. This causes another crisis, with the debt haircut. This haircut doesn’t hurt any of the original bad actors, because they have already been bailed out to save the system.
7b. The troika doubles down with “more of the same will save you.
7c. More of the same doesn’t save Greece.
8. Politically when more of the same doesn’t help for years and years on end, causing the worst depression since the Great Depression, your party tends to lose.
9. Syriza gets four months to try to fix all this and mysteriously isn’t magical. (I’m skeptical that ass kissing would have made them magical.)
10. Here we are.

The problem many here have with d-squared is that he wants to focus on 1, 3a, 7a and 9.

The banking framing is to studiously ignore 2, 3 and 5.

The Syriza frame is to studiously ignore any Greek problem with 1.

My basic take is that the troika has made MANY choices to save ‘the euro’, but that bailouts happen only when threatened. Bankers and Greece had credible threats early in the timeline. Bankers were bailed out, Greece was put off with soothing noises about growth. This gave them time to insulate the system. This reduced the Greek threat to the system without doing anything to help Greece’s long term prospects. If Greece had defaulted THEN, the troika would have agreed to lots more write-downs, and by now, Greece would have already dealt with the pain of the default (see repeated history of Greece). But because the troika promised growth if its plans were followed, the default option looked much worse at the time than it does in hindsight. Now that the system is believed not to be threatened (though frankly I suspect that it is more fragile than the euro-elites think) Greece’s leverage is gone, it will probably have to default anyway, and it ate 6 years of depression for essentially nothing.

It is the suspicion that the bankers knew that it would be eating 6 years of depression for nothing (i.e. still very likely to be forced out and still having to eat the fruit of a default and exit) but did it “to protect the system” which looks so ugly. D-squared portrays this suspicion as projecting “cackling evil”. But really it is just a self protecting decision to protect the banking system. Greece’s pain isn’t a big concern, so protecting the important thing while hurting the unimportant thing doesn’t strike any of the bankers as ‘cackling evil’.

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Rich Puchalsky 07.05.15 at 6:40 pm

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”?

129

Sebastian H 07.05.15 at 7:06 pm

I don’t mind the oops, so much as the “oops and let’s continue on doing the same thing that devestated your economy”

130

Igor Belanov 07.05.15 at 7:10 pm

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.

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Igor Belanov 07.05.15 at 7:11 pm

That should be ‘without’ the necessary socio-economic harmonisation…..

132

Bruce Wilder 07.05.15 at 8:49 pm

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?

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bob mcmanus 07.05.15 at 8:51 pm

127: Agree.

“What is needed is an anti-elite policy on a Europe-wide scale.”

Syriza’s mandate was to stay in the EU;keep the Euro; and end austerity. We shouldn’t say it can’t be done, but ask how it can be done. Varoufakis, as far as I know, has never said it can be done quickly, easily, or only in Greece. It has always been a European project. Grexit, if it happens, will be a tactical event. If y’all think reform is possible, tell me how. But the old regime must fall, the current elites must be displaced. They won’t reform themselves.

Better analysis please, a more Global analysis. We are rapidly approaching 2+ failed states on the periphery.

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Bruce Wilder 07.05.15 at 8:52 pm

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?

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Roger Gathmann 07.05.15 at 8:53 pm

I think the problem was always with the decision of the EU in 2010 to shift the owners of the debt from private creditors to public ones. This was never going to work. Moreover, people in the netherlands and germany, etc., woke up to find their money “going” to Greece. Of course, nobody reported that Greece was a transit stop for 90 percent of the money going to Greece’s private creditors.
Politically, of course, this makes Greece an easy villain. It provides cover for the private sector creditors, who got paid one hundred centime to the euro. And it created a political problem neither Europe nor Greece can solve. It was a shortsighted and truly stupid thing to do. The spectacle of Greece negotiating with its private creditors would not have aroused the nationalistic currents that the EU was supposedly founded to abolish.
The EU heads should sponsor a referendum on their leadership with the population of all member countries voting. I’d like to see how that would work out.

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bob mcmanus 07.05.15 at 9:02 pm

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.

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Collin Street 07.05.15 at 9:02 pm

> Does dsquared strike you as either evil or stupid?

Yes, if you want it in those terms: “they were inches away from a deal, but the greeks were too intransigent [to entirely adopt the creditor terms without variation]” isn’t a position you could normally justify. There’s some more conclusions I could write, but, really, berating the greek government for intransigently refusing to fold utterly is a start-point.

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Bruce Wilder 07.05.15 at 9:17 pm

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.

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Tom Bach 07.05.15 at 9:42 pm

Bruce, which part of your scenario is smart and which part takes the long view. At least as I read it, your version of events is both stupid and short sighted.

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Ronan(rf) 07.05.15 at 9:48 pm

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.

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Z 07.05.15 at 9:50 pm

That irrational faith in markets…

Yes, that happened (more precisely, it was a lack of familiarity with the topic coupled with trust towards economic experts who seemed to genuinely believe in them) but I don’t think it was the key fact. In retrospect, I believe that their mistake was actually more political than economical: in crude terms, they were working under the assumption that you could move Europe forward by “buying” the establishment (or, more neutrally, by offering them a good deal and hoping that the people would get on board, or fall in line, eventually) and that all inconvenient facts would sort themselves out. It did work for 5/7 years.

Fast forward 17 years and the No scores a crushing victory (that I would never had expected) and the political contestation against EU-led austerity is carried over almost exclusively (numerically) by fringe, anti-establishment political forces, which are more often than not on the far right of the spectrum.

I should say, by the way, that while I had already developed doubts about the economic triumphalism at the time, I was then fully convinced by the political argument myself so was as mistaken as everyone else.

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William Timberman 07.05.15 at 9:52 pm

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.

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bob mcmanus 07.05.15 at 9:54 pm

It’s Oxi, 61-39

What Comes After Oxi? …Nantina Vgontzas, Jacobin

I have not a clue, but I have been reading about left nationalism, how it differs from right nationalism, and wondering if they can form alliances. It can get confusing and messy, as it was in the twenties and thirties.

Not liking the reaction of Podemos and Sinn Fein, and no fan of Martine.

144

Ronan(rf) 07.05.15 at 9:58 pm

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 .

145

john c. halasz 07.05.15 at 10:29 pm

B.W.@ 77:

Yeah, I’ve been pushing that sort of proposal for years now, and I’ve never gotten any real response. The usual proposal for “internal devaluation” is to reduce taxes on employers, to reduce “unit labor costs” and thereby boost exports and thus employment and “competitiveness”. It should be fairly obvious who would pay for such a policy, as well as, how contradictory and ineffective it would be. But raising VAT to a high level, while counterbalancing it with a sharply progressive, mostly negative income tax, would seem to be a fairly sure way both to collect taxes, with a buy-in from the public, (since VAT is quasi-self-collecting, and the ways to cheat are well known), and to construct a mechanism for maintaining current account balances and gaining some actual “export” advantage, (since if VAT were completely rebated to foreign tourists, Greece would in effect be able to discount its tourism below standard EU VAT rates). And then Greeks could begin working on reviving and restructuring their internal domestic economy and demand, without the worry of blowing out the current account again and being at the mercy of external financing. Since it really wasn’t the public debt, pace EZ rules, nor the failure of Greek productivity, (which actually had been growing at a much higher rate than Germany), but rather the current account balance that was unsustainable and gave rise to this whole fiasco.

146

Bruce Wilder 07.05.15 at 11:56 pm

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?

147

F. Foundling 07.06.15 at 12:00 am

@Igor Belanov 07.05.15 at 7:10 pm
>There is no point using Mussolini-style rhetoric and pretending that Greece is somehow a ‘proletarian nation’ battling against the evil imperialists.

This was a very interesting sentence. I don’t see how anyone is saying Greece is “somehow a ‘proletarian nation’ battling against the evil imperialists”. I don’t see how anyone is using Mussolini-style rhetoric. And I don’t even see how saying that Greece is a proletarian nation, if someone had said that, could have been meaningfully described as Mussolini-style rhetoric.

>It doesn’t help to keep discourse in this ‘billiard ball’ nation-state against nation-state argument.

Certainly this is not *ultimately* an issue of nation-state against nation-state, but that’s precisely what the creditor countries’ populations have been convinced to believe – have chosen to believe – and that’s the problem. I absolutely agree that in the end of the day, the populations of all of Europe, north and south, are the victims (as always, including WW2). This doesn’t preclude the sad fact that some of the victims are assisting in the victimisation of other victims.

>What is needed is an anti-elite policy on a Europe-wide scale.

Sounds great, I’m all for it; it’s just that it seems clear to me by now that it’s unlikely to happen.

>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.

The various European institutions can insulate themselves from control in the same ways as the national ones AND by many more. Hardly anybody feels the European institutions really depend on his vote; there are always the other member-states to point to, and the institutions are heavily infested by neoliberal ‘technocrats’. We don’t have a pan-European identity and pan-European solidarity – as we are seeing in the Greek crisis – and we can’t have a proper pan-European political discourse, so I find it hard to see any prospects for a functioning pan-European democracy. Ultimately, European integration – and the Euro – means a weakening of democracy, and is thereby a means of blocking left-wing policies for the forseeable future, and of imposing right-wing eceonomic policy (and US-aligned foreign policy) on everyone. That’s what it does now; and, in many ways, it seems, in spite of some people’s illusions, it has always been supposed to do that. As for the UK specifically, I’m very much thinking along the lines of engels (87-89); and if the UK left can’t beat the Tories at home, Brussels certainly won’t be the one to solve its problem for it.

148

dsquared 07.06.15 at 12:21 am

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.

149

F. Foundling 07.06.15 at 12:34 am

>Ronan(rf) 07.05.15 at 9:58 pm
>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 .

Well, if you don’t like Syriza, it’s only natural that you won’t like Podemos either. Judging from your pro-troika stance in recent threads, you wouldn’t want a ‘pan european alliance against austerity’ in any case, or you would never be satisfied enough to consider it ‘meaningful’, whether on the pretext of the participants’ alleged nationalism or otherwise. All of this seems like concern trolling at this point (and frankly, I don’t think leftism fits in with your ‘tribalist’ scepticism of rational discussion anyway). By the way, I’m not generally a fan of terrorism, but it’s nice to hear that you have someone over there who cares about water charges and council houses.

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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. 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.

151

Collin Street 07.06.15 at 12:43 am

He appears in his writing to be someone who’s never encountered anything to shake his self-confidence

But everyone encounters failure: if someone acts as if they’ve never encountered anything to shake their self-confidence, it doesn’t mean they’ve had life-long success it means they’ve never recognised failure when they encounter it.

Spotting your own failure is hard, for reasons I’ve set out before. And this goes double if you don’t even know what failure looks like from the inside.

[about the only use of enhancement / accelleration programs for bright students is to improve their odds of encountering failure under controlled circumstances, I think.]

152

Ronan(rf) 07.06.15 at 12:43 am

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.

153

geo 07.06.15 at 1:00 am

dsquared @148: Have mercy. For those of us on the other side, it’s awkward enough that you’re the smartest person around here. If we couldn’t asperse your virtue at least a little, it would be intolerable.

154

F. Foundling 07.06.15 at 1:02 am

>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.

155

Bruce Wilder 07.06.15 at 3:00 am

john c. halasz @ 145

Yes, it would seem to be a technically obvious approach. I was offering it less as a serious proposal than as an illustration of how serious proposals are never considered. It is a kind of “dog that didn’t bark” point about the shape of our political discourse. The capacity to think critically about the b.s. fed to us by our neoliberal pundits is apparently at low ebb.

I thought about raising a completely different example, but I could no longer find the appropriate link: it was a self-described leftist, who was praising Sweden as a model of socialist consciousness, because some non-profit group was organizing a special supermarket in Stockholm to serve the growing ranks of the poor, with day-old bread, cosmetically-undesirable vegetables and canned foods near their expiration dates, and so on. It was an admirable example of a society that was responsive to the threat of growing inequality, you see.

156

Lee A. Arnold 07.06.15 at 3:40 am

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.

157

Nepos 07.06.15 at 12:51 pm

I do wonder why a conservative like dsquared bothers to post here at all. Unless he’s trolling. I mean, posting things like (shorter version) “the Greeks deserve what they get” on Crooked Timber is like coating yourself in chum and diving in shark-infested waters, you have to know what’s going to happen.

Perhaps the National Review would be more amenable? (National Review article from yesterday: “Beware Greeks casting blame”)

158

Roger Gathmann 07.06.15 at 2:17 pm

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.

159

phenomenal cat 07.06.15 at 9:53 pm

“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.” Foundling@154

F. Foundling, is “F. Foundling” just a different handle for “Plume”?

160

Lee A. Arnold 07.06.15 at 10:50 pm

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.

161

MPAVictoria 07.06.15 at 11:59 pm

Dsquared is brilliant and humorous. He is also enjoys trolling and rarely engages honestly with criticism.

/He also has been brilliantly wrong about Greece right from the very start and contemptuous of the very people who have been correct. So I think he is due some criticism. Not that he will engage with the Bruce Wilders and the Rich’s of our little world anyway.

162

Lee A. Arnold 07.07.15 at 12:24 am

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.

163

JimV 07.07.15 at 1:19 am

“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.”

Non sequitur (for the logic fans out there, if any); and also a strawman, which I thought was disposed of in that previous thread, but apparently it is one of those zombie arguments. To repeat, no one (that I know of or support) is arguing that “a god does not exist”. We are arguing that Adam and Eve, Noah and the Flood, etc. are contradicted by scientific evidence and that believing in them is as rational as believing that the moon is made of green cheese. Having our words (and our nephews and nieces minds) twisted that way does result in some rhetorical animus, on occasion, but it is not caused by people’s silly beliefs (of which I no doubt have some) but by the bad-faith way (take that anyway you want, as Elaine Benes would say) some of them argue for them.

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Collin Street 07.07.15 at 1:45 am

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.

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Lee A. Arnold 07.07.15 at 2:06 am

JimV #163: “To repeat, no one (that I know of or support) is arguing that “a god does not exist’ “

My point here was that the complaints lodged against Dsquared aren’t even what he is arguing, which is exactly the same sort of illogical blanket condemnation lodged against religion on that last thread, where some commenters further decided, after insulting other people’s religion in a time of distress, to trot out the old chestnut that “rationality” provides proof, not only against the stories in the bible or in theology, which it surely does, but provides evidence against the concept of deity itself, which it surely does not. Indeed we just had another go-round of the “magical penguin” argument in #154 above.

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Lee A. Arnold 07.07.15 at 2:09 am

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

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Bill Benzon 07.08.15 at 10:17 am

Saw this in the NYTimes yesterday:

Germans Forget Postwar History Lesson on Debt Relief in Greece Crisis

As negotiations between Greece and its creditors stumbled toward breakdown, culminating in a sound rejection on Sunday by Greek voters of the conditions demanded in exchange for a financial lifeline, a vintage photo resurfaced on the Internet.

It shows Hermann Josef Abs, head of the Federal Republic of Germany’s delegation in London on Feb. 27, 1953, signing the agreement that effectively cut the country’s debts to its foreign creditors in half.

It is an image that still resonates today. To critics of Germany’s insistence that Athens must agree to more painful austerity before any sort of debt relief can be put on the table, it serves as a blunt retort: The main creditor demanding that Greeks be made to pay for past profligacy benefited not so long ago from more lenient terms than it is now prepared to offer.

But beyond serving as a reminder of German hypocrisy, the image offers a more important lesson: These sorts of things have been dealt with successfully before.

The 20th century offers a rich road map of policy failure and success addressing sovereign debt crises.

So what I’m wondering is whether or not among the economics of it all, we’re not also dealing with scapegoating where Greece in the role of the ritual goat that’s expelled from the community so as to affirm (rather shakey) communal bonds.

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