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I kept meaning to write about the events going on around Greek membership in the Eurozone, but events kept happening so often that the post that I usually write first in my head kept getting out of date. And now it’s too late to post with a Twitter echo, heh — although I suppose it frees me up from having to try to write first sentence clickbait.

I have been following the Greek situation with completely rapt attention, since every twist, turn, and repetition of it — a.k.a. “The Passion of Hellas” — has been deeply educational. And now the situation may, just may, finally be coming to a head. Or not! If there’s one thing that the Syriza government in Athens has done for us that we can hopefully all agree on, it’s to reveal that the emperor has no clothes. It really does appear to be a case of people following a bad theory off a cliff, because they are too blind or cowardly to do otherwise.

Because of all these twists and turns, any kind of analysis that does the whole situation justice won’t fit here, alas. In lieu of this, I offer you a few remarks:

1. We are continuously told that left-wing solutions won’t “work”, left-wing parties and their positions run counter to the Eternal Truths of economics, etc, etc, human behaviour doesn’t allow it, yadda yadda yadda. OK. If that were so, why is there a whole elaborate and very blatant superstructure constantly being erected and renovated to ensure specifically that humans behave so that left-wing solutions won’t work. Consider, like, every single “free trade” agreement of note for the past umpteen years.

And yet, in this Greek situation we see it at it’s most obvious, when it becomes clear that the troika is willing to entertain helpful political fictions and flexibilities about a Greek debt policy that has obviously failed. But it nevertheless insists on using the debt payment schedule as a means to force the Greek government to enact precisely the sort of reforms that any left-wing government worth its salt can’t accept. (Surprisingly, it appears that Syriza is a left-wing government worth its salt as leftists — needless to say, one is saddened by the fact that this is a surprise.)

2. Speaking of which, one of the most fascinating things about this whole episode, in terms of media at least, is the frequent speculation in European media of just when Greek PM Alexis Tsipras will see reason, ditch his finance minister, and fire the left-wing portion of his caucus, as well as the nationalist coalition partners — in order to form one of the usual weak-tea social democratic coalitions that will promptly give in to the troika and sign on the dotted line. It’s not only media — apparently the political culture of Brussels simply has a very hard time understanding that there are people who could be working outside their particular intellectual framework and yet be serious about it. What makes this all even stranger is that Syriza conducts its discussions more or less in the open, if you look at the correct media — which is of course not the media that the mainstream European media read.

The reason why I think the situation is at a (bad, depending on your point of view) turning point is that the EU-level politicians are finally coming to realize, with some chagrin, that the incentive structure of politicians that are actually left-wing is different from that of a government of post-social post-democrats. Syriza’s behaviour has been far from strategically perfect, but it is the sort of behaviour you would expect from a left-wing government with a gun to its head — the absolute minimum level of slow compliance. EU politicians seem to think that they’re actually offering a carrot as well as a stick, but they seem to have overestimated the attractiveness of the carrot.

It’s for this and other reasons that I find that explanations that reduce this situation to the bad behaviour of banks in 2008 to be overblown. There is a huge component of ideology and entrenched ways of doing business here. Indeed, one of the complaints about Yanis Varoufakis is that he is an “amateur”, which we can immediately translate into “bad at helping other people keep political cover.” Which he may be. The previous Greek governments hardly managed to implement structural adjustment in any effective way, but they were professionals in that sense — they gave other European politicians cover, and for that they are missed.

So, in that sense, Syriza really is like the child that pointed out that the Emperor has no clothes.

3. And speaking of the previous governments, isn’t it interesting how everything is all of a sudden due and payable and how Syriza must implement in a few weeks what has been avoided for years? One can’t help but imagine that this is only the expected reaction to a left-wing government being elected. Indeed, it turns out that, in the short run at least, it isn’t Germany that is Syriza’s principal enemy in the Eurozone, but rather the governments of other crisis countries, particularly Spain and Portugal for exactly the reason I mentioned above: the Syriza government takes away political cover from these governments by its very existence.

Indeed, not all the reforms demanded of Greece are bad ones. Greece has a widespread and problematic tax-evasion problem, for example, but it turns out that taxes are really deeply cultural. The German language has a great word for this: Steuermoral It is very hard to build a different Steuermoral and very hard to collect taxes consistently without the right kind of Steuermoral. That gives us an opportunity to learn yet another German word: Daueralimentierung — long-term feeding. Much of this agony has been about avoiding (the appearance of) the Daueralimentierung of Greek finances in the Eurozone. The structural reforms (bog-standard IMFery) are supposed bring Greece into some kind of long-term sustainability as an export competitor (!) to Germany. Obviously, this is a fantasy: Erst kommt die Daueralimentierung, dann die Steuermoral.

4. Which, of course, brings us to the real issue: Europe is not a real country, and the situation is, in fact, clear evidence that a currency zone must be a real country. Within an economic unit, there will always be subunits that are chronic underperformers, especially if your goal is (!) a continuous export surplus with everyone else. These subunits create, over the long run, a kind of death spiral situation, unless they are supported by the “overperformers”. Every long-lasting, successful currency union (USA, Canada, West Germany under the DM, etc) has some kind of transfer mechanism. There is no possibility that the Federal Reserve will pull the plug on Mississippi banks just because Mississippi is a big recipient of US federal program spending. (Exactly this very dangerous politicization has taken place with the ECB and is the reason why this is such a dramatic crisis for Greece — the plug-pulling was threatened almost immediately after Syriza was elected and the bank run hasn’t ended.)

The Eurozone was conceived and written explicitly under the guarantee that it would not become a “Transfer Union”, which in the northern countries means, “pay lazy southerners to loll about on the beach”. Therefore, arcane, wishful-thinking requirements were written into the treaties, allegedly designed to avoid this situation. These requirements are only as strong as the Eurozone somehow preventing a large economy like Spain or France from, um, falling into the “wrong” hands. Of course, since not all contingencies can be accounted for, adhering to these requirements can increase the possibility of a political upset. A transfer union of some form is necessary and inevitable — or the Eurozone will fall apart.

But the Eurozone is not a real country. Canada, despite its two languages and the binational griping, is a real country. Even if you were able to make a case for the overall benefit of an Eurozone-wide transfer union (and there are arguable benefits even for the payers, most importantly, well, a single currency), many citizens of Germany and elsewhere shy away from the idea. And the lock-in effect of the present arrangement into a neoliberal frame of thinking leads me to come to the conclusion that many German commentators have come to: Lieber ein Ende mit Schrecken als ein Schrecken ohne Ende. Better a horrible end than an endless horror. Especially since an important principle, the primacy of democracy over debt and credit relations, is also at very much at stake.

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This page contains a single entry by Mandos published on April 25, 2015 1:39 PM.

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