Let Them Eat π
Some months ago I tried to explain that the crisis in Greece concerned the entire globe directly and that what was happening to my country was nothing short of an economic coup d’état. Naturally, I was accused of doom-mongering and over-dramatising. It pains me to have been proven absolutely right on both points.
If we are to learn lessons from the events of the last three years, it is vital to challenge dominant and convenient narratives on the issue. They range from, at worst, malicious propaganda and, at best, distracting fairy-tales.
The first of those is the idea that the current crisis is made in Greece. It is not. It is the inevitable fallout of the global crisis experienced in 2008. But do not take my word for it. Here is what Angela Merkel had to say on the matter in February 2010, when the “Greek problem” started to rear its head, as reported by Bloomberg:
German Chancellor Angela Merkel criticized market speculation against the euro, saying that financial institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere. In a speech in Hamburg, she hit out at currency speculators, who she said are taking advantage of debt piled up by euro-area governments to combat the financial crisis. “The debt that had to be accumulated, when it was going badly, is now becoming the object of speculation by precisely those institutions that we saved a year-and-a-half ago. That’s very difficult to explain to people in a democracy who should trust us.”
Do you understand that? The debt was piled up to bail out banks. Those same banks then bet against nations being able to repay it, amplifying the crisis. This is not a purely Greek phenomenon. It is happening everywhere – read this article on the UK position. Greece was in a particularly vulnerable position because of the proximity of an incredibly expensive Olympics in 2004 which left a huge legacy of debt.
I really wish knowledgeable commentators would stop perpetuating the idea of another or second crisis. We are still experiencing the global crisis which started in 2008.
The second is the notion that the current crisis is a financial one. It is not. It is a political crisis and an ideological one. The demise of an economy the size of Greece (1.8% of Eurozone GDP, 0.47% of World GDP according to 2010 IMF figures) should hardly register as a blip on the global radar.
The primary reason it is causing such a panic is the interconnectedness of the banking system – the very same systemic relationship which caused the domino effect in 2008 and which we have failed to address or regulate. The secondary reason for the widespread nature of the problem is the Eurozone’s refusal to allow Greece to proceed with what most commentators have seen as an inevitable default for some months now.
Both these factors are down to political decisions, not sound fiscal policy. The panic over the proposed Greek referendum a few weeks ago, exposes much deeper tensions between Democracy and Economic Policy. The announcement of a referendum – the ultimate exercise of democracy – sends economic indicators into a nose-dive. As soon as it is scrapped, they recover. Tensions between the US executive and Congress over budget issues – an integral part of their democratic process – resulted in their debt rating being downgraded.
In Greece, the man who presided over our entry into the Euro – seen universally as a huge error at the root of current troubles – has been appointed to solve the problem. In Italy, an advisor of Goldman Sachs – seen by many as the crooked firm who cooked the books of Southern European economies at the root of current troubles – has been appointed to solve the problem. The blind leading the fucked.
So, we have ended up with two EU countries with appointed, rather than elected leaders. And nobody seems to find this disquieting. Yes, times are very difficult. Yes, they both succeed incompetent and disastrous governments. Yes, they come at a time when urgent action was required. But all three of those excuses have applied to every junta that has ever taken control of a nation by force. But, no matter. Markets like them.
And that is precisely the third issue: our obsession with markets and the theory that markets do not lie. Markets are the collective expression of individual greed. They are the overview of a no-holds-barred fight of individual interests, scrambling to make money. They position themselves, posture, exaggerate and lie all the time. They exist based on the economic theory that they are “self-correcting” and yet they have shown themselves repeatedly not only to be unable to correct their flaws but also to cause or exacerbate systemic errors.
We increasingly humanise them in the language that we use – “markets are jittery”; “markets have reacted with anger”; “markets seem to have confidence”. Meanwhile we dehumanise and objectify real people who are, right now, suffering untold misery.
Famines in Africa, created and perpetuated by financial speculation on food commodities, become mathematical equations. Pensioners in Greece having to live on 400 Euros a month, an increase of 40% in suicides and 60% in immigration and 20% in homelessness in a three month period, become figures to be fed into an economic model. Whether we should or should not treat patients on the NHS with a particular condition (for which treatment exists) becomes an accounting exercise of considering cost versus benefit.
If one were to assess world economies by purely market criteria, the most successful of the large players (by a long way) would be China – huge surplus, record growth, productivity and innovation. The USA and the EU, those self-appointed beacons of democracy, are currently begging China cap-in-hand for some of their spare cash. Or put a different way – the one surviving authoritarian, communist state is a model of capitalist success. Another topical example is Libya. At the very moment its people were getting shot in the street for rising up against its oppressive regime, it was the only country in the world with zero sovereign debt.
Markets are the ultimate victory of applied science on human consideration. They have become the new Marie Antoinette – an entity standing on a balcony, presiding over its people – who when confronted with news of war, suffering and death, invariably responds with “let them eat π”.
There appears to be an inverse relationship between democratic deficit and economic surplus; an unbearable tension between human suffering and economic health. To not devote the intellectual capital to exploring this paradox with urgency, is a dangerous form of elective blindness.
I would encourage you to read my extensive article Democracy vs Mythology: The Battle in Syntagma Square. While I do not tender that piece as scientifically probative, it is certainly a more informed view that those held by the many economist hacks paraded by news organisations, whose sole relationship to the situation seems to be that they once, in their youth, in a moment of weakness, had a greek salad.