Bill Mitchell, “Don’t mention the war! er the Troika …,” Billyblog, February 26, 2015Bill Mitchell’s scathing assessment of recent events is rather difficult to disagree with, despite the brave face put on the agreement by many left-wing people. Yes, Greece may have “bought time” but, as Bill Mitchell says, if the Germans are unwilling to allow any substantive changes in economic policy in Greece now, why would they concede anything important four months from now?
I cannot resist adding my additional thoughts on this. James Galbraith’s essay defends Syriza here.
“There is no money in Greece; the government is bankrupt. Large-scale Keynesian policies were never on the table as they would necessarily imply exit – an expansionary policy in a new currency, with all the usual dangers.”If that was so, then shouldn’t Syriza have been honest with the Greek public? Should they not have said: “there is no way to deliver on substantive promises to end austerity in Greece unless the Greek public is willing to accept the short-term pain of withdrawing from the Eurozone.”
Galbraith also tells us that now there is a new “spirit and dignity in Athens.” Well, that sounds nice, but I suspect it will not last very long without real action. Critics see the obvious here: the current agreement appears to mean nothing but more “austerity with a human face” for the Greeks. What substantive measures can Greece take to end the misery? What has been agreed seems to mean a weak or feeble recovery at best and at worst means more destruction of Greek businesses and, even worse, more grotesque destruction of the fabric of society. More women robbed of human dignity and forced to prostitute themselves to survive or support their families.
If Syriza basically allows all this to continue, how long before voters desert the left in Greece and move to the socially conservative, but economically interventionist right, perhaps even the ugly right?
Frankly, it may be that this bizarre, utopian commitment to the Eurozone amongst the mainstream European left will be the undoing of Europe. When the extremely ugly, vicious right or far right start winning in the polls, the left will have only itself to blame for the bloody mess.
Mitchell is totally wrong.ReplyDelete
I get the impression that certain people on the left would not be happy unless Merkel and Schaueble crawled on their bellies begging forgiveness for imposing austerity. Absurd.
From Galbraith's essay:Delete
"There is no money in Greece; the government is bankrupt. Large-scale Keynesian policies were never on the table as they would necessarily imply exit – an expansionary policy in a new currency, with all the usual dangers"
OK. Then shouldn't Syriza have been honest with the Greek public? and said: "there is no way to deliver on substantive promises to end austerity in Greece unless the Greek public is willing to accept the short term pain of withdrawing from the Eurozone."
Galbraith tells us that now there is a new "spirit and dignity in Athens" -- but critics see the obvious: the current agreement appears to mean nothing more than more austerity "with a human face". More destruction of Greek businesses and, even worse, more grotesque destruction of the fabric of society. More
women robbed of human dignity and forced to prostitute themselves to survive or support their families.
If Syriza basically allows all this to continue, how long before voters desert the left and move to the socially conservative, but economically interventionist right, perhaps even the ugly right?
Frankly, it may be that this bizarre, utopian left-wing commitment to the Eurozone will be the undoing of Europe. When the extremely ugly, vicious right or far right start winning in the polls, the left will have only itself to blame for the mess.
Not at all clear that austerity is continuing. Next negotiations are to run massive fiscal stimulus through the European Investment Bank. I wish people would read the blueprint before leaping to conclusions here...Delete
The people involved here know exactly what works; they also know what the stakes are with regard to the far-right. And my impression is that they will cause chaos before they submit to austerity proper.
"Next negotiations are to run massive fiscal stimulus through the European Investment Bank."Delete
Bill Mitchell already deals with this issue, though. He points out that it is highly unlikely to ever happen, and also even if it did, it would be inadequate anyway, because you need to increase consumption and create direct work programs for the unemployed.
Oh direct work programs like the Jobs Guarantee being put in place in Greece that is designed by an MMT economist from the Levy Institute?Delete
As to it never happening... if it doesn't then Syriza will probably start to move to exit the euro. If they can't return the country to growth inside the single currency they will leave the single currency. My bet is that they can get the stimulus program up and running. There is appetite for it in Europe.
The opposition to trying this just looks to me like opposition for the sake of opposition.
I would agree that the European centre-left is too fixated upon European institutions like the euro and EU. This is a form of blindness.ReplyDelete
But even if Syriza was going to leave, there was no realistic way to do it within a few days of taking power. They have to take proper control of the organs of state, and they had to bargain in good faith.
If the negotiations fail, they will have had time to develop contingency plans.
"What substantive measures can Greece take to end the misery?" What do you think of this:ReplyDelete
In his speech at the extraordinary cabinet meeting that was televised live, Tsipras also ruled out a third bailout that allegedly Germany prepares for summer.
Five legislation drafts:
1) Humanitarian crisis: free electricity and food for 300,000 poor households, free housing for 30,000 people. Food stamps through a pre-paid smart card that will be charged each week.
Relief measures for 3.7 million natural person, very small, small and medium enterprises that owe up to €5,000 “wihotu hope to ever pay back their debts again.”
2) 100-installment-scheme: the scheme will allow debtors of taxes and social security funds to repay their debts in upto 100 installments. Those will debts below €50,000 will not be arrested and put in prison.
3) Freeze foreclosure for primary residence: the measure will apply to home owners owing a home worth maximum up to €300,000 ‘objective value’.
4) Reopening of former state broadcaster ERT, rehire laid-off personnel and proceed to all necessary legal and administrative requirements. “There will be no fiscal burden,” Tsipras reassured. ERT was suddenly shut down in 2013, it was replaced by a new state broadcaster NERIT.
5) Skouries Gold Mining: to revoke the license of architecture and electromechanical studies of the Gold Mining project in Skouries, Chalkidiki, Northern Greece. “After several serious allegations, the withdraw of the license has been deemed necessary in order to reexamine whether the several provisions, have been kept. Our priorities are to defend the environment and the public interest,” Tsipras said.
At the same time, Alexis Tsipras announced also that authorities have unified data containing in the so-called “Lagarde and Liechtenstein lists” as well as lists with properties abroad in order to facilitate authorities to proceed to targeted audit and combat big scale tax evasion.
Do not get me wrong: I think Syriza have very good, well intentioned people.Delete
Now (1) to (4) sound great. And how is he going to pay for them when he needs to run a primary fiscal surplus?
To me all five sounds great, but maybe the situation has gotten out of hand anyway. See Evans-Pritchard in the UK Telegraph: "Deposit losses reached €12.8bn in January. This is showing up in the "Target2" payment data of the ECB system. The Greek central bank's liabilities to the rest of the EMU network rocketed from €49bn in December to €76bn in January as capital flight accelerated. They may have hit €100bn by now.ReplyDelete
This is double-edged. Creditors have even more to lose if Greece spins out of control. A full repudiation of debt to the EMU institutions and states would cost over €300bn. It would be the biggest default of all time, by an order of magnitude."