The Greek Debacle

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The Greek crisis has provoked a predictable mixture of indignation and self-satisfaction in Europe, alternatively lamenting the harshness of the settlement imposed on Athens or celebrating the last-minute retention of Greece within the European family, or both at once. Each is as futile as the other. A realistic analysis has no place for either.

That Germany is once again the hegemonic power in the continent is no news in 2015: it has been clear for at least twenty years. Nor is the reduction of France to its handmaid, in a relationship not unlike that of Britain to the United States, a political novelty: since de Gaulle, the reflexes of the French political class have reverted to those of the early forties, not only in accommodation, but admiration for the superior power of the day, first Washington and then Berlin.

Least of all is there any surprise in the outcome to date of monetary union. From the start, the economic benefits of European integration — taken for granted by bien-pensant opinion across the board — were very modest.

In 2008 the most careful estimate, from two economists favorable to integration, Barry Eichengreen and Andrea Boltho, concluded that it may have increased the GDP of the Common Market by 3–4 percent from the late fifties to the mid-seventies; that the impact of the European Monetary System was nugatory; that the Single European Act may have added another 1 percent; and that monetary union had scarcely any discernible effect on either rate of growth or level of output.

https://www.jacobinmag.com/2015/07/tspiras-syriza-euro-perry-anderson/

[geek tragedy]

1. Tsipras has been a complete disaster. Absolute abdication of leadership on multiple levels--

from calling his stunt referendum instead of accepting a deal and selling it to the public, to preemptively taking a Grexit off the table, thus taking a torch to his one source of leverage, and not even discussing the merits of a Grexit with the people of Greece.

Promised everything, delivered the opposite.

And of course the EU and Eurozone are severely compromised institutions. They're not doomed--if Greece isn't going to leave, no one is.

But, lots of reforms are going to be necessary. And someone is going to have to stand up to Germany.

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2. I am gloomy.

Everybody seems likely to keep right on doing the wrong things for only the best of motives.

[geek tragedy]

3. at least they're doing it with bank notes instead of artillery and bombers

The USA had its own growing pains, the EU tried the old Articles of Confederation model, turns out it's still a loser

Europe has split the sovereignty baby, with predictable results. Time to stitch him back together and award primary custody to the locals or to Brussels. But they gotta shit or get off the pot.

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4. So far. nt

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5. Greece and the birth of fiscal colonialism

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Unsustainable contradictions are now in play. Without a recognition of what was wrong with the formation of the euro and the overall direction of the EU, there will be no resolution to the conflict between debt and democracy. Political violence and mass unemployment are now possibilities in Europe. Fascism is the logical next step.

Market utopianism supposes a price-setting market in human beings without a society. Welfare statism, which is what left politics has become, has no place for society or capital. Both are bankrupt. Permanent Keynesianism and limitless debt spending are a nasty place for a political economy to be, in permanent bad faith and servitude. There is a double tragedy here. Since joining the EU, Greece has become an entirely monetised economy and so the value of its currency is of fundamental importance. In other words, it has become dependent on subsidies and imports. Outside the EU and the euro, it would have a standard of living closer to that of Bulgaria than of Belgium.

Syriza has pursued an entirely incoherent strategy of simultaneous resistance and surrender. Greece is caught in a vicious debt cycle that leads to a perpetual need for stimulus. The result is what we now have: fiscal colonialism without political reciprocity. The wiser strategy would have been to surrender a semblance of national democracy in favour of the German social market system. The German system is pro-worker; its foreign policy is not. This is what the UK Labour Party should be challenging.

After the Second World War, the British occupying power in North Rhine-Westphalia, under the supervision of Ernest Bevin, the Labour foreign minister, was a crucial force in brokering free and democratic trade unions, worker representation on boards and a vocational economy that defined the social market economy. It promoted labour value rather than debt in its political economy and a social democracy rather than an administrative state in its politics. Where is that British Labour Party now?

http://www.newstatesman.com/politics/2015/07/greece-and-birth-fiscal-colonialism