Dear readers, if you are only interested in global health, this post is probably not for you. But if you have been following the Greek crisis more or less closely, and you feel that the logic behind it has been escaping you, read on. Be aware though that this post will leave you with more questions than answers.
Creditors have been imposing austerity measures on Greece in exchange for loan extensions for more than 5 years. While it can be argued that at the onset of the debt crisis in Europe some economists did genuinely believe that austerity was the answer, over the past two years the opposing camp, the ones who never thought austerity was the way to go in the first place, have won the intellectual debate. Given the flaws in some of the key papers used to defend the pro-austerity position, and the evidence from the figures on the Greek economy, there is no doubt today that austerity doesn’t work in the context of Greece.
Recent quotes from the following prominent economists speak for themselves :
* Joseph Stiglitz, Nobel Prize in Economics, thinks the most reasonable solution is “a write-off of Greece’s debt” (Time, June 29, 2015).
* Paul Krugman, another Nobel Prize : “Given reports from the negotiations in Brussels, something must be said — namely, what do the creditors, and in particular the IMF, think they’re doing?” (New York Times blog, June 25, 2015).
* Thomas Piketty, author of “Capital in the Twenty-First Century”: “We have single-handedly turned an American private finance crisis into a European public debt one.”(in French, Libération, June 7, 2015)
* Jeffrey Sachs, author of “To End Poverty”, “Europe’s demands – ostensibly aimed at ensuring that Greece can service its foreign debt – are petulant, naive, and fundamentally self-destructive.” (Project Syndicate, June 15, 2015)
* (and one from a few years ago) Olivier Blanchard, IMF’s Chief Economist, acknowledged in 2013 “that the fund blew its forecasts for Greece and other European economies because it did not fully understand how government austerity efforts would undermine economic growth.” (The Washington Post, January 3, 2013).
Now let’s pretend for a moment that it’s not democratically elected European leaders who are in charge at the “negotiation” table. To simplify things a bit, let’s say it’s the “technocrats” of the European Commission, the ECB and the IMF calling the shots. Technocrats don’t care much about European citizens’ opinion, because they can’t lose their job if people are angry. Yet, technocrats do believe in economic science.
From the above quotes it is clear that 2 Nobel Prizes, 1 chief economist at IMF, and 2 world-class professors and authors all agree nowadays that what has been imposed on Greece for over 5 years was plain wrong. Some of them have been saying (or shouting in at least one case) that for nearly 3 years, actually.
Now, rational technocrats would listen to these guys. After all, you’d expect technocrats, of all people, to be rational. We doubt that many of the people who drafted proposals made to Greece have 1/10th of the legitimacy of Stiglitz and Krugman when it comes to macro-economics. So if it were up to them they would probably listen.
Yet that’s not what is happening. What has been happening, especially in the past few years (when the intellectual debate was more or less over, and the huge damage inflicted on the Greek society clear for everybody with eyes), goes against technocratic reasoning. Moreover, the whole process has been systematically made as opaque as possible to outsiders (i.e. anybody outside the “Troïka” (now called “the institutions”), it seems). We witness a seemingly endless sequence of so-called “last chance” meetings in Brussels. Yet, the arguments we hear and read in the news feel like those of 4-year-old kids trying to explain who started the fight to their teacher. It is almost never about the content of the proposals, or only in a way that tries to equate a country’s budget with that of a household. The issue is never put into perspective. Nobody seems to remember that the global crisis started with the finance industry in 2007/2008, and that it was not a public debt problem in the first place. “The institutions” obviously don’t want anybody to understand what is happening, and the media have their own laws, focusing on the polarization, shocks & potential meltdowns. Nobel Prizes seem puzzled by the utter stupidity of austerity measures, as we noticed, but they are mainly used to spice up the op-ed pages of quality newspapers; it’s not like the ones in charge seem to be paying much attention. (Granted, some Nobel prizes do say not-so-clever things publicly sometimes, but in principle they can be trusted on their core expertise.)
What is happening also goes against all democratic reasoning : in addition to the lack of transparency and the almost childish framing of the whole battle mentioned above, no population in Europe would be happy to witness this kind of intrusion in their own country, and the resulting suffering. If it were clearly explained to them, no citizens in the EU would back what their leaders are trying to do with Greece, purposefully or not. Also, the risks for the EU of an exit of Greece are too high in terms of credibility (both inside and outside the “Union”) for rational democratic leaders to take the chance. Stiglitz and many others go even further by arguing that the Eurozone “was never a very democratic project” in the first place.
So it doesn’t make sense, neither from a democratic nor a technocratic point of view. And it can’t possibly be collective lunacy.
What is it then ? Who’s holding the steering wheel ? Answering this question will not help the Greek people nor will it give us the answer to what might happen if Greece remains in the EU or if it quits. But we’d love to know. It might shed a whole new (and possibly frightening) light on European “high-level” politics. If democratic leaders and technocrats were really in charge, they could have changed their minds when strong evidence against austerity started being published. It would have been ‘rational’ for them to do so. Yet no such change occurred. Which suggests that “the institutions” have somehow been manipulated all along, possibly by people who made them “an offer they couldn’t refuse”. So they’ve stuck to the plan, despite the risk that this might eventually lead to the end of the Eurozone which European leaders of the generation of Merkel and Hollande cherish so much. This may sound far-fetched, but the Institutions’ stubbornness is simply staggering.
Anyhow, no matter who is really pulling the strings, Tsipras’ government challenges the current balance of powers. By calling on Greek citizens to decide whether they should accept the latest austerity measures imposed by creditors (or not), Tsipras actually poses the right question: do the Greek people want to regain their sovereignty by backing up a government which legitimately represents them? Or do they accept to hand it over completely to the group of non-democratic institutions and individuals who are to a large extent responsible for their current suffering ? Next Sunday’s referendum will be a symbolic battle for democracy. It might create a great opportunity not only for the Greeks, but for all European citizens to recover the democratic power they have lost without noticing.