Since the onset of economic calamity in the West beginning around 2007 ‘official’ response has been framed as modest successes with a few policy errors while the reality is of remote elites and their agents enacting punitive policies under the guise of material economic constraints. In this context the election of Alexis Tsipras and Syriza in Greece appears a radical left turn while the actual economic proposals under discussion appear to be the middle-of-the-road textbook economics that preceded the neo-liberal coup of the 1970s in the U.S. And while Mr. Tsipras has greater understanding of this economics and strategies of economic resolution than do the European and American leadership classes, the levers of resolution remain firmly with this (mis)leadership.
Put differently, the economic suffering of so many is largely gratuitous, economic predation carried out under the pretense of material constraints. As with Argentina in the early 2000s, Greece has an ‘internal’ kleptocracy with ‘external’ alliance to international bankers through the economic lever of external debt. While the U.S. leadership could have conjured the funds ‘out of thin air’ to put the unemployed in the U.S. to work and chose not to, Greece’s membership in the E.U. precludes this potential solution. As was largely the case with the mortgage relief and Federal Reserve asset buying programs in the U.S., subsequent European loans to Greece went to rebuild European bank coffers on the backs of the Greek people.
Graph (1) above: as of December, 2014 over six million potential workers in the U.S., people who want to work but have given up looking because of the weak job market, are estimated to exist. The Economic Policy Institute compared baseline estimates of job market growth to actual growth and the missing six million workers are the difference. Because this method already took into account expected retirees and others likely to exit the job market the state of the economy is mainly left to explain the missing workers. As FDR showed with the New Deal work programs in the 1930s, the U.S. government can create jobs for these people if the U.S. (mis)leadership cared to. Much as with the predominant German view of Greece, the view among American elites is that the unemployed simply lack the motivation to find work. Units are missing workers. Source: EPI.
The rise of Syriza in Greece is a welcomed development if Mr. Tsipras and his colleagues understand what they are up against and act accordingly. Whether the commitment to stay with the E.U. project is sincere or tactical, the currency union precludes much constructive action other than internal reorganization of the Greek economy. Internal reorganization, reigning in the kleptocracy and making it pay its way and using the gains in public resources to fund social spending, runs head on into the policies of extraction being inflicted on Greece by the Troika. What is framed by Western liberals as bad economics, ‘austerity,’ can otherwise be seen through the experience of the last half-century of austerity policies enacted by the I.M.F. (International Monetary Fund) to assure that banks are paid no matter the social catastrophe that results.
This longer history gives context to the policies inflicted on Greece. The American ‘model’ in South and Central America was / is to install ‘pro-business’ despots, internal kleptocrats, supported by the C.I.A., to loot ‘their’ countries while keeping order for U.S. business interests. Nominally leftist neo-liberal tool Carlos Menem led Argentina in the run-up to the Argentine crisis of the early 2000s. At the IMF’s behest, Mr. Menem implemented austerity policies that led to the collapse of the Argentine economy and ultimately to the collapse of the (subsequent) Argentinian government. It wasn’t until the Argentinian people rebelled and refused I.M.F. imposed austerity that economic resolution was possible.
Likewise, the I.M.F. led much of East Asia and Russia to economic ruin in the 1990s with nominal ‘development’ policies premised in neo-liberal dogma backed by austerity policies when things inevitably went wrong. While there were no doubt true believers amongst the bankers promoting the neo-liberal program then, much as there are in the E.C.B. today, the actual policies being implemented were banker ‘workouts,’ programs of debt repayment inflicted on delinquent ‘debtors’ without regard to their public policy implications. This is to say that the economic theories claimed to support I.M.F. policies tended to be ‘theoretical,’ requiring that several centuries of imperial history be overlooked, rather than based in reasoned examination of ‘the facts.’
In Argentina in the early 2000s there was little confusion as to whose interests the I.M.F. served. The ‘public’ debt the I.M.F. was working to get repaid was formerly private debts that were socialized, bank and corporate liabilities converted to obligations of the Argentine people, not unlike the trillions in bank ‘assets’ dumped by the (George W) Bush and Obama administrations into Federal government agencies to save Wall Street in 2008. This conflation of private with public debt is a primary component of neo-liberal extraction. And the ‘privatization’ of Greek ‘assets’ now being repudiated by Syriza was used to loot Argentina by this international kleptocracy as a core I.M.F. policy. This is to suggest that the Troika’s austerity programs for Greece have little to do with theoretical economics and everything to do with Western imperial ambitions. The policies may have ‘logic’ as economic theory, but the logic emerged from several centuries of imperial practice.
Another way to see the issues is to ask where the U.S. Central Bank, the Federal Reserve, found the $4 trillion to buy financial assets through its QE (Quantitative Easing) programs? The money was conjured ‘out of thin air,’ by making digital entries against the assets being purchased. The E.C.B. similarly has fiat currency; it can conjure money at will. If an asset is needed to be booked to balance the Central Bank’s books, a nominal asset like the trillion dollar coin being proposed a while back in the U.S. would work just fine. The point is that the E.C.B. could technically, if not politically, resolve Greece’s public debt with a few keystroke entries. The debt is being used as a political and economic lever by the Troika, much as was the case in Argentina in the early 2000s and is currently the case in the U.S. The budget ‘deficit’ being used to sell austerity in the U.S. is a contrived fiction. It isn’t that the accounting isn’t ‘real,’ it is that it misrepresents for political purposes how government spending is really financed.
Graph (2) above: much as imperial facts are framed by economists and political theorists as theoretical disputes, as ‘good’ versus ‘bad’ policy choices, it is put forward as ‘coincidence’ that fiscal policies that would benefit the poor and middle classes are ‘impossible’ because of budget constraints but finding $4.5 trillion for the Federal Reserve to buy assets to benefit the very rich is possible. In recent decades capital gains from rising financial asset prices courtesy of the Fed have gone almost exclusively to the very rich. The Troika now pits German taxpayers against ‘profligate’ Greeks when the battle lines are between bankers served by the E.C.B. and the people of Greece. Source: Emmanuel Saez.
The point in uniting the victims of an engineered Great Depression in Greece with the plight of Argentinians in the early 2000s to that of the growing poor underclass in the U.S. is that the problems are social— class warfare, not a function of material limitations. Each of these circumstances represents a struggle for social resources; the differences are over economic distribution, not ‘natural’ limitations. E.C.B. bankers might really believe that ‘expansionary austerity’ policies would allow the Greeks to pay un-repayable debts. But by implementing policies that have long history as imperial plunder, they have that history to answer for. The serial capitulation by the so-called European left to these neo-imperialist policies only makes sense if Party leaders see themselves on the ‘inside’ of the imperial divide. Mr. Tsipras and Syriza can either forego such illusions or they will take the Greek people down with them.
The thinly veiled racist drivel coming from the European North claiming that Greece’s problem are the product of a ‘national character’ finds its twin in American elite views of the economic problems besetting the growing poor underclass in the U.S. Mitt Romney’s ‘makers versus takers’ frame is the received wisdom in banker and corporate executive ghettoes across the U.S. An effort is being pushed to audit Greek debt to understand how, and for what purposes, it was undertaken. As social services in Greece were being cut arms from German and French arms manufacturers continued to be purchased on the Greek people’s dime. When an audit of Argentina’s debt was conducted some 70% of it was found to be fraudulent, private debt undertaken by private interests for their own benefit that was turned into public debt to rob the Argentinian people.
The economic policies forced on Greece are being imposed by degree across the West. School systems in major U.S. cities like Chicago, Philadelphia and Detroit are being systematically looted by neo-liberal ideologues and self-serving ‘managers’ for their own benefit. The idea of economic ‘efficiency’ being pushed is operational efficiency— efficiency in terms of providing the least service at the highest level of revenues. Public and private pensions are being cut under claims of material scarcity when the taxes and pay that were intended to fund them have been cut to benefit the wealthy. And the Obama administration left millions of families who were defrauded by predatory mortgage loans with debts greater than the value of their houses while the banks that made the loans were restored on the public dime.
In Greece Mr. Tsipras is so far saying the right things (top link). And what he is saying is only ‘radical’ within the frame of the hard-right turn of neo-liberalism of the last forty years. The economic policies forced on Greece are more draconian than in the U.S. and European core, but be degree, not by type. Wall Street, which includes major German and French banks, has used manufactured crises to affect ‘soft’ coups around the globe for decades. Debt is used as a weapon. The Greek people have a very difficult battle to fight. But the neo-liberal coup is international. Americans and Northern Europeans who think they are on the ‘winning’ side just haven’t had their jobs and life savings stolen yet. To one degree or another, we are all Greeks now.
Rob Urie is an artist and political economist. His book Zen Economics is written and awaiting publication.