Friday, 20 February 2015

Who Are The Real Revolutionaries?

Buried beneath the mountain of verbiage and breathless news reports about the Greek debt negotiations lies a little-noticed role reversal. While the new Greek government Syriza adopts the dramatic plumage, media savvy and rhetoric of ‘revolutionaries’ they are, in fact, staunchly defending the Greek status quo – the very status quo that brought Greece to its knees. The usually media-shy, grey and drab Eurocrats in Brussels would shiver at the comparison, but they have become the real revolutionaries who want to change Greece and bring it kicking and screaming into the 21st century.

            The Greek state, with its bountiful patronage and rigid control, has dominated the Greek economy and protected politically loyal interests for generations. Every party in power has used the state coffers to reward voters with jobs in government or in state-owned enterprises regardless of aptitude or knowledge of the job at hand. The combination of hapless, inefficient state economic enterprises and bloated bureaucracy whose main goal was to strangle at birth any innovation that might reduce its numbers has slowly but surely deprived the Greek economy of the vitality and oxygen needed for real growth. Who in his right mind was going to spend the energy required to fight through the swamp of bureaucracy and closed professions to start something new that just might offer a lower priced, better service or product to all consumers? Far better to stuff your idiot cousin into well-protected state job.

Is he the revolutionary ...
            This is what Syriza wants to defend at all costs. It is, after all, the source of the party’s political power. And this condition is exactly what the bureaucrats in Brussels want to change. Syriza loves to play on the image of the hard-hearted Germans insisting that impoverished Greeks tighten their already tightened belts a few more notches. Greeks respond ‘What belt? I sold that long ago.’ 

Even brilliant economists like Paul Krugman weigh in against the follies of relying on austerity to bring a country out of depression. It is not every day that I take issue with a Nobel Prize-winning economist, but Krugman may be only half right in this case. I agree completely that austerity by itself accomplishes nothing but misery. How can any country, or company, for that matter prosper on a diet of nothing more than the economic equivalent of kale and tofu?

It is the flip side of the austerity coin that has been obscured in all the concern for the long-suffering Greek people. So far, Syriza and its vocal supporters have said very little about the vital structural reforms required to get Greece off the welfare rolls. What about opening up the economy to newcomers and, God forbid, foreigners? What about amending the bureaucracy to encourage instead of discouraging enterprise? We know that Syriza is firmly against selling or even leasing state assets to raise funds that could be used in much-needed social welfare programs. But why, precisely? Do the party leaders really believe that the state can run things like the railroad, ports or power corporations more efficiently than private owners? The real tragedy is that without these long-overdue structural reforms the pain of reduced spending over the last few years will be wasted. Greece will remain mired in a welfare trap, unable to claw itself out of debt and unable to grow.

Or is he the real revolutionary?
The revolutionaries in Brussels want to change the story line. They are well aware of the desperate state of many Greeks, but they would like to help Greece grow out of the welfare trap rather than remain on the EU’s life-support system. An obvious deal is on the table. Greece’s debt conditions are eased in return for real movement on the economic reforms. Will Syriza pick up this deal? Or will it continue to play the role of the defiant revolutionary defending the barricades with cries of ‘national sovereignty over all else’? One wonders if Greece’s rulers have ever explained that the price of joining the EU and then the Euro was a loss of total sovereignty. The club has rules that one is supposed to obey. One didn’t hear much about a ‘loss of sovereignty’ when EU funds were flowing in to improve the country’s antiquated physical infrastructure. But now when the club secretary reminds members that the club is joint enterprise with certain obligations we hear cries of anguish from many Greek politicians.

If there is no agreement in Brussels in the next couple of days Syriza could possibly elect to hold a referendum on the Euro. It could ask the Greek people to decide if they want to stay in the Euro even with the ‘odious’ conditions imposed by heartless Germans -  or do they want to return to the ‘proud and sovereign’ drachma regardless of the economic pain that might cause. Such a step could give Syriza political cover regardless of the outcome. In any case, we won’t have long to wait for the end of this melodrama.


Anonymous said...

Very fair and well put!

Anonymous said...

Excellent , touched all the key points.

What is the chance of achieving these reforms??

David Edgerly said...

The chances don't look all that good without some major backtracking by Syriza.


Anonymous said...

Excellent as always!