‘austerity’ or ‘Grexit’: is there really no better alternative for Greece?

Should the Greeks submit to further the “austerity measures” that have already destroyed their economy and social infrastructure as Angela Merkel and others are demanding, or should they drop out of the Euro and begin tackle their debt crisis by returning to a hugely devalued Drachma? These are the only available choices, as we are all, Greeks included, constantly reminded.

Christine Lagarde, the Managing Director of the IMF, is one of those calling for continued “austerity”, and this is, of course, perfectly in-keeping with her position. Ruining countries through debt and “austerity” being the legacy of so much IMF and World Bank intervention. Lagarde is also keen to protect the Euro, and, as she made very plain in a recent interview to the Guardian [Fri 25th May], couldn’t care less what this means to the Greeks or the Spanish or anyone else in Europe:

So when she studies the Greek balance sheet and demands measures she knows may mean women won’t have access to a midwife when they give birth, and patients won’t get life-saving drugs, and the elderly will die alone for lack of care – does she block all of that out and just look at the sums?

“No, I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time. Because I think they need even more help than the people in Athens.”1

We are given to believe that the IMF operates in order to help ailing economies and so judging her remarks on that basis, this is akin to the doctor telling a patient that they’re not interested in treating a broken leg whilst some of their other patents have cancer. Worse than that – because Lagarde and the IMF (as one arm of ‘The Troika’) actually caused the misery that the Greek people are now suffering by insisting upon such a ruinous austerity programme. Returning to the analogy then, and we see that in this instance the patient broke their leg having been run over by the doctor’s own car.

Lagarde seems unaware of her own organisation’s part in the Greek’s downfall, but then it should be noted that she is not an economist. She also has “the little kids” in Niger on her mind “all the time” apparently! Evidently “the little kids” in Athens don’t count. Now it’s hard to imagine Lagarde thought anyone would swallow such cant, which perhaps explains what she immediately went on to say in the same interview:

“Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

She wouldn’t say this if she was talking about Niger, of course, whether it was true or false. Anyone dismissing the plight of a African nation on the basis that their society is rife with corruption (which unfortunately is the situation facing most of the people on this planet) would be roundly condemned as a racist. In contrast, it is fine to speak ill of the Mediterraneans.

But this repeated accusation is also such errant nonsense that it’s hard even to begin to correct it. Not that there isn’t tax avoidance in Greece – of course there is – there is tax avoidance in all countries. And in all countries this avoidance is something that the wealthy do far better than the poorer classes. In the real world, accountants are mostly employed for the purpose. Tax avoidance is hardly even frowned upon. Indeed the world’s giant corporations are so good at it that they only pay small fractions of the contributions due of them.

Tax avoidance is absolutely rampant in our globalised off-shore world, and the vast scale of tax avoidance by corporations and the super-rich is a genuinely serious problem that should be urgently redressed. Not that it’s a problem that can be easily treated, just so long as most of the world’s leading politicians use the same legal loopholes and tax haven immunity themselves. But Lagarde doesn’t mean tax avoidance in any case, because if she did, she would be directly blaming previous Greek governments for their major part in such everyday corruption, rather than obliquely pointing the finger towards the ordinary Greek in the street. Her objection is not to tax avoidance but only to tax evasion. All those transparently illegal but comparatively minor tax infringements that are routinely committed by the business small-fry in every society – and just how many cash-in-hand payments slip the British government treasury’s coffers to fall instead into the pockets of our own independent traders?

Lagarde insinuates that the Greeks’ unpayable debts are entirely down to a lack of tax receipts. If this were true then it must follow that the fate of the Euro, and along with it the whole European project, is all now hanging in the balance because of the failures of the Greek tax collection system. But this is patent nonsense too – endlessly recycled nonsense at that – which, and if it only held a grain of truth, ought to make every one of us call into question our entire economic system simply on the grounds of its unsustainable frailty.

However, this financial crisis did not start with Greek taxpayers and will not be solved simply by collecting more Greek tax revenues now, as Lagarde’s comments also imply. This whole financial crisis is a banking crisis. One that was caused by systemic failures and criminal trading. It continues because those failures have never been rectified and because no prosecutions have yet been brought. Austerity cannot cure this disease. It will bring nothing but pain. So as our own lives get tougher – along with the lives of those in Germany, France and elsewhere – we should not be blaming the Greeks for their “contagion”, but people like Christine Lagarde, Angela Merkel and the other austerity-mongers for helping to turn a crisis into a catastrophe by such wrong-headed economic thinking.

So what of the second option – the one that already has the stupid text-style name of Grexit? Should Greece abandon the Euro altogether? Well, firstly, the Greeks cannot be forced to drop out of the Eurozone – or at least there is no recognised mechanism for expelling any member nation. Secondly, it should be noted that the Greek people don’t want to leave the Eurozone. Like most of the peoples of Europe, these days they are broadly enthusiastic about the European project. Added to this, they also clearly recognise the serious risks of trying to suddenly go it alone in such perilous times. Once isolated, the Drachma would be mercilessly attacked by the same predatory banks and hedge funds that are currently threatening to bring down the Euro. The Drachma wouldn’t stand the ghost of a chance.

Which brings us to an impasse. Accept “austerity” or get out! Jump off a cliff or suffer slow death by a thousand cuts. Is there really no genuine alternative for the Greeks?

Well, the answer to that question actually depends upon what you value. If you think that all debts are sacrosanct, then it necessarily follows that the Greeks must go on paying the banks to their bitter end. That the debt is unpayable doesn’t matter. That the debt is the consequence of so much ineptitude and malfeasance within the banking system doesn’t matter either. The Greeks must cough up because otherwise the chaos will worsen (or so we are again constantly given to believe). But if you value human life above money, and recognise that debts that cannot be repaid will never be repaid, then you can begin to think more constructively. In fact, the alternative becomes immediately and blindingly apparent. Since a debt cancellation will inevitably come sooner or later, the only real question is how much longer must the Greeks be punished in the meantime.

A way-out of all this mess is entirely possible. It doesn’t involve “austerity” and does not necessarily require a Greek exit from the Eurozone. What is needed is simply an end to the bottomless banker bailouts and then new money being made available for reconstruction projects and other productive enterprise within Greece, Spain and elsewhere. Such a ‘New Deal’ injection is unlikely to be offered by the IMF, and neither will it be supported by the likes of Angela Merkel. But it can be fought for by the Greek people themselves, and in this battle to stop the wanton destruction of their nation, as fellow Europeans we should stand with them, recognising that the same aggressive financial interests that have already eviscerated Greece, will be pillaging our own lands soon enough.

*

One potential hope for Greece is that in the coming second election, Syriza (a coalition of leftist parties not always in agreement with each other) may just pip the two more traditional main left (PASOK) and right (New Democracy) parties and win the election. Syriza have been attacked from both political flanks and by almost all of the mainstream media, and yet remain strong in Greek opinion polls. The reason presumably being their commitment to staying in the Eurozone whilst seeking an end the savage “austerity” programme through a total renegotiation of the loan agreed under Pasok, New Democracy and Loas (the Greek version of the BNP) prior to the recent elections and under guidance from a technocrat, Lucas Papademos.

Their leader Alexis Tsipras, who has certainly been bold in his criticisms of the German government for its self-righteous and unhelpful stance, is also trying to drum up vital support from other progressive leftist European parties. And Syriza together with the German party Die Linke have now to put together a 6-point programme  offering “alternatives to austerity and bank rescue”. A set of proposals that other movements like los indignados and Occupy might also consider endorsing.

*

Additional:

In an article published in the Guardian on May 29th, entitled “Greece can do without the ‘sympathy’ the IMF has shown Niger”, Nick Dearden explains how in the 1980s, the IMF and World Bank’s economic reforms and “austerity programme” ruined Nigeran agriculture and helped unleash a famine:

These policies fed into the 2005 famine, a crisis caused not primarily by natural catastrophe – food was available but unaffordable – but by an appalling set of policy decisions. Even during a crisis there was no let-up in economic dogma. The IMF told the Niger government not to distribute free food to those most in need. Today’s so-called “tough love” to Greece is nothing new.

And yet these genocidal measures, which were part of “the IMF’s now infamous Structural Adjustment Programme”, ultimately failed even to reduce Niger’s debt levels:

The desperate impact of IMF policies on Niger has not even achieved the purported chief objective of the IMF – to control debt. In a Jubilee report released last week, we found that 10 years after debt cancellation, Niger’s debt payments as a proportion of government revenue are projected to be the same level as they were before cancellation. IMF attempts to “restructure” Niger have failed even in these terms.

Nick Dearden concludes:

To pretend that the IMF operated in a somehow kinder way towards Niger than it is doing in Greece stands up to no scrutiny whatever. The IMF’s policies cannot assist countries in crisis. Greece can learn from this – and has little to gain from Lagarde’s “sympathy”.

Click here to read the full article.

1 From an article entitled “Christine Lagarde: can the head of the IMF save the euro?” and captioned with the banner “Her charm is legendary, but Christine Lagarde, head of the IMF, is far from a pushover. She talks about sexism, swimming and saving the European economy”, written by Decca Aitkenhead, published in the Guardian on May 25, 2012. http://www.guardian.co.uk/world/2012/may/25/christine-lagarde-imf-euro

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3 Comments

Filed under analysis & opinion, austerity measures, debt cancellation, Greece, Niger

3 responses to “‘austerity’ or ‘Grexit’: is there really no better alternative for Greece?

  1. Marta

    Talking about “bottomless banker bailouts”, have you heard of the Bankia scandal in Spain? The government here are cutting absolutely everything in the way of public services, but they’re more than ready to pump astronomical amounts (the latest figure I’ve heard is 23 billion euros) into a private bank that has behaved in the most corrupt and irresponsible way imaginable. http://prod-euronews.euronews.net/2012/05/23/bankia-s-black-hole/

    Like

  2. Alex Jones

    You can only pursue “austerity” so far before it destroys the economic ability, the nation and its people. Greece would be better off to default.

    Like

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