It Will Have Gull-Winged Oars

I watched Debtocracy this afternoon, after meaning to do it since it came out. It’s very good and I recommend it to anyone who has any sort of interest in these things. Click play above.

I was thinking a bit today following on from the translation I posted yesterday and about the whole question of citizenship and how you need access to the right information, and time to deliberate over it, in order to operate as an active citizen, as opposed to an inert constituted object with a one-off subjective lever-pulling activity every couple of years.

What you get, instead, unless you have the time and the inclination to go off in search for something else, is the habitual reduction of broad political questions to narrow calculations, presented through the intercessions of economists and other supposed experts, who always disavow any sort of political dog in the fight, and who strive instead to convey a resolute and unassailable certitude in an iron logic that is intended to produce silence and abort questioning.

Below is a translated piece by Vicenç Navarro titled Alternative Policies for Greece. As he himself notes, it is not that the alternative he outlines is unlikely to be implemented because it violates laws of science, but because of the political forces arrayed against it. One of the problems I see these days is a sort of consensus forming on the left in Ireland that there has to be some sort of clear alternative economic programme outlined so as to convince people that the direction headed on account of the dominant discourse is neither immutable nor inevitable. And I’m fine with that, but a lot of what I’ve seen is a bit like someone setting out a vast detailed itinerary of all the places he’s going to visit whenever he gets a car, but with a glaring absence of detail around how in blazes he’s going to get a car. To be a bit more pointed: it’s all very well to say that you’re going to take industries into democratic public ownership –and I’m down with that, don’t get me wrong-, but unless you have some compelling examples you can show people and people can experience, close to home preferably, of democratic mechanisms that can be applied to public ownership (hint: the Dáil and trade union structures are not compelling examples) then you might as well be talking about fantasy cars.

Alternative Policies for Greece

One of the successes of neoliberal thought has been to convince the citizenry (with the help of mass media) that there is no alternative to the neoliberal policies that governments are implementing which include the deregulation of labour markets, facilitating the sacking of workers by business owners, cuts in wages, the reduction in public spending and public sector jobs and the reduction of social and labour rights. The cuts and measures implemented by the Greek government in response to the pressure of the “Troika” (comprising the European Commission, the European Central Bank and the International Monetary Fund) are presented as inevitable and necessary in order to come out of the crisis.

In theory, the objective of such cutbacks is to reduce the budget deficit and with this the public debt, thereby calming the financial markets. The latter, it seems, are very worried since they consider that in light of the poor economic situation (the Greek economy shrunk 4.5% last year) it is very unlikely that Greece will be able to pay its debt. Therefore the banks demand enormous interest rates as a condition for purchasing bonds from the Greek state, interest rates that can reach 12%. In reality, the Greek state spends 9% of its Gross Domestic Product paying off the interest on its public debt, an unbearable situation. The “troika” still holds  that through enormous austerity measures (such as cutting the number of public employees by 20%, on top of the 10% that had already been cut) and privatisation measures, the State will be able to pay its debt (which has reached 166% of Gross Domestic Product). It is totally impossible for Greece to pay its debt with such high interest rates. And it is more than likely that the “troika” knows this.

Does this mean that Greece is resigned to collapse and bankruptcy? Not necessarily, since however much the “troika” and conventional wisdom of mass media might deny it, there are alternatives. For these alternatives to be considered and developed depends solely and exclusively on the political context that exists in the country. Today the Greek situation (just as the Spanish situation) [and the Irish situation – HG] is characterised by an alliance between the powerful Greek classes (who pay very little tax) and the banking sector, whether abroad (and especially that of Germany and France) or in Greece, with the help and complicity of the Greek state.

The alternatives would include:

  1. A profound and progressive fiscal reform, through which the State would no longer end up having to get into debt, by collecting funds from the powerful classes that today barely pay taxes.
  2. Invest and spend this money in creating employment. The greatest problem, not only from a social and human standpoint, but also from an economic standpoint, is unemployment.
  3. Transform the public debt into Eurobonds guaranteed by the European Central Bank at an interest rate no greater than 3%. This requires a considerable change in the functions and obligations of the European Central Bank, moving closer towards what the US Central Bank (the Federal Reserve Board) does. It is likely that inflation at the Eurozone comes in at 2%, which means that the interest on Eurobonds would be 1%, with which Greece could pay its debt easily over a 20 year period (bringing it down to the limit of 60% of GDP), a reasonable time frame. The US paid the debt it acquired during the Second World War in 50 years.

If GDP were to grow by 3%, which could be achieved by investing in job creation, by raising public spending, Greece would no longer have a problem. Now, all this entails breaking down the class alliance, carrying out the necessary fiscal reform, and for the ECB to buy Greek public debt and transform it into Eurobonds. Can you see this happening? It isn’t likely. But not for economic reasons, but for political ones.

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July 2011

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