If you rely – as we usually must – on the mass media to get a picture of what’s going on in the world you probably think the economic crisis in Greece came about because the irresponsible Greeks are insisting on retiring at 50, are unwilling to give up the “bonuses” to which they have become accustomed, and are insisting that their European neighbors foot the bill. However, most of what we read or hear is either distorted, out of proportion, or simply isn’t true. The economic crisis in the European Union wasn’t caused by Greek working people and the threats they face these days are far greater than are being portrayed.
The Greek worker living high on the hog, getting paid for doing little and retiring into the lap of luxury is as real as the proverbial “welfare queen” driving her Cadillac downtown to pick up her check. Yeah, there are moochers and con artists in every society but that’s not the real issue here. The working people of Greece confront the same problems most of the rest of us do. The world of capitalism has become dysfunctional and those still profiting from it have come up with a way to deal with it, by putting the cost right on our shoulders. And, as with the unemployed single mother, the scapegoating is tinged with racial/ethnic stereotyping. The same goes for the Italians, Spanish and Portuguese – the southerners lining up for dole from the frugal, hardworking people in the North.
The working people of Greece did not create the mess their economy is in any more than their counterparts in the rest of Europe are responsible for the now continent-wide economic crisis.
“Want to know exactly why public anger in Greece is running at such explosive levels?” asked Tony Bonsignore last week in the British financial investment advice service Citywire . “Then take a look at the austerity measures currently being debated by the Greek parliament.”
“The BBC reports that as part of the IMF/ EU bailout Greek leaders are proposing the following measures:
- Public sector pay to be frozen till 2014;
- Public sector salary bonuses – equivalent to two months extra pay – to be scrapped or capped;
- Public sector allowances to be cut by 20 percent;
- State pensions to be frozen or cut, with the contribution period up from 37 to 40 years; The average retirement age raised from 61 to 63, and early retirement restricted;
- VAT [value added tax] to be increased from 19 percent to 23 percent;
- Taxes on fuel, alcohol and tobacco raised to 10 percent;
- A new one-off tax on profits to be introduced, plus new gambling, property and green taxes.”
“On their own any one of these measures would probably be enough to prompt significant political disquiet; taken together they represent a catastrophic setback to the financial aspirations of the average Greek,” wrote Bonsignore, formerly a reporter and editor for Financial Times. “It certainly wasn’t what the Greek population voted for when they entered the EU in 1981 and adopted the single currency two decades later.”
Writing from Athens, John Lichfield of The Independent (UK) observed,
“Whether pain can ever be spread evenly in a system so endemically corrupt and perverse as the Levantine political and economic system of Greece is open to question. How can anyone trust a system in which large sections of the wealthiest members of society – from ship owners to lawyers and doctors – have traditionally, and quite legally, evaded almost all direct taxes?
“The problem is that correcting the injustices in the tax system will take years to harvest its fruit. The deeper, immediate, further austerity measures VAT [value added tax] increases and pension and public spending cuts – imposed on Athens last weekend will produce an immediate cut in the state deficit. But they will fall mostly on modestly-off Greeks, in the private and state sectors, who do pay into the system and feel they have already made several blood sacrifices already.”
The significant difference between Greece, Spain, Italy and Ireland is that they are economically less affluent than other countries to the north. Therefore there are major imbalances in trade on the continent. One result is that they are relatively uncompetitive compared with the others, especially export powerhouse Germany. The other result is that the countries sometime referred to as “the periphery of the continent” were doubly undermined by the current economic crisis that – you will recall – originated in the United States.
Poverty was increasing in Greece before the present crisis hit. The Greek unemployment rate was 9.5 percent last year; it rose to 11.3 per cent in January. As a consequence of steps now being undertaken, it will rise further. The Financial Times says the EU – IMF-imposed measures will deliver “a brutal amount of pain” to the country. As economist Paul Krugman has said, the “severe austerity” now demanded of Greece “will have a strong depressing effect on an already depressed economy.”
In some ways the economic situation in Britain is of greater consequence than that in Greece. The other day someone described that country as a heart patient in urgent need of a transplant. They just had an election in the UK and, on its eve, Andrew Wander wrote in Aljazeera, “Analysts say that this election will mark the dawn of an era of austerity unlike anything seen in the country for a generation, with higher taxes and drastic cuts in public spending needed to fund efforts to balance the nation’s books.” He went on, “If Britain is not seen to be dealing with its mountain of debt, the country could lose its triple-A credit rating and with it the trust of the financial markets whose investment in government bonds keeps treasury coffers full.
“If that happens, the results could be even more harmful than a recession sparked by spending cuts; demand for UK bonds could collapse and the UK could end up facing a Greek-style cash flow crisis.”
Wander reported that Mark Littlewood, the director of the Institute of Economic Affairs, “believes that British public sector strikes are ‘quite likely’ as the cuts kick in, and he is not alone in predicting political problems for the next government.” Furthermore, “Mervyn King, the governor of the Bank of England, is said to believe that whoever wins this election will be out of power for a generation because of how tough the austerity measures will need to be.”
“Innocent Greeks are facing years of austerity,” Ruth Sunderland, business editor of the Observer (UK) wrote this last Sunday. “People will have their pay slashed, lose their jobs and be forced to wait for years longer to draw the pensions they were promised. Dreams and aspirations will be ground into the dust.
“In London and New York, the plight of Greek families fails to stir the faintest compassion in the cold-eyed speculators who have been feasting on their distress before moving on to their next prey in Spain, Portugal or Italy. And despite the revision of views on Black Wednesday, there is no guarantee that this bout of speculation will turn out to be for Greece’s benefit in the end.
“In the UK, we have good reason to be afraid of the jackals stalking global markets. Our situation is a long way from being as dire as that of Greece, but the election result has left the markets nervous about more political turmoil and whether there will be credible plans to reduce our deficit. If and when the speculators turn their attentions our way, we can be sure they will act mercilessly, with no regard for the human misery of lost jobs, home repossessions or emptied-out pension plans.”
Quiet as it’s kept, there is a much bigger picture here and it contains some sinister implications. Poul Nyrup Rasmussen, president of the party of European Socialists (PES), which coordinates Europe’s socialist, social democrat, progressive and labor parties, says the EU’s conservative majority is, in fact, punishing Greece, subjecting it to “the nation-state equivalent of waterboarding” and is out to “dismantle core social standards.” Writing in the Britain’s Guardian May 7, Rasmussen said the continent’s conservatives are “trying to use these kinds of austerity measures to force through social cutbacks across Europe.”
“This is but a cynical attempt to roll back fundamental social standards. It does not even make financial sense as it would force thousands into the grey economy – one of the structural causes of the crisis in the first place – or even worse, would force them into abject poverty,” Rasmussen wrote.
In most of the rest of the world the prescribed method for dealing with the system’s crisis is referred to by its proper name: austerity. The media in our country seems to have an aversion to using the term. But that’s what it is when, in order to deal with the economic malfunctioning, you cut education budgets and fire teachers, enact special taxes that hit working people hardest, reduce services for the indigent and threaten to reduce or eliminate retirement and medical programs for seniors. It comes down to who, in a pinch, is going to be required to lower their living standards, and which individuals and families are expected to lead more austere lives. There is a political crisis in most of the industrialized capitalist world because things are getting tough for the lower end of the economic ladder while vast fortunes are being amassed at the top.
There is nothing even remotely equal about the sacrifices people are being asked to make at the present moment. The financial arrangements being worked out for Greece don’t involve aid for Greek workers and the middle classes being squeezed by the economic crisis; its purpose is to rescue the banks – the local ones and the other European banks that hold Greek debt. This will seem familiar to anyone who has looked on as troubled financial institutions on Wall Street have been bailed out and are again raking in profits while the unemployment rate rises and more and more people are evicted from their homes.
“In truth, the very foundations of the global neo-liberal system, which emerged from the Reagan-Thatcher inspired capitalist economic blitzkrieg of the last 25 years, is now discredited,” wrote John Palmer in the Guardian May 7. “The EU as a whole also needs a new economic philosophy based on green and sustainable growth and which encourages social cohesion and not short-term economic growth, reduces excessive dependence on the financial and carbon energy sectors, and which actively promotes greater social equality. The time to strike out in a new direction is now – before it is too late. Where Europe leads, the world may well now want to follow.”
Try telling that to Thomas Friedman. The New York Times columnist – of late earth fame who will never have to worry about where his next meal is coming from or whether he will have a roof over his head – is quick to endorse the idea that the task in our country is, as he put it Sunday, to “cut public sector pay, freeze benefits, slash jobs, abolish a range of welfare entitlements and take the ax to programs such as school building and road maintenance.” And all the while, we can be sure new billionaires will arise, poverty increase and economic inequality grow. Now that’s something to look forward to.
Crossposted with permission from The Black Commentator.