Top: Greece’s Finance Minister Yanis Varoufakis, centre, Spanish Economy Minister Luis de Guindos, right, Minister Michael Noonan, left; Above: Dr Julien Mercille
It’s 9.07am on Monday.
It’s Mercille on Monday at 9.07am
Dr Julien Mercille writes:
This week Greece will be front-page news again. Will the IMF and European authorities force Athens to implement even more austerity, or will they finally be more flexible and give Greece some breathing space?
One of the most important myths to debunk is that Greece has not done enough so far and has been slacking off in implementing austerity and reforms.
Nothing could be further from the truth. Greece has implemented austerity more deeply than any other country, and therefore provides the best example that this strategy simply doesn’t work to revive economies.
The UCD economist Karl Whelan wrote a good article a few days ago detailing how much “adjustment” Greece has already gone through:
– Public sector employment decreased by over 25%, from 907,351 in 2009 to 651,717 in 2014 (a drop of more than 255,000 people). Syriza plans to rehire as many as 15,000 employees, but this a tiny fraction of the drop in numbers.
– Greece was forced to reduce its public deficits from 15.6% of GDP in 2009 to 2.5% of GDP in 2014, “a scale of deficit reduction not seen anywhere else in the world” and which involved “massive cuts to public expenditure”, i.e. to services to the population.
– Pension reforms: this is a central aspect of the current negotiations. The perception conveyed by the media is that lazy Greeks retire early on fat pensions. But Greece has introduced long-term reforms in recent years, so that the retirement age will be increased significantly. Indeed, under those reforms, Greece will move from one of the lowest retirement age (at 62 years old) in the EU to one of the highest (at 67.5 years on average).
In addition, Yanis Varoufakis, the Greek Finance Minister, noted that since 2009, wages have been reduced by 37%, pensions by up to 48%, and consumer spending by 33%.
The result of this draconian austerity regime?
“Economic activity was choked, total income fell by 27%, unemployment skyrocketed to 27%, undeclared labour scaled 34%, public debt rose to 180% of the nation’s rapidly dwindling GDP, investment and credit evaporated and young Greeks, just as their Irish counterparts, left for distant shores, taking with them huge quantities of human capital that the Greek state had invested in them”.
Adding insult to injury is the fact that the German government, which is leading the charge against Greece, itself had its debt largely cancelled after World War II.
The London Debt Agreement of 1953 wrote down its outstanding debt by a significant amount and established a schedule that extended the repayments over 30 years, which allowed the country to recover and become Europe’s economic leader.
In the words of one analyst, the agreement was based on the premise that “Germany’s actual payments could not be so high as to endanger the short-term welfare of her people or her long-term ability to rebuild a shattered economy and society”. But the German government now is doing exactly the opposite to Greece.
In my view, the overarching point in the Greek saga is the extent to which European elites are opposed to real democracy, which goes way beyond simple elections. They are scared by the thought that people could have a say in policy and in decisions that affect their lives. The Troika imposes its will, and that’s it.
It’s the same thing in Ireland. When were you asked if you wanted to offer a blanket guarantee to the banks? When were you consulted about austerity? Did you ever agree to cut the funding of rape crisis centres throughout the country by 30%, just to make it harder for victims of rape to seek help?
Whenever people power emerges, it is opposed by the establishment. Syriza and Podemos in Spain are hated because they provide a message of hope and offer a clear progressive alternative to austerity. For the same reason, the media spends an enormous amount of time criticising the anti-water charges movement, Sinn Féin, and the smaller left parties like People Before Profit and the Anti-Austerity Alliance.
Another way to look at it is that even though the story is always presented in terms of “Germany vs. Greece”, this is misleading. The fundamental dynamic in Europe is instead that elites from all countries are acting in a loose alliance against ordinary people in all countries. That’s why Enda Kenny is siding with Angela Merkel and the troika against Syriza.
Therefore, grassroots cross-national solidarity is very important and offers one of the best hopes for both Greece and Ireland. If Syriza wins in Greece, and Podemos in Spain, they will support similar democratic movements here.
In this respect, there’s a group in Ireland called the Greek Solidarity Committee. It is composed of activists, academics and the five Right2Water trade unions (Mandate, Unite, CWU, CPSU, OPATSI).
They’ve organised various events and have brought to Ireland speakers from Greece. For example, one of them came to talk about the Greek water anti-privatization movement, making it obvious that the same issues affect people across Europe. Thus, information and experiences can be exchanged and built on.
Another simple way to increase democratic input in the Greek and Irish crises would be to proceed with so-called debt audits. You may never have heard about that because the media never talks about it, but it’s a very simple process.
Groups of citizens evaluate the whole debt of their country and examine which parts are illegitimate, illegal, or “odious”.
For example, should debts contracted by a military dictatorship be paid back by citizens? Should borrowings used to pay back bondholders that gambled on domestic banks be paid back by citizens? Or borrowings made under conditions of austerity which everybody knows worsens the economy? There’s room for debate here, but this is what real democracy is about.
For those who think this is utopian, the Greek government has just released its preliminary debt audit report last week. It was commissioned by the Syriza government and should be used as a basis to address Greece’s debt problems. Is that even imaginable in Ireland? Not under the current government, but if Syriza-Podemos waves come to our shores, it will be.
@JulienMercille is lecturer at UCD and the author of The Political Economy and Media Coverage of the European Economic Crisis: The Case of Ireland (2015, Routledge). His new book, Europe’s Treasure Ireland (Palgrave), will be out next month.
No surprise that the nutty professor is on Team Greece.
This is a country that has emphatically said no to austerity for decades . Now it’s time to pay up.
Did you actually read the figures?…
Proper order. It’s only people’s lives, like.
Your faith in the system shall be rewarded.
He conveniently leaves out the fact that up to 20bn tax goes undeclared and evaded each year in the Greek economy. If they bothered collecting and investigating it, including the “Lagarde list and 54,000 people who took over 20bn out of the country to overseas accounts, it would be a start to properly fund the running of the country that official sources say never more then 15,000 people declare more then a 100,000 per year.
“the media spends an enormous amount of time criticising the …., Sinn Féin ”
Indeed Mercille, thankfully there are some in the media that will not be silenced by the barrel of a gun.
Reviving the Greek economy is not the top priority. The top priority is to change the Greek economy, to punish the naughty Greeks for attempting to get the best bits from an International rapacious free market economy and a public expenditure driven left of centre economy. Also because they have failed to get their black/grey market under control.
…that a bank is deemed too big to fail but a country isn’t probably says it all about Europe in general and Germany in particular…
Juliens point is not that Greece has been the bold child of Europe but that some of its elite raked in the money and like Ireland the average working man pays. The pensions ffs, older generations would have paid into these. Its illustrative of how the burden is disproportionate and austerity causes nothing but misery.
Media tends to give equal coverage of all populist movements, and yes Mercille all powered by the people, be they extreme right or left. Your drivel , once entertaining , now merely irritates.
“Media tends to give equal coverage of all populist movements”….. but most things only get populist if the media gives it attention in the first place…. chicken and egg stuff……. no?
No. Difference between populist and popular, populist driven by reaction , popular you could argue by media.
…mmmmmaybe …i hear ya :)
ich liebe Clampers
I wonder how the Greek Solidarity Committee would feel when the government introduces spending cuts here in order to continue subsidising Greece’s current expenditure.
Ireland has lent €300m so far – I’m sure that there are a lot of hospital wards around the country that could have made good use of that money.
C’mon now. We have wasted far more money for supposed financial stability than that. Blaming the Greeks is nonsense.
Or we could tell teh Troika to stuff their bonds up their hole?
Well, then there wouldn’t be any money for Greece’s public services – its Eurozone partners are the only people willing to lend Greece any money.
“Ireland has lent €300m so far – I’m sure that there are a lot of hospital wards around the country that could have made good use of that money! Still less than half of debt write downs we gave to denis O’Brien, which i believe to be in the region of 660 million, that we know of so far. How may hospital wards could’ve done with that money?
Ehh ok …. I also hate DO’B but this has nothing to do with him.
Why are you giving this guy a platform and advertising his books?
Why the fupp do you think m8?
Any pertinent articles you could link Nikke? Any angle on issue is fine. Or do you just not like him?
There are hundreds of economists in Ireland, I’m just wondering why Broadsheet has given this guy a weekly slot and why is Broadsheet advertising his books at the end of his article?
People submit stuff and dont get paid….
I’d imagine Karl’s Mum allowed the Broadsheet guys use of the home phone and called Mr Mercille up and asked him if he’d do a regular Monday blog post and in return he gets his latest work / social media profile linked to at the bottom of each post.
BS gets free content and Mercille gets a little bit of free promotion. Sounds like a fair swap to me.
I doubt there are many economists whose views align as closely to the Broadsheet editorial slant as Mercille’s.
Poor judgement & a soft spot for the emperor’s new clothes.
When you spend more than you earn and you can’t pay back your creditors, then austerity isn’t a choice, it’s reality.
Nope
Insolvency
Bankruptcy
Then
Austerity
Tenner says its time to “kick the can down the road” again.
Greece lied its way into the Euro, continually refused to open its economy to any level of meaningful competition, doesn’t collect taxes and doesn’t have significant exports. Its their refusal to implement basic economic reforms that has worsened austerity. If they don’t make the economic changes necessary to grow their economy, then logically, they have to tax and cut the existing limited wealth and expenditure.
Mercille’s economics pedigree is pretty flawed. Greece elected communists to make the bad men go away and continue to refuse to accept any responsibility for their fate.
On a human basis, I’m obviously sad to see Greeks suffer, but on a national basis, they kept digging and digging, blaming everyone else for the hole their in.
Elected communists…that school boy labelling does you no service either.
“Greece lied its way into the Euro”…What a load of Bollox. This keeps getting rolled out by the media. As if the the poor old EU had the wool pulled over its eyes. The EU new exactly what state the Greek economy was in, the dogs on the street new this. Do you honestly believe that they managed to somehow evade all the standard checks that were in place for all other entrants. If this was the case you have to assume that those guiding the EU are bunch of clowns that have no idea at all what they are doing and do not have access to financial advisor’s from the worlds best firms supporting them. Its a nonsense.
Shit!, Shit!, Shit!….”Knew”
So you are saying Greece gladly went into this situation with eyes wide open and now they are complaining?
Sh!te!, Sh!te!, Sh!te!….”Knew”
I’ve been reading these columns for some weeks now, and the one thing I can’t fathom from them is how the elites are supposed to benefit from the behaviours Dr. Mercille outlines. To what end is Greece being relentlessly hounded by the Troika?
He says: “In my view, the overarching point in the Greek saga is the extent to which European elites are opposed to real democracy, which goes way beyond simple elections. They are scared by the thought that people could have a say in policy and in decisions that affect their lives. The Troika imposes its will, and that’s it.”
But why are they so opposed to it? Why do they fear people having a say? Is the suggestion that democratic countries are slowly being moved to some form of economic totalitarianism? Given the protests and riots across Europe, in countries with a much greater history of such than our own, isn’t there a danger that these so-called elites might push things too far and end up against a wall? People have a breaking point, after all.
“It’s the same thing in Ireland. When were you asked if you wanted to offer a blanket guarantee to the banks? When were you consulted about austerity? Did you ever agree to cut the funding of rape crisis centres throughout the country by 30%, just to make it harder for victims of rape to seek help?”
No, and what’s happening with rape crisis services is appalling, but I’ll get to have my say on that in the next election. Which is usually how the dialogue between governments and populations works. That’s what happens under our political system, we elect people based on their policies and trust that they’ll make the right choices. And yes, it’s easy to be cynical about the reality of that, but it is the principle, and so I think the above quote seems oddly naive.
“Whenever people power emerges, it is opposed by the establishment. Syriza and Podemos in Spain are hated because they provide a message of hope and offer a clear progressive alternative to austerity. For the same reason, the media spends an enormous amount of time criticising the anti-water charges movement, Sinn Féin, and the smaller left parties like People Before Profit and the Anti-Austerity Alliance.”
But why? All this talk of shadowy backroom cabals, but absolutely no explanation that I can discern offered for their behaviour. Why do these faceless elites think austerity is to their personal benefit? Looking at the figures quoted, it’s not as if there’s much money lying around to be exploited.
“The fundamental dynamic in Europe is instead that elites from all countries are acting in a loose alliance against ordinary people in all countries. That’s why Enda Kenny is siding with Angela Merkel and the troika against Syriza.”
But why why why is this the dynamic? Who are these boogeymen and what do they get out of this? There must be more to the answer to this than the maintaining of the status quo. If the people in a democracy suffer, the elites find themselves unemployed.
I like these articles, and Dr. Mercille makes some valid and interesting points, but I wish he’d be a bit clearer on what the endgame of these secret societies who run the world is.
Not an answer to your question, but an example of how PRETEND democracies like USA work…. helps add light to the “elites” question you raise…… the EU is going the way of USA.
https://www.youtube.com/watch?v=5tu32CCA_Ig
“Greece lied its way into the Euro,” politicians lie all the time, that’s their job, politicians aren’t powerful, they are the mediators of power, even during a time of crisis when politicians and the media are actively reporting what is going on, the misinformation is huge, the Greek people were as lied to as the Europeans, people bang on about Greece lying to get into the Euro as if this was an unparallelled act, innocence lost, the first recorded instance of politicians not being generous with the truth in human history, so now they must be expelled from the Euro of Eden, give me a break! The Euro itself was built on lies that you can have a stable currency union in the form the Euro was made, why is Greece’s ‘lie’ the one that counts?
“continually refused to open its economy to any level of meaningful competition” At what point does a competition acquire meaning? Actually the current Greek government are on board with privatisation, they’re (claiming to be) just against it at fire sale rates, which seems fair, in fact it would be in the creditor nation’s interests for the Greeks to get a good price for privatisation, if they weren’t the ones looking to buy it up. Disaster capitalism 101.
“doesn’t collect taxes and doesn’t have significant exports.” How much in taxes does Ireland collect from Google, Apple, Denis O’Brien… etc? Greece has a recent history of military dictatorship and is extreme polarised along left and right, on balance of course you should pay your taxes, but the informal culture of going to the doctor (it generally the professional classes who avoid it) and getting two rates, the with tax rate and the cash in hand rate, is old, and would be very difficult to change in six month into government in the seventh year of an economic crisis when people are generally a bit short of the old cash no? In order for Greece to develop the kind of industry it would need to be export orientated (and for that you don’t just need to make stuff, you need somewhere to export into) it would need either massive investment to help it industrialise, or to devalue it’s currency, even if it did go the devalue route (which it obviously can’t do in the Euro) it would then be in competition with the Eastern European block, who have been at this for longer, are already heavily industrialised and have established trading partners in Scandinavia, Germany, and Russia.
“Its their refusal to implement basic economic reforms that has worsened austerity.” What are basic economic reforms? Greece government has adjusted spending twice as much as Ireland has. The Greek government has pledged to reform, they’ve been in government since late January, and most of their time has been taken up with crisis management, whilst the Greek have been untrustworthy sure, if you read back on what Varoufakis has been writing since the start of the bailout, he’s been saying all along it was a con and a fraud, now maybe he is a git, don’t know him, only read the guy a bit, but in such a situation I’d be more incline to trust the person who was calling the bullshit, bullshit all along, than the people who weren’t, ie. the yes men, the creditors dearly wish were still in charge.
“If they don’t make the economic changes necessary to grow their economy, then logically, they have to tax and cut the existing limited wealth and expenditure.” Logically? The Japanese economy has been flatlining the last twenty years, huge debt, no growth, how does it manage that? Well in part because you have a massive arts and crafts sector, lots of local, look around a Japanese house vs. an American home you’ll find far more handcrafted goods, a more coherent aesthetic in the former and far more factory produced utilitarian rubbish in the latter. The IMF figures demonstrate that for every single euro cut you lose about 1.4 euro in GDP, in other words cuts activate a downward cycle in growth, you chuck more debt onto top of that and you’ve got yourself an economic death cycle, this was the economic medicine the IMF, and Eurogroup gave administered and it’s been killing the patient, the IMF have admitted they were wrong and yet are still insisting Greece chomp down on their poison.
“Mercille’s economics pedigree is pretty flawed.” And yours are shithot!
“Greece elected communists to make the bad men go away and continue to refuse to accept any responsibility for their fate.” They’re not communists, Syriza is the coalition of the radical left, so you have a mixture of some communists, anarchists, and social democrats. In Varoufakis you’ve got someone who is on the record as saying before Greece even entered into the Euro it was a disaster in waiting, called the last two bailouts as just elaborate can kicking excersises that would only make the situation worse, has repeatedly criticised the figures being produced by the Greek government and the creditors.
All of this was foreseen by anyone not dumb enough to think that Greece would magically grow it’s way to prosperity once it loaded up it’s government credit card with European government debt so it could pay off the credit card of it’s banking sector which was lent recklessly to by the banks in creditor nations because the financial markets prices Greek debt the same as German because they thought default couldn’t happen in the Euro.
Like it isn’t even about Greece, from an Irish perspective, do people not remember how this goes? Do people not remember how spectacularly wrong the economic profession got it in 2008? They have no bloody idea how Grexit would play out, none, and German and French exposure to Greek banking debt is pretty big, those big banks, they’re pretty highly levereged, and there’s been a lot of scandals recently, Deutche Bank in particular, those European stress tests aren’t worth the paper they’re written on. Truth is these people in charge don’t have a clue, they’re predictions are muck (they clearly only want to listen to yes men anyway, apparently the Italian finance minister took exception to the Greek pointing out that they’re country is also somewhat economically buggered, which is true), they have no idea what’s going to happen, the Euro is severely flawed. Ireland is a SMALL OPEN economy, that means we’ve got very little power and we’re reliant on the foreign economies to supplement our own with both investment and demand.
Siding with the big boys and smirking as they pick on the ‘weak’, small nasty little people, the type who like getting that last sneaky dig in, that’s the role we’re playing, both teacher’s pet and mouthy lackey, no self awareness, no bigger picture, no courage, or imagination, not especially ‘liked’ by anyone (we get praised for our non-existent ‘reforms’, but not for shouldering such a huge proportion of the European bank bailout costs) that’s the role Ireland is playing politically in this and it’s disgusting.
Nice post SOMK… last para is spot on !
tldr
Very nice post, fair play for taking the time.
Yes – fair play m8
Detide for rotide :
Euro built on lies, Japanese love handcrafts and Enda looking for the ultimate accolade from zee Germans, ein Stern .
“In this respect, there’s a group in Ireland called the Greek Solidarity Committee. It is composed of activists, academics and the five Right2Water trade unions (Mandate, Unite, CWU, CPSU, OPATSI).”
I have had a look at this Facebook group,
It’s composed of the usual naval-gazing and up-their-own-arse narcissists who can often be found putting their names to open letters to the newspapers.
You mean like gobspoos who comment in Internet fora!
Why can’t he just make the economic argument without wrapping it up in this juvenile ‘New World Order/shadowy cabal/lamestream media is against me’ crap?
He totally rambles past his basic point, which I tend to agree with.