DiEM25: Bring it on! – J.K. Galbraith in the Boston Globe

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From the destruction of Greece to democracy in Europe

By James K. Galbraith (Click here for the Globe’s site)

IN PROTESTING the Treaty of Versailles ending World War I, John Maynard Keynes wrote: “The policy . . . of depriving the lives of millions of human beings, of depriving a whole nation of happiness should be abhorrent and detestable — abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe.”

Last year’s third bailout of Greece, imposed by Europe and the International Monetrary Fund, does to Greece what Versailles did to Germany: It strips assets to satisfy debts. Germany lost its merchant marine, its rolling stock, its colonies, and its coal; Greece has lost its seaports, its airports — the profitable ones — and is set to sell off its beaches, the public asset that is a uniquely Greek glory. Private businesses are being forced into bankruptcy to make way for European chains; private citizens are being forced into foreclosure on their homes. It’s a land grab.

And for what? To satisfy old public debts, incurred for tanks, submarines, the Olympics, big construction projects outsourced to German firms, and to hide deficits in health care, with creditor connivance — a quagmire of graft to support an illusion, that Greece could “compete” as part of the euro. Already in 2010 the IMF knew it was breaking its own rules by pretending that Greece could recover quickly, sustain a huge primary surplus, and repay its debts. Why? To help save French and German banks, which the IMF’s sainted managing director, Dominique Strauss-Kahn, wanted to do, because he wanted to be president of France.

Europe crushed the Greek resistance in 2015. Not because Wolfgang Schäuble, the German finance minister, thought his economic plan would work; he candidly told the Greek finance minister, Yanis Varoufakis, that “as a patriot” he would not sign it himself. But Germany wants to impose its order on Italy and on France, where civil society continues to fight back. And Chancellor Angela Merkel could not admit to her voters, or to fellow Europeans from Slovakia to Portugal, that back in 2010 she’d saved Germany’s banks by saddling them with Greek debts that could never be paid.

Greece was given collective punishment as a lesson. It was done to show that “there is no alternative.” It was done to stop any other attempt to develop, articulate, and defend a more rational policy. It was done to protect the power of the European Central Bank, the German government in Europe, and the policy-making authority, in face of a long record of failure, of the IMF.

Greece is now a colony — the polite say “protectorate.” Elsewhere in Europe the left — Podemos in Spain, the Left Bloc in Portugal, Die Linke in Germany — has stalled out, for now. In France the Socialists are destroying themselves. Italy alone is interesting: It is in the midst of a banking crisis whose only solution is stronger growth; this requires the government to defy Eurozone doctrine or it may lose power to the radical Five Star movement soon. But, apart from that one case, progressive Europe is blocked.

Next up will be the far right, especially the National Front in France, which if it came to power would blow the European Union apart. Similar pressures are building in Poland and Hungary, which have governments already outside of European democratic norms. In Britain, right-wing Tories and the UK Independence Party have combined to vote the UK out of the European Union — although with surprisingly moderate political results so far.

That is why Europe needs the Democracy in Europe Movement. DiEM25, started by Varoufakis, is a new transnational European progressive movement. It is just getting underway, and it may go nowhere. But it presents a last, slim hope of holding the European Union together on terms that the peoples of Europe might accept.

Democracy would come by small steps at first. Transparency and accountability for Europe’s opaque governing institutions would come first. After that, an economic policy focused on jobs, investment, and sustainability. Ultimately there would have to be big changes, as revolutionary as the 2015 Athens Spring. The old oligarchies, the Brussels cabals, the self-serving technocrats, and the economic ideologues who now dominate European economic policy would have to yield.

Bring it on.

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1 Comment

  • It is unfortunate that Galbraith makes, once again, the inadequate comparison of Greece & Versailles (which has been discussed in this blog at length). A promissory note, the most typical debt instrument, begins with the phrase “For value received (i. e. the loan), the borrower promises to pay (i. e. the repayment of the loan)…”. In the Versailles case, Germany’s promissory note would have said “For value destroyed (i. e. the war), Germany promises to pay (i. e. reparations)…”. in the former case, money is supposed to be paid in exchange for money previously received. In the latter case, money is supposed to be paid without having previously received anything.

    When Galbraith suggests that the debt was incurred to spend on tanks, submarines and the Olympics, he should present numbers. If he did present numbers, he would find that the amounts spent on those items are very small compared to the overall debt taken on. The bulk of Greece’s foreign debt went into consumption imports and private wealth (mostly abroad). Not to even ask where the close to 200 BEUR in EU subsidies since 1981 went. I, too, find it outrageous that tax payers should service debt whose proceeds are stashed away in private accounts offshore and it would have added credibility to Galbraith’s article if he had said so.

    Yes, many of Germany’s assets were stripped after WWII (i. e. expropriated). No Greek assets were stripped (i. e. expropriated), at least not so far but who knows what ideas SYRIZA will come up with in the future. Greek assets where sold and when I look at the investment plans which Cosco at Piraeus and Fraport at the airports have, I can only see positives in having sold those assets.

    I do not share Galbraith’s enthusiasm about DiEM25. If I recall, the original manifesto focused on transnationalism or rather the de-emphasizing of the nation state. I recently watched a fanatic German professor in a talk show who argued passionately that nation states would have to be abolished. There were no longer “the French” or “the Germans”, she argued. We all have to feel like Europeans. What would Galbraith say if there were a movement to do away with Texas’ statehood because, after all, all Texans are Americans? At the recent Olympics, the medal totals were ranked by countries and all European countries were on the list. I didn’t see Texas or Massachusetts on the list but only the USA. Will there, in the world of DiEM25, only be one European soccer team, one Olympic team, one UN seat, etc. etc.?

    Since Galbraith undoubtedly knows much more about the American independence and nationhood movements than I, I think he should draw some comparisons. There, too, it was a battle between the Federalists (Hamilton/Adams/Washington or Juncker/Schulz) and the anti-Federalists (Jefferson/Madison or populist EU politicians) and the argument between federal power and decentralized state power carries on to this day. There would never have been a United States of America if the American states would have had to give up their statehood.

    Mind you, there are several points in Galbraith’s analysis with which I agree but if the overall context destroys credibility, then that takes away strength from those points.