Monday, July 27, 2015

Stiglitz On Greece


Joe Stiglitz has been spending the last little while in Greece, checking out the state of affairs. Those affairs, he predicts, will get worse and follow a course of events which keep repeating themselves:

As I read the details, I had a sense of déjà vu. As chief economist of the World Bank in the late 1990s, I saw firsthand in East Asia the devastating effects of the programs imposed on the countries that had turned to the I.M.F. for help. This resulted not just from austerity but also from so-called structural reforms, where too often the I.M.F. was duped into imposing demands that favored one special interest relative to others. There were hundreds of conditions, some little, some big, many irrelevant, some good, some outright wrong, and most missing the big changes that were really required.

Greece, he writes, is a sacrificical lamb on the altar of neo-liberalism:

Austerity is largely to blame for Greece’s current depression — a decline of gross domestic product of 25 percent since 2008, an unemployment rate of 25 percent and a youth unemployment rate twice that. But this new program ratchets the pressure up still further: a target of 3.5 percent primary budget surplus by 2018 (up from around 1 percent this year). Now, if the targets are not met, as they almost surely won’t be because of the design of the program itself, additional doses of austerity become automatic. It’s a built-in destabilizer. The high unemployment rate will drive down wages, but the troika does not seem satisfied by the pace of the lowering of Greeks’ standard of living. The third memorandum also demands the “modernization” of collective bargaining, which means weakening unions by replacing industry-level bargaining.

That's not to say that structural reforms aren't needed. But, as in the past, those in charge have got their economics wrong:

Structural reforms are needed, just as they were in Indonesia, but too many that are being demanded have little to do with attacking the real problems Greece faces. The rationale behind many of the key structural reforms has not been explained well, either to the Greek public or to economists trying to understand them. In the absence of such an explanation, there is a widespread belief here in Greece that special interests, in and out of the country, are using the troika to get what they could not have obtained by more democratic processes.

Special interests. Does that sound familiar?  The results could well be catastrophic -- not just for Greece but for all of Europe. Those who refuse to learn from history are condemned to repeat it.

This entry is cross posted at The Moderate Voice.


Kirbycairo said...

It is amazing to me that after the Structural Adjustment programs of the 1980s and 90s, and the disasters they wrought, that people are still operating in the same framework. The insanity of expecting different result. The greatest strength of Neo-Liberalism has always been people's ignorance and that fact continues today.

Owen Gray said...

The repeated results of neo-liberal economics illustrate Einstein's definition of insanity, Kirby. They remind us that supposedly bright people can be crazy.

Dana said...

"The above quote has been mis-attributed to Albert Einstein, Benjamin Franklin, and Mark Twain. In fact, none of these great minds were responsible for such a convincing, yet blatantly incorrect definition. The first time it actually appeared in print was in a 1981 Narcotics Anonymous text (page 11)."

This one lives in hope that eventually clumsy misattributions will be abandoned even by the old and wise.

Kirbycairo said...

I can't help thinking that in a couple of hundred years (if our race survives) the Neo-Liberals will be looked upon as not unlike those who ran the Spanish Inquisition; insane purveyors of a twisted but entrenched system of power that is used to torture and abuse whole populations based solely on an orthodoxy that has no basis in fact, but is entirely constructed in the corridors of the distant halls of power and is intended to spread its strength through fear and suffering. Remember C.S. Lewis' book "That Hideous Strength"?

Owen Gray said...

I confess I've only seen the quote attributed to Einstein, Dana. Perhaps it should have been attributed to Sisyphus. While we're on the subject, let me be clear. The last sentence is George Santayana's, not mine.

Owen Gray said...

An interesting analogy, Kirby. Without question, neo-liberals are true believers, who are certain that the non-orthodox can only be brought to heel by punishment -- burning at the stake, if necessary.

Kirbycairo said...

@ Dana - Since any definition of "insanity" is contextual and, I would say, driven partly by some ideological underpinnings, I am loath to say that this definition (from whomever it originates) is 'blatantly incorrect.' Rather, I would say that it is not a particularly meaningful claim. I suspect that the reason that people easily accept the attribution of the statement to Einstein is that it sounds vaguely scientific, in as much as one would expect a person using one of the myriad "scientific methods" to conduct experiments with an expectation of repeatable results, ie., the same experiment conducted in the same way will issue the same or similar results. It seems to me that the danger in the statement is the generalized spread of the notion that 'insanity' is easily definable and people can be simply labeled as 'insane' because of one basic pattern of behaviour. However, the very concept of insanity is deeply problematic and like so many social concepts is another method whereby people can utilize linguistic simplicity to wield power in various ways. And in this case people can use the perceived authority of Einstein to add credence to concept that is really useful only limiting discourse or labelling 'the other.'

The Mound of Sound said...

The most important bit of wisdom passed along to me by my late father was his warning that we do not have any right or freedom that wasn't paid for, in blood, and often more than once. To this he added that there doesn't exist a right or freedom that isn't immensely valuable to someone who would take it from us. Once we have lost our rights it's unrealistic to expect them to be recovered without being met by violence and other forms of suppression in the process of reclaiming them.

Neoliberalism entails the state surrendering or fettering the public's rights and freedoms through a loss of national sovereignty. Free market fundamentalism is powered by political capture, corporatism supplanting democracy. We see it's full expression today in America's "bought and paid for" Congress and the rise of transactional government. This gives rise to the ascendancy of illiberal democracy in which the rights of the individual are subordinated to the powers of the state. People are no longer governed (by consent), they're ruled (by manipulation and deceit). Harper doesn't govern. He rules. He doesn't lead the country and our people. He administers them.

Just as generations of our ancestors threw off the shackles of feudalism there is no reason to believe we cannot rapidly be tipped back into a state of some modern equivalent of feudalism. The smoking gun that reveals we are indeed on this path is the rise of inequality - of income, of wealth, and, above all else, of opportunity. It is manifest in the decline of the blue- and white-collar middle class. We see it in our faltering social cohesion, itself fueled by the perverse adoption of wedge politics. We pull people into electoral camps and set them against each other rather than uniting them to support the betterment of the country. This appeals to Harper's parasitic nature.

I can't think of a time when Canadians' expectations of their government have ever been lower and with the lowering of our expectations have come very mediocre leaders like Harper, Trudeau and Mulcair. Those of us of a certain age recall an era of politics vastly different with leaders like Pearson, Diefenbaker and Trudeau. Nothing brings that decline home more than imagining what Pierre Trudeau would have done to a character like Stephen Harper. He would have dismembered the guy. Instead, with the Mediocrity Twins running the opposition, Harper has been able to rebound to match the NDP's numbers. That stands as a powerful indictment of these two clowns - Justin the Lesser and Tommy Angry Beard.

The message is clear. Don't expect the opposition to restore Canadian democracy. They can talk about voting reform but that doesn't matter much if the public will isn't translated into public policy, if the political capture of neoliberalism isn't dismantled.

Owen Gray said...

Stiglitz foresees angry people in the streets, Mound. Perhaps we are headed in that direction, too.

Scotian said...


To be fair to one of the Twins, Trudeau the younger originally had planned on being a sitting MP for a fair bit longer so as to become more experienced and better skilled to be a leader before running for leadership if he chose to, it was circumstances which forced his timing in this at least as much as any ambition on his part. Mulair on the other hand...

I do not disagree with your wider point on how shallow the talent pool is, but again, part of that fault lies on all of us, the citizenry for letting our politics get this bad, one of the prices of being in a democratic system of any type is that either you use it or lose it. Far too many decided a long time ago to either drop out or not pay enough attention to be able to see any differences between the leaders and parties despite there being some fairly massive ones at different points, even back in the PCPC/Lib days when they did have a certain amount of overlap on some things, same as the Lib/NDP used to. Even then though the leaders and the core party political positions had real differences, yet how many times do we see and hear "they are all the same"? Librocon/Lib Tory same old story from those that purport to be politically informed on the progressive side?

Part of my rage these days is because I have watched this happen, warned of exactly what it would lead us to, tried to prevent it, warned of it when it got here, and in the end watched this mentality win out. I still see real differences with all the national parties and leaders, and I am getting so very tired of being told I am some sort of idiot for thinking so.

While I agree neoliberalism is not a good thing, in many ways I see it as more of a symptom than a cause, the actual problem is the unwillingness of the average citizen to CARE enough about the responsibilities of citizenship itself when it comes to civic duty in things like voting, in paying attention to public policy issues and debates, and being involved. Part of the reason neoliberalism thrives is because ignorance thrives, and THAT is for me the true underlying problem, and that is the thing I wish I saw answer for.

We live in a world that is both too easy and too rushed for most people to take this time, or to see why it is important for them to do so. One of my most fervent prayers about the Harper regime is that it helps show people why they cannot allow this sort of thinking about politics to continue, and why they need to care. Alas, these days I am becoming far more like Dana in this regard than I ever thought I'd be.

The Mound of Sound said...

Scotian I disagree that the root of the problem somehow rests with an indifferent public. I'd suggest that public apathy is rooted in the failure of the political caste to address the average person's very deep concerns and worries. I'm convinced they won't address those core issues because they know all too well that the solutions require fundamental reform of the political system and the dismantling of neoliberalism.

Our political spectrum didn't shrink of its own accord. The Left wasn't abandoned, undefended, for no reason. Layton/Mulcair did that when they concluded it was the only path to power. They had to transform their party into a replica of a movement their predecessors would have scorned. Lofty principles that once were enough to sustain them were abandoned in a bout of sheer opportunism.

It could be said the Liberals lured the NDP to shift right by their own mutation into a clearly center-right movement. Ignatieff's rein left permanent scars. The party sure as hell left me and I'd been with it for forty years. As for the timing of Justin's ascendancy that was his call and he is fully accountable for it. I can remember the anger I felt when Ignatieff, one year into his leadership, talked about what a wonderful learning experience it had been. You don't run on the basis of "I'd really like a chance to try learning that job." When you run you're proclaiming yourself ready to lead. What Iggy and Junior have done is nothing less than "bait and switch."

We have seen from similar malaise across Europe how effective political leadership can connect with a dispirited public and energize new parties. What we continue to see refutes your point that the failing is that of the public. It's not. It never was. Leaders are supposed to lift people up. It's their job. Leaders are supposed to speak to the public's deepest concerns and their greatest aspirations. That is not what we have today in three grey suits stuffed with wet cardboard.

Life, even in Canada, is getting harder, more precarious. Parents despair that their children will never enjoy the life as rich and rewarding as their own. Inequality grows. Democracy turns rancid, illiberal. Unrest builds. The environment may already be lost. And who speaks to those worried parents about these things? Not Harper. Not Trudeau. Not Mulcair. Even if they had the ideas they are utterly bereft of the courage to implement them. And that is the failure, Scotian, not the Canadian people.

Unknown said...

I. also Owen, think the cause of our vanishing democracy and freedoms is Neoliberalism, more specifically the thinking that gave rise to Neoliberalism. Just as all political systems are derived from more fundamental philosophical ideas that can be identified, Neoliberalism however is not based on any philosophical ideas. There is no philosophic reference point where you can say this or that idea is what has given rise to Neoliberalism. Neoliberalism is dogma, that can only be accepted on faith. Once analyzed, one cannot find any rational reason for a government to implement Neoliberalism into their political system. One of the give aways is that Neoliberalism is not open for discussion by these governments, because what they are really doing is providing a platform only for the corporate elites, by taking from the people and giving to these elites. With Harper implementing his Neoliberal agenda behind closed doors, it is impossible for Canadians to know what he is doing. What they may be aware of, and have a disdain for is Harpers ruling in secrecy, across the board. I'm hoping there is still a silent majority out there, because if there is they will be the ones to throw Harper and his thugs out.

Owen Gray said...

Ayn Rand posed as both a philosopher and a novelist, Pam. She was neither. One of her books was entitled "Selfishness Is A Virtue." A lot of neo-liberals claim that she inspired them.

It would appear that their sense of judgment was seriously impaired.

Unknown said...

Rand made her economics very clear Owen when she wrote the book "Capitalism the unknown ideal" and in part, The New-Left the Anti-Industrial revolution". The book your referring to is
"The virtue of Selfishness" Frederic Heyek, Von Mises 2 of the creators of Neoliberalism were friends of Rand. What's somewhat interesting is that many of the anti-environmentalist got their ideas from Rands book "The New Left, the Anti-industrial revolution". In it Rand poses the New Left/Socialists as using enviromentalism as a tool to control business and industry.
Rand believed that any government intervention in the economy or any, even in part, planned economy lead to dictatorship.We know in a democracy that is not true of course. I find it interesting though, that it is in fact Neoliberalism that leads to autocracy. Neoliberalism is now not only institutionalized, but it's also the global infrastructure. To start dismantling it is going to require leaders with knowledge and courage.

Owen Gray said...

Rand made the mistake, Pam, of equating all government with the Communism she despised. In her own day, there were many who saw her arguments as sweeping generalizations. Two generations later, that insight was forgotten.

Anonymous said...

actually i read stiglitz years ago and he stated that the riots in the street he concluded were part of a well orchestrated plan by the imf and world bank to bring a society to its knees so property values went down so did the price of businesses and assets thereof now the 1% moves in to an orgy at the hogs trough much the detriment of the people who made up that society.

that is where harper is leading us he claims or his base claims that he is an economist yes he is but he is a black economist who is purposely leading us on the same road as greece and countless other societies being 'helped' by bankers and the 1% but in truth the 1% and bankers are helping themselves only at the expense of everyone else.

their greed knows no limit they enjoy the pain they inflict they also need security they have an unrepentant need for snooping and when danger comes their way they have been known to hide in closets...


Owen Gray said...

Harper has always known who he's working for, namaste. He's worked very hard, though, to hide the names of the people who employ him.