May 16, 2012
Who’s the Chicken in This Game?

One of the most insightful articles about the Greek political situation and the future of the euro comes from Robin Wells at The Guardian. Whether her predictions are right is another issue, of course.

Sometimes, just sometimes, economics and politics are like physics — one can recognize immutable forces. One of those times is now, as Greece is inexorably pushed out of the euro. It took no particular talent to have seen this coming, just the recognition that it has always been a fantasy to believe that the Greeks would democratically choose to destroy their economy for the better part of a decade in order to pay foreign creditors.

I don’t know enough about the situation to believe that Greece’s exit from the euro is inexorable. In fact, my knowledge is limited to other areas, which leads me to expect that flexibility from Germany is growing more likely, regardless of what Chancellor Merkel continues to say. Her clout is dwindling both at home and abroad, and the opposition has found its voice in several countries.

As I read further into Robin’s article, I find that we agree on this.

…what has become unavoidably clear is that Germany, the linchpin of the eurozone, has been hopelessly stuck in an attitude that makes the break-up of the eurozone almost unavoidable. If Germany cannot pull itself together to keep Spain in the euro, then the markets can no longer ignore the fact that the lack of leadership and governance is a fatal flaw in the system.

What accounts for this? I would argue that the heart of the problem lies in the political culture of Germany and the mindset of its political and economic elites, which have never been willing to admit to their own voters the sacrifices that must be undertaken in order to be the leader of Europe. Instead, they have led Germans to believe that they can have it both ways: enjoying the fruits of the eurozone while times were good, and lobbing the burden of adjustment onto others when times got bad.

I agree that the German elites bear a disproportionate share of the blame in this case. But they merely represent elites from various countries around the world, prominently including the US, who collectively are attempting to turn back the clock a hundred and fifty years to the days of the robber barons. The great corporations are now much more powerful than governments; witness our lack of progress on climate change, population growth, health care, transportation, and so on.

Yet I have to admit to a secret suspicion that these elites are less powerful than they want us to think. They talk big:

Chris Towner, director of FX advisory services at currency traders HiFX, said: “The Greeks seem to be playing a game of chicken here, first of all putting party politics above sovereign interests and secondly in the bigger picture questioning whether the European Central Bank are bluffing when it comes to not offering them bailout money if they fail to form a government.”


To translate here à la Chomsky, “party politics” means the democratically expressed will of the majority, “sovereign interests” means the will of the financial institutions as stand-ins for the 1% (as in previous posts I’m using 1% metaphorically, I think it’s actually a small subset of the real 1%); and “the bigger picture” exhibits most explicitly the world view that the banks should rule over the people. It could hardly be made simpler or more straightforward.

So now let’s see what they actually do. The contagion, after all, might spread to the US if something isn’t done.

Stephen Lewis, economist at Monument Securities, said: “It may well be that eurozone leaders would raise the threat of Greece being obliged to leave the eurozone if it fails to comply with bailout terms, so as to sway Greek voters to support pro-bailout parties. But if this threat were to be credible, the EU would have to start elaborating measures to facilitate Greece’s departure from the eurozone well before the election took place. Otherwise, Greek voters would assume eurozone leaders were bluffing.”

Yes, the 1% can both buy and sell lots of guns and super-expensive weapons of all types. But they can’t control individual behavior in democracies, which means they can handicap the ballot but not control it. Perhaps more importantly, they have no control over what we choose to buy in this free market we were slipped instead of the democracy we were promised. As Chomsky has said for years, democracy and capitalism are presented to Americans as inseparable when in fact they’re opposites and mutually exclusive. We swing back and forth, first favoring one pole and then the other.

The new factor in this oscillation is the free flow of information around the globe. I’ve long thought that governments do not withstand the free flow of information. Perhaps we’re at the stage in human history where we can synthesize a new form of government to meet our current needs rather than those of a few centuries ago, one that encourages information flow rather than restricting and outlawing it.

There was a time in human history when an argument could be made that the accumulation of wealth in a small number of hands was the quickest, perhaps only, means of advancing the techniques of civilization. It wasn’t a particularly convincing argument even then; but at a time when developed resources were barely sufficient for the population, it could be defended by those so inclined. Today, however, that argument is defunct, obsoleted by global connectivity in all its forms. Nowadays spreading the wealth enriches everyone, because there’s enough to start with.

Now we should get rid of money.


Posted by Chuck Dupree at May 16, 2012 04:11 AM
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That's what Occupy is all about. Another way.

Posted by: Pat In Massachusetts on May 16, 2012 5:01 AM
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