Wayne O'Leary

Europe’s Bully, and Europe’s Victim

Opining in the New York Times recently, Steven Rattner, Wall Street executive and sometime advisor to the Obama administration, commented that the European Union’s German-led economic hard line toward Greece was a positive development. “Not everyone loves German rigidity,” allowed Rattner, “but Europe should be grateful for it.”

That is not an uncommon view among Americans obsessed since the start of the world recession by the fear that the United States would somehow replicate the problems and modus operandi of a small Mediterranean nation and come crashing down. To the conservative mind, in particular, Greece is getting what it deserves: retroactive punishment for failing to order its governmental policies to reflect the needs and values of global corporate capitalism — to “bring its economy into the 21st century,” in Rattner’s words.

Greeks have obviously been too concerned about saving jobs, protecting living standards, maintaining a social safety net, and preserving some semblance of a public sector; this predicament arises from a combination of presumed laziness and incompetence, and a stubborn refusal to bow down before the priorities of international finance, as outlined by its proxies, the German government and the bureaucracy of the European Union — the “troika” of the European Commission, the European Central Bank, and the International Monetary Fund.

A similar indictment has been leveled by our conservatives against average Americans, specifically the symbolic 47% on the lower half of the socioeconomic scale, the “takers” who need to be disciplined and forced to adapt to what the market, which is to say the elites and the creditor class, demand. One Percenters are the same the world over, in North America as well as Western Europe.

The prescribed solution to what are called hard times is also the same, whether in Brussels, Berlin, or Washington; it’s simply this: austerity now, austerity tomorrow, austerity forever — except for the banks, the corporations, the investment “community,” the rich and influential, and the paid-off retainers of the political establishment. Greece (and indebted southern Europe generally) is absorbing the brunt of the impact now; Americans are being told to shape up, or they will be next.

This logic amounts to disrupting or destroying the lives of the many to compensate for the misdeeds of the few. Prior to the onset of the subprime mortgage crisis, it was international bankers who spread economic contagion worldwide, first by irresponsibly encouraging risky borrowing and investment by masses of individuals who couldn’t afford to assume potential losses, and then by acting as willing financial conduits for sovereign governments in similar precarious circumstances.

By enabling the assumption of massive debt throughout the Western World (up to $57 trillion since 2007) on the delusional theory that a glorious new era of permanent growth and prosperity had arrived, bankers, who knew better, played on the foolish, optimistic expectations of those who didn’t, implanting a bubble mentality in order to turn short-term profits. Believers (individuals and governments alike) that shouldn’t have been granted loans were given the money anyway and led down the primrose path.

The gullible included Greece’s pre-2010 center-right government, since replaced by today’s embattled leftist Tsipras regime. Now that the bills arising from the financial crisis have come due, these victims are facing moralistic reproval from their creditors, the hypocritical winners in capitalism’s rigged casino, and being threatened with severe fiscal sanctions guaranteed to extend humiliation and misery far into the future.

In everyday terms, the reckoning amounts to a rejection of the classic solution of the past: restructured debt or debt forgiveness—sensibly writing off or drastically reducing the debts of people or governments that will never be able to fully repay, in order to keep society functioning. After World War I, the Versailles Treaty forced defeated Germany to pay unreasonable reparations, which led to another war 20 years later. After World War II, by contrast, the victors (including Greece) forgave half of prostrate West Germany’s foreign debt, which permitted Bonn’s celebrated postwar economic recovery. Lesson presumably learned.

When it comes to present-day Greece, however, Germany’s Wolfgang Schäuble, finance minister in the Merkel government, who has been dubbed Europe’s “ayatollah of austerity,” has a less charitable vision, as communicated to US Treasurer Secretary Timothy Geithner in 2012: he would progressively tighten the screws on Greece, already stretched on the rack, as an object lesson to Europe’s other debtor nations (Spain, Portugal, Ireland, et al.), pressuring them into acknowledging the preeminence of the EU and frightening them into surrendering to its rigid fiscal conservatism. Instead of using loans and bailouts to restart their stalled economies, they would be forced to apply acquired funds exclusively to paying down debt. Stupidity times ten.

In the end, it all comes down to Chancellor Angela Merkel, the EU’s dominant economic player, who is increasingly the personification of all that is unattractive in the German character. Her government has become a spiritual throwback to the Nazi regime of the Third Reich, with fiscal intimidation replacing military aggression. Hitler’s Wehrmacht overran Greece in 1941; Merkel’s bankers and bureaucrats are overrunning it in 2015.

It’s all being done in the name of EU unity, the euro, and the global economy, of course, but really, it’s economic imperialism at its worst. Germany, Europe’s wealth leader and holder of the largest share of Greek debt, could easily help Greece recover; instead, it would rather crush its tiny Aegean neighbor to make a point.

Merkel’s fiscal hard line derives directly from a rightist economic philosophy called ordoliberalism, an offshoot of Friedrich Hayek’s anti-Keynesian Austrian school that flowered under Germany’s conservative postwar governments. As practiced since the financial collapse, puritanical ordoliberalism rejects fiscal expansionism and economic stimulus in favor of restrictive monetary policy, constitutionally balanced budgets, permanent surpluses, and limited spending. It’s less economic theory than moral code, says The Economist in analyzing it.

Tragically, this balance-sheet religion, replete with paranoid fear of debt and unnatural love of austerity, has been foisted on the rest of the EU and maintained with Germanic thoroughness and intolerance, as Greece, its neck in a noose, can attest. Its destructive message, which has been adopted by American conservatives as well, is this: self-imposed misery will make you free — and godly. So, support your local billionaire and keep the rest in their assigned places.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, September 15, 2015


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