Post-Syriza post

There are many positives and negatives in the Syriza victory.

The most obvious positive in the Syriza result is that especially in a young and fragile democracy, it’s good for the established politicians to be kicked out once in a while, without prompting a military coup, just to show the next lot that it can happen.

It’s also compelling that the Troika struck the wrong deal, and Syriza’s craziness, if it is real, might give them the credibility to extract one that is better for Greece and the Eurozone as a whole.

But there are some negatives.

First is the demonstration that promising the Moon works.  Syriza’s promises, so far as they are intelligible, are not affordable.  But no-one cared about that, or no-one understood.

This strategy was adopted by the SNP.  And it worked for them too.  They didn’t win the independence referendum itself.  But they decisively changed their own political power, the constitution, and may yet win independence in the longer term.  What lesson does that teach future politicians who contemplate explaining things as they really are and really could be?

Another negative is the industry of drawing false lessons from Greece.

George Osborne draws the lesson:  we need more austerity ourselves, or we will end up like Greece too.  For a month or two after the May 2010 election, there was some justification for thinking this.  But never since.

The left draws the lesson:  Syriza have rejected austerity, we need to do it too, and can.  Well, there’s austerity and austerity.  The electorate was choosing back in 2010 between two plans that were pretty similar relative to the sharp contraction enforced on Greece by the Troika and their financial crisis.  In the end, the Coalition reneged on its deficit reduction plan and, with the assistance of the BoE, inflation was allowed to cruise more than 3 percentage points above target.  Rejecting austerity and an associated 25% cut in GDP doesn’t contribute much to forming an opinion about what the UK government should have done.  That’s like using an argument against famine to lobby against a slight trimming of one’s calorie intake.

The left also draws the lesson:  you see what capitalism and neoliberals do?  Let’s dump the lot.  But Greece represents not a failure of market economics, but instead a failure to construct a market economy, and a failure to construct a functioning public or ‘socialist’ sector alongside it.  And it’s almost utopian to hope that the state failure that poisoned markets and allowed the public sector to deliver so little for what taxes were collected, is going to be fixed by that same state.

Another negative:  the suggestion in some press commentary, that Syriza’s victory is one for democracy [fine thus far] and that if they don’t get what they want, that is democracy being thwarted.  Well, no.  If they don’t get what they want, it’s because leaders of other democracies calculate that giving more money to Greece would not be popular with their own electorates.

And one more:  Syriza’s harking back to reparations for World War 2.  This is bound up with an attempt to make a case that debt relief is moral.  I believe it is, on the grounds that the debt was in part the fault of reckless Northern bank lending.   But going back to past grievances.  Where does that end?  This is is a nationalist ploy that stirs up separatism that makes fiscal union (of the kind that would have avoided this mess) impossible.

 

 

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6 Responses to Post-Syriza post

  1. Bill Wells says:

    Tony,
    As I argue in the recent blog by Simon Wren-Lewis ‘Debt restructuring: a proposed principle’ I think that there is a general over-statement of how ineffective the functioning of a particular part of the Greek – and indeed the Eurozone – market economy is. Before the recession its employment rate was at historic highs (where the OECD says that history starts in 1983) and over the past year or so the rate has risen faster than the EU average – which in turn has risen faster than the US rate in percentage point terms.

    In the labour market I would argue, therefore, that your statement that Greece’s failure is ‘a failure to construct a market economy’ is too harsh. There is, of course, still more to do and in its fledgling state it has been buffetted enormously by macroeconomic shocks. However, there are some signs of recovery. This is because I believe that some of the structural reforms that every says are needed may already have occurred.

    I do think that the optimistic tone of the OECD Jobs Study Reassessment in 2006 should be remembered and re-introduced. It concluded that the general improvement across the developed world in labour markets does suggest that it is possible to make a difference as long as the structural reforms are consistent with the institutions and policies of the individual countries – subsidiarity.

    And because I believe that democracy tends to deliver the politicians who are best placed to find the policies that suit their own country’s needs – with some help from other countries and multi-national organisations – I remain optimistic for Greece (and the Eurozone). Of course it will be muddled with two steps forward and one step back but it may be that the worst is now behind us.

    Bill Wells

  2. Christiaan says:

    About that last point: no, it’s a response to the north’s use of moral arguments for debt repayment. It exposes those arguments as patently one-sided and hypocritical.

  3. William Meyer says:

    Your discussion of “what capitalism and neoliberalism does” is so slippery that it slides.

    “Capitalism and neoliberalism” is not synonymous with “market economics”. I suspect the actual left wing argument is not to reject “market economics” but to point out that markets are institutions embedded in prior social arrangements that are dictated not by “market outcomes” but by “politics” which is another word for power relationships. The left does not like the prior social arrangements dictated by the current distribution of power. Why should they? Why does mainstream modern economics so often play the trick of pointing at one small piece of the current situation and shouting “see how awesome and efficient markets can be” and ignoring the rest of the picture, which includes a great deal of coercion and violence, implicit or explicit? Why are economists then shocked when people accuse them of being flacks for the existing social arrangements of society–that is, for the powerful?

  4. Ben Birnberg says:

    Tony

    I’ve seen your post-Syriza blog and hope you’ll not mind a few comments. 1. Syriza has not “promised the Moon” nor has it made unintelligible promises.. Its basic immediate promise, and one which is wholly intelligible, is to tackle forthwith the root causes of the country’s demoralisation – impoverishment because good businesses have been destroyed and welfare props removed, massive unemployment with their consequences including a big increase in suicides. Much of this can be done at minimal cost as Varoufakis emphasises, and very fast. The new government intends to create a return to a climate of hope and optimism without which the country cannot survive. 2. Syriza’s victory is indeed a victory for democracy. There is no suggestion that free speech will be curtailed if Syriza doesn’t get its way on everything. It doesn’t expect to. On the contrary, the fact that Syriza has lined up with a right-wing party is an indication of its broad brush approach to politics. And it has stressed that it has every desire to meet its fiscal obligations once the great debt burden has been renegotiated and repayment brought into line with the revival of the economy, a sine qua non for repayment. 3. Moreover I believe there is every justification in Syriza pressing the case for reparations. It is not just a case of a ” past grievance” but a very live present issue. The bail out of Germany in the post-war years when the Allies wrote off the entire debt (670% of its GDP) notched up by the Nazis (and in addition was given some $1448 million aid under the Marshall Plan) – whilst Greece got next to nothing for the devastation it suffered under the Nazis, laid the basis for the economic miracle – the Wirtschaftswunder- which has given Merkel and her likeminded German colleagues the arrogance to dictate to Europe. You don’t need to probe much further for the present discontents in Greece. Ben

    Date: Wed, 28 Jan 2015 21:09:33 +0000 To: benbirnberg@hotmail.com

  5. Cowper says:

    “What lesson does that teach future politicians who contemplate explaining things as they really are and really could be?”
    The more things change, the more they stay the same? The established politicians in the EU have merely been better at masking the unrealistic nature of their promises. You know, stuff like expansionary austerity. Be particularly wary when they drag out the old hoary “there are no alternatives” (i.e. trying to set the parameters of discourse to exclude anything they dislike).

  6. Earwig says:

    “giving more money to Greece?” Is that on the table?

    Greece is transferring part of its surplus to the Eurozone. (A quite considerable part from Greece’s POV; a pittance from the EU view.) No aid is being considered at this point. The flows are in the opposite direction to what is implied here. How can we “draw the right lesson” from such misunderstandings?

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