Austerity, Greece and us

OXIThe purpose of “Austerity” is to help the rich to rob the poor. Although packaged as “fiscal probity” to fool us (and Labour leadership candidates – three already having succumbed), that’s what it’s really all about.

I have written about “Austerity” in seven previous posts (q.v. the Austerity tag) and don’t propose to repeat myself. But the Greek “debt crisis”  has demonstrated that the monied classes of Europe all employ similar arguments so, in this new post, I will highlight some additional issues and provide three useful links.

My first (The Greek No Vote Marks a Victory for Humanity) makes the point that we have common cause with the people of Greece. Their experience demonstrates that austerity does not reduce national debt. The Greek economy has shrunk to such a degree that even the IMF  concedes that it is now impossible for Greece to pay off these historical debts.

So what happened to the bail-out money? About 90% was used to recapitalise private banks (mainly French and German) – the same people whose reckless speculation created the crisis. A mere 10% has assisted those suffering from job losses, pay and pension cuts. Austerity in Greece has been a cloak for transferring money from the poor to the already rich. This is why the “No” vote was so decisive.

All significant strands of left-wing opinion (socialists both within and outside the Labour Party, Greens and Plaid Cymru) favour debt relief or debt restructuring and, throughout Europe, more and more pressure is being exerted in this direction. Why is this said to be impossible? There are two aspects – ‘historical’ and ‘political’.

Historically, many nations have experienced comparable debt levels – including, notably, Germany. There are at least three ways in which historic debts have been eliminated – inflation, investment and debt relief. All these options are currently being denied to Greece.

This is well argued in a recent (4th July) interview with Die Zeit, by the  economist, Thomas Pikett. (The link is – “Germany has never repaid its debts“)  He argues for a “traditional” approach to deal with Greek debt – in other words, Greece should do the same as Germany and Britain did in the past.

Politically, I challenge the assumption that it is unthinkable for Greece to default – private companies do this all the time and continue to trade with the blessing of the monied classes. We all know of companies that default on their debts and then, with a different name but with the same directors and owners continue to trade.

As a committed socialist I believe “limited liability” is immoral and despicable in all circumstances and should be made illegal. But for those happy with companies that do this, why shouldn’t similar leniency be shown to a government (especially if it has no blame for the actions of its predecessor – as in Greece today).

The obvious difference is, of course, that private enterprise is allowed leniency – whereas national debt is treated as an excuse to reduce welfare spending. Simon Jenkins, in an article in The Guardian on 8th July, argues that for Greece, the worst option would be to stay in the Eurozone – in effect, it needs a planned default.

As in Britain, the Greek national debt was caused by the irresponsibility and greed of the private sector (now being bailed out by the state) whilst the EU/troika demands that the government balances its books by imposing austerity.

This is one of the ways the richest 1% have accumulated wealth at the expense of the remaining 99% – and now own 50% of the world’s total wealth.

The whole process – and the capitalist system – stinks.


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