“I hope the new government won’t call into question what is expected and what has already been achieved,” Jens Weidmann, President of Deutsche Bundesbank, quoted (in translation) in the NY Times, 26 January 2015, about the victory of Syriza in Greece.
Achievements? 25% decline in Greece’s GDP since the start of austerity; 26% unemployment rate (to be fair, that’s down from 28% a year ago); youth [<25] unemployment 49.8%.
These numbers are virtually identical to those of the worst of the US Great Depression: about a 25-30% decline in GDP from 1929-1933 and a non-farm unemployment rate of about 30% in 1933. Does any rational person talk about the Great Depression as an ACHIEVEMENT?
What universe do people like Weidmann inhabit that they can believe, and publicly state with a straight face, that policies leading to such massive human misery are an “achievement?”
Quite aside from Syriza’s victory, other Greek parties who openly reject the austerity program also did well: combined, the various parties got well over half of the vote.
Sooner or later, European political leaders need to get the message that political systems cannot remain viable when vast numbers of citizens support political parties that specifically reject the system itself. France had such a situation in the mid 1950s, when the Communist Party on the Left and the Poujadists on the Right – both of whom basically rejected the Parliamentary system of the Fourth French Republic – got roughly half of the total vote. The Fourth Republic collapsed in 1958. The frenzied reform efforts of the 1770s and 1780s in France, leading to the events of the spring and summer of 1789, offer another example of systemic failure. Major political parties, like the Liberals in early 20th-century England and the Socialists in Greece today, can become irrelevant overnight: PASOK, the main Left party (Socialist) in Greece, won fewer seats (13 v 17) yesterday than the xenophobic Golden Dawn party, which has employed rhetoric reasonably described as neo-fascist. On the other end of the political spectrum, the Greek Communist Party, which stridently opposes the austerity policies, won 13 seats.
People understand that governmental policies that bring on the equivalent of the Great Depression mean that the system of government, and the economic power structure behind it, have failed. The complete failure of both main Greek political parties – PASOK (in power at the start of the crisis) and New Democracy (in power in recent years) – to govern on behalf of the Greek people has called into question not simply the policies of a given party, but the political system.
In other postings on Brutal Capitalism, I have suggested that Greece offers a warning to countries in that system. The press talk about Spain, but what about the rejectionist parties in France? The UK? Marine Le Pen stands a very good chance of being one of the two finalists in the next presidential runoff in France, and she’ll surely get a lot more than the 20% her father polled. How many elections will UKIP have to win before it becomes a power broker in the UK? (It currently polls a consistent 20% in UK opinion polls, a strong third to the two main parties and three times as much as the nearly defunct Lib-Dems.)
If we look at the USA, we can see the same sort of governmental dysfunction. The Democrats did make one fundamental change – allowing the Bush reduction of the capital gains tax to lapse – and carried out both an infrastructural investment campaign and limited health care reform. These policies helped the US recover more effectively than the Euro zone, but did not do much to change long-term trends in falling real wages, falling household income, declining labor force participation rates, and dangerous economic inequalities. Household income has fallen roughly 10% since 1999; real household income in the US was higher in 1988 than it is today. We have had an entire generation in which the economic condition of the average household has gotten worse, despite the overall real GDP growth in that period of about 70% (nominal growth has been from about $5 trillion to $17 trillion). Since 2008, GDP has risen in the US by about 20%, yet median household income, despite gains in 2013 and 2014, remains well below what it was in 2007-08. Those numbers make it pretty obvious that the few have eaten the loaf, and the many have had to make do with the crumbs fallen to the floor. Quite apart from the economic inefficiency of such outcomes, continued over an extended period of time, they undermine belief in the political system.
In such situations, governments unable (or unwilling) to act by recognized legitimate means (as defined by their society – in our case, the legislative process supposedly promoted by our contemporary democracies), will usually turn to fear, repression, and militarization. If a society is to legitimize grotesque social inequalities, then it will start to introduce such inequalities in seemingly innocent places. Soon, the legitimacy of inequality will appear in ways unimagined even a few years before: who would have thought that American cities would turn increasingly to policies that allow the rich to buy their way out of a traffic jam? Or that security lines at airports would be divided based on the price of your ticket? [News flash for all those first-class and business travelers: if the plane crashes, we’re all in it together.] Or that attractions of all kinds would now have special “VIP” tickets, far beyond the capacity of ordinary visitors, to allow the rich to go to the head of the line at the traveling Harry Potter show or at Disneyland or countless other places? Parents get to feel publicly humiliated in front of their children: daddy, how come we have to wait in line?
This world has come to pass before our very eyes, and the obscene – money-based security checks – now seems not simply ordinary but perfectly legitimate.
Why? In a world in which the people running the economy, like Mr. Weidmann, believe creating Great Depression-level unemployment is an “achievement,” do we need to ask?