Wednesday, September 12, 2012

Ethnic Stereotyping and Class: Two Ways to Look at the Eurozone Crisis

Hats off to Darian Meacham who says what needs to be said: it is absurd to speak of countries as if they were single individuals (much less “representative agents”) and explain the problems of peripheral Europe on the failings of entire peoples or cultures.  In every instance, and not only Greece, the focus of Meacham’s post, the “national” crises of corruption and barriers to initiative can be traced to an elite class that benefits from them.  Taxes are automatically deducted from workers’ paychecks, while the rich pay nothing.  A tangle of red tape insulates business owners from competition and provides opportunities for insiders to harvest a never-ending flow of bribes.

Meacham could have gone on to point out that, if any interest group is blamed in the media, it is labor.  The key to progress, we are told, is liberalizing labor markets—removing certifications, restrictions on firing, centralized wage bargaining and so on.  What this argument conveniently overlooks as that the most regulated labor markets can be found in the social democratic countries of the north, which nevertheless regularly enjoy trade surpluses.  It is not labor that has failed in the deficit countries, but capital.

Meacham’s attack on euro-neoliberalism might seem strident to you, but consider the demands imposed by the Troika on countries like Greece and Spain—demands that will have even more force as prerequisites for ECB bond purchases.  They are blind to asset-stripping and capital flight.  They call for higher taxes on those who already pay and give only lip service to fighting tax avoidance.  (Indeed, if the EU were serious about getting the rich to pay their taxes they would take aggressive action against tax havens, which of course they don’t.)  Budget cuts are concentrated on education, health care and social protection.  (Greece was allowed, even forced, to continue wasteful military purchases during the first years of the oversight program.)  Privatization of public enterprises is demanded irrespective of whether they perform well or not, and without consideration for the depressed prices they will command in a fire sale.  (Or perhaps that’s the point.)

Returning to Greece, the implicit logic of the Troika program is that the Greek state is too large and provides too many public services, despite the fact that the aggregate numbers for Greece are hardly out of line by European standards.  This is what Meacham means by neoliberalism.  In fact, the real problem is endemic clientelism, the use of the public sector as a well of resources that can be granted or withheld by political grandees in return for votes and other expressions of loyalty.  Yet the Troika has never identified the problem by its real name, and the measures they call for would, in many cases, make it worse—for instance by removing civil service protections and giving politicians more discretion, down to the individual level, over who gets to keep their job.  If this were about actually helping the Greek people to move to a higher level of productivity, not to mention democracy and human dignity, you could call it an error, but the matter is never discussed in the first place.

What is tragic is that, not only are nightmares being visited upon low and middle income people in countries like Greece, Italy and Spain, but the entire discourse surrounding the “problem” and its supposed causes has been poisoned by the ugliest form of ethnic stereotyping.  In some ways the crisis has served as a vehicle to bring Europe closer together: this is true of economic institutions, although the pace is maddeningly slow and the content crudely neoliberal.  On the level of popular politics, however—the rhetoric of political parties, political coverage in the media and conversations in pubs and cafes—the crisis is tearing Europe apart, undoing decades of patient consciousness-building.  In the end, it really is about nationalism versus class: if you ignore one, the other metastasizes into a monster.

One final point, not mentioned by Meacham but logically connected: when the time comes to cut the budget, a promise is made that every attempt will be made to cut the fat, not the bone.  The reason this promise is broken is that the fat holds the knife.

1 comment:

Zorblog said...

Good points, but IMHO the anti-firing regulations and early retirement benefits in Southern Europe are really playing a part in their economic woes.
More generally, what you see in (non-English speaking) Europe is a lack of economic culture, including among the political and media spheres.
This is why Europe engaged in the euro without even paying attention to the warnings of economists.
It is also the reason why Europe pressed so hard on austerity (and still does despite all the evidence of its failure). The only alternatives to austerity that are usually considered is protectionism, market restrictions and more red-tape. This leaves very little room for sensible center-stage economic policy.
Scandinavians seemingly know better, but they account for a very small share of the European Union, and very few people read Swedish south of Malmö.