Socialist Prime Minister George Papandreou of Greece stunned the world with his announcement of a national referendum on the new austerity measures demanded by European Union rich nations in exchange for additional loans to the debt-ridden and depressed Greek economy. The referendum has now been shot down by opponents in the Greek parliament afraid of even temporary postponement of the latest “deal”.
EU leaders and banks – motivated by stark fear at the thought that ordinary Greek people may get to vote on the proposed draconian cuts to their standard of living – are screaming “foul!” and indeed have much cause for alarm. So far, their affection for austerity has meant massive cuts in pensions and wages, education, health and services, and jobs. But NONE of the magic growth that the “market confidence fairy” (who hates public investments) is supposed to fix has transpired. Neither have corruption and bribery receded with austerity. Austerity is making all the economies worse, not better: Greece, Portugal, Spain, Italy, Ireland, Latvia, Estonia, and others. Even the UK. Even the U.S.
In fact, the exact opposite policy is the right one. And it is the one that will eventually have to be deployed after all the dangerous fictions in Republican and conservative talking points have played out, perhaps after many existing institutions are in ruins. But it must – and thus ultimately will – be done.
- Public investment – especially in the abilities and talents of the people – must be aggressively increased.
- There must be more not less democratic influence over national and international industrial policy.
- Progressive taxation on excessive inequality of the top 1% must be increased to help shoulder the burden of these public investments.
- And, government must be an employer of last resort in high unemployment times.
The banking industry is shocked at this misery of new moral isolation: Oh! the “elegance” of market failures “working themselves out”!! (with taxpayer assistance as millions fall into ruin and poverty). But their shock and arrogance clarifies for working people their rights – and duty – to bring their political power to bear on the entire austerity regime. Bank-driven austerity politics – where the 1% increase their wealth at public expense and protection while the 99% are getting poorer – is not compatible with democracy.
Long ago Greeks helped found the ideals of democracy. In a profound sense, they are now opening a new door on the future of democracy in this new, globalized world.
A vast contest is unfolding across the world with national characteristics in each country. The Greek struggles will be the pivot. A class and political restructuring of great magnitude, of both global and national institutions, is well under way. It is responding to imperatives of a global re-division of labor driven by the wide deployment of advanced technologies, economies of scale, new markets in emerging economies, and the vast infrastructures required to support 21st century commerce.
None of us will escape the challenge now before the Greek people. We too must directly confront and turn back the banker austerity agenda. Much of the future we see through a glass darkly. And like in Greece, the landscape here is already strewn with the failures of austerity policies and there are more failures coming.
If the Greek people by protest or vote defeat the “deal,” Greek default on its debt will follow. So will the collapse of Greek banks, requiring their likely nationalization and the return to the drachma currency. The currency switch will mean a 50% pay cut – maybe even more in the immediate short-term panic. The global reverberations will be large. But, on the other hand, Greek exports might grow when its currency is devalued – if any financing could be obtained after a default and exit from the Eurozone. Voting no is a risky path, and no picnic. There is no escape from globalization. With defeat of the deal, Greece will likely have to exit the Eurozone barring the onset of a EU-wide upheaval that takes a progressive direction toward greater EU-wide governance, working class empowerment and social democracy. No one knows how far-reaching the consequences of even calling the referendum, never mind its result, will be. The blindness of the banker regime to the huge threat against the EU project inherent in their austerity agenda — noted by Nobel prize winning economists the world over — seems obvious. But not to them!
Saying “yes,” however, while averting the shock of immediate default, will lead to another 30 percent austerity program with both pay cuts AND no growth to boot! And a loss of sovereignty too! There is no light at the end of that tunnel. And without growth, default, on an even bigger debt, is inevitable.
No one should be surprised if the Greek people say no to the new EU austerity regime, regardless of the consequences of “going it alone”. There is austerity down either path, and fearsome storms too. But in either outcome, the working class of Greece has the best chance to make its voice known and demonstrate that ITS voice, especially when harmonized, delivers the most powerful and wisest song!
Photo: Dan Cross // CC 2.0
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