A serious Greek debt crisis is unwinding, threatening the stablity of the Euro and, with it, of the European Union itself. EU-wide institutions may be too weak to overcome resistance from France and Germany to bail out Greece. But either Greece gets bailed out, or basic political stability both in Greece and the EU will be at risk.
The background of the Greek debt crisis is summarized as follows.:
The previous right-wing government of Kostas Karamanlis took a joyride on the global financial-bubble jet with a captain refusing to report there was no more fuel until a crash landing ensued.
The new left-center Panhellenic Socialist Movement government actually issued the “no fuel” report, exposing the fact that the previous government had outright lied to everyone, central bankers too, about the size of government debt. The report revealed the largest budget deficit in Europe, far exceeding the 3 percent cap mandated by the EU central bank or the French and German member banks who would have to finance the largest burden of additional debt. The PSM plan to address the deficit and a restructuring of the Greek economy will mean targeted cuts in services, adjustments in taxation, as well as steps to reduce the size of the economy’s informal sector, which is closely related to large numbers of undocumented workers in the Greek workforce. Still in play are whose services will be cut, and how progressive the tax program used to service the debt will be, and how the immigration question will be addressed.
European Social Watch estimates 20 percent of Greece’s gross national product is in the “informal economy.” Generally speaking, the informal economy of a country is defined as unreported economic activity. Sometimes called black, gray, moonlight, underground, shadow, informal markets often pose the single biggest economic obstacle to the normalization of immigrants in society. Informal wealth cannot be taxed. If you cannot establish a progressive tax system on income, it is nearly impossible to fairly distribute wealth and development, or empower democratic institutions. Informal economic activity is a key structural component in the current crisis. Success integrating undocumented workers into society is a foundation for long-term progress for Greek workers.
Reforms reducing disposable income (via taxes) will compel millions into an intense, very class-oriented struggle over how wealth will be re-divided in society to accommodate the structural changes. Ten thousand Greek workers have hit the streets in recent weeks to make their views known.
France and Germany have long been proud of their relatively progressive income tax, and broad social benefits. Thus they are peeved at Greece for being “irresponsible.”
If Greece defaults on debt it will be more expensive than the PSM deficits needed to keep the restructuring from breaking down civil society, and democracy. Still, the “investing” class is counter-attacking by speculating in Greek bonds – in effect saying “any inflation from Greece exceeding 3 percent deficits must be paid up front, by Greece, in higher interest!”
There are important lessons for workers worldwide.
First, stay focused on universal and progressive taxation in the big policy debates, at every level. Taxation is the flip side of public investments in the abilities, health and welfare of our people – and the infrastructures that propel advanced development. It is a pillar of sustainable democratic institutions, accessible to all on an equal footing.
Second, managing immigration challenges so that they result in second-class citizenship, economic or otherwise, for the millions of globally migrating workers, poses grave risks for all social progress.
There is a third lesson, related to some left perspectives on the character of the global financial storm of which Greece is the latest big wave. Some say the point of worker uprisings against disproportionate sacrifices is a repudiation of social democracy and of the democratic struggle in general. They propose instead calling for the overthrow of capitalism. Anything less is a sellout. Such positions weaken the ability of workers and their friends to unite and bend society against the dominance of ultra-right and finance capital interests as far as possible, and toward workers’ needs. It is this struggle that demands attention NOW, and to which all other questions must be subordinated.
Stay focused on the concretes of the class issues, count the money behind the positions – messages for all from Greece. As in ancient times, they are running a marathon to bring us the news.
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