A Global Disaster

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economy, Europe

Paul Krugman is calling the European summit agreement on Greece “the sacking of Athens.” He said, gloomily, “So we have learned that the euro is a Roach Motel — once you go in, you can never get out. And once inside you are at the mercy of those who can pull your financing and crash your banking system unless you toe the line.”

See also Krugman’s blog posts “Faithocrats,” “The Pause of 2014,” “An Unsustainable Position,” and “History Lessons for Euro Debtors,” which together make about as good a primer on the Greek situation that there is. See also Ivan Krastev, “A Greek Farce.”

The immediate impact of the Greek agreement is calmer markets, defeated Greeks and skeptical Germans. So should Europe celebrate? Do European leaders expect Greece to be transformed by the accord as Central Europe was transformed in the 1990s? Is it possible that the whole referendum episode — a resounding public “no” followed by Mr. Tsipras’s climb-down with the creditors — could serve not to humiliate Greek voters but instead to re-educate them?

While many in Brussels are hoping that the Greeks have learned, it is more than likely that the new reform package agreed to on Monday will result in further radicalization of certain segments of the European left and the spread of apathy in Greece.

Mr. Tsipras’s leftist populism failed to win Greece a better deal. Instead, the real political winner is most likely to be not the moderate center but the anti-European right. And while European leaders can congratulate themselves on keeping the Union going, the price that Europe will pay for saving Greece economically and losing it politically is the transformation of the Union from a project sustained by hopes and aspirations into one surviving on shared fears and confusion.

Krugman says in “Faithocrats,”

But let me note, as I have before, that what Europe calls technocrats aren’t people who know how the world works; they’re people who subscribe to the approved fantasies, and never change their minds no matter how badly wrong things go. Despite the overwhelming evidence that austerity has exactly the dire effects basic textbook macro says it will, they cling to belief in the confidence fairy. Despite a striking lack of evidence that “structural reform” delivers much of a growth boost, especially in an economy suffering from a huge output gap, they continue to present structural reform — mainly in the form of disempowering workers — as a sovereign remedy for all ills. Despite a clear record of past failure, they continue to push for asset sales as a supposed answer to debt overhang.

In short, what Europe usually means by a “technocrat” is a Very Serious Person, someone distinguished by his faith in received orthodoxy no matter the evidence.

Structural reform in the form of disempowering workers sounds pretty much like what the Republicans want to impose on us, here.  Faith-ocratism will be our doom.

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13 Comments

13 Comments

  1. c u n d gulag  •  Jul 16, 2015 @1:15 pm

    And thus reopens the Austerity door, and in steps 21st Century Fascism!

    I can’t believe how short-sighted Germany and the Banksters are!
    Forgiving Greece its debt would not cost all of that much at all.

    Ah, but the Europeans are in full-Austerity mode, and are eager to punish.
    “Crack that whip!”
    But not on the wealthy and powerful Banksters (American AND European) who almost flushed the entire world’s economy down the toilet!
    Don’t punish the ones who kept lending to Greece so that you made oodles and oodles of money! (Kind of like our criminal Banksters here with the real estate fiasco – where they walked away with their fortunes intact, but working families had to walk away from their homes).

    Punish the guilty?
    OH NO!
    OF COURSE NOT!!
    ARE YOU MAD?!?!?!?!?!
    They’re much too big and (self) important to fail!

    No, you must take it out on someone or something small.
    This is the equivalent of having a huge fight with your wife, and then going outside and giving the dog a few good kicks in its balls!
    And then, next time you get near the dog, you really shouldn’t wonder why he decides to bite-off a good chunk of your hand.

    Stupid, stupid, stupid…

  2. uncledad  •  Jul 16, 2015 @1:24 pm

    “never change their minds no matter how badly wrong things go”

    Is Krugman referring to the GOP?

  3. Dan  •  Jul 16, 2015 @4:30 pm

    Sounds like technocrat is another word for Republican, substituting, maybe, “structural reform” for “lowering taxes.”

  4. joanr16  •  Jul 16, 2015 @4:55 pm

    And then I read this

    http://www.huffingtonpost.com/entry/angela-merkel-crying-refugee_55a7d6a8e4b04740a3df26c3?

    and suddenly realized: Merkel is possessed by the ghost of Lady Thatcher!

  5. paradoctor  •  Jul 17, 2015 @1:48 am

    Why the persistance in error? Stupidity and ambition. You can never have enough of what you really do not want.

  6. paradoctor  •  Jul 17, 2015 @1:50 am

    Maha, what’s a Buddhist perspective on stuck-on-stupid?

  7. goatherd  •  Jul 17, 2015 @7:51 am

    Just taking a wild guess, I’d say attachment. Ideologies simplify the world in such a way that, for a moment, we have the illusion that we understand it, or some aspect of it. Most of us grow out of this stage and accept confusion as part of the bargain of being in the world of action. But, some people invest too much or have the extraordinary good or bad luck of gaining notoriety or reward from their belief. The belief becomes intwined with their sense of who they are. The difference between the real world and a mere, simplified model of the world, begins to degrade.

    When the pursuit of the illusion causes negative consequences in the real world, the tendency is to grasp it tighter, because, it has become central to a world view and a concept of self. Often, it has been the driving force for a lifetime of labor, a career. There’s too much invested in it for it to be relinquished without a struggle.

    So, when empirical data contradict the belief, the choice is between, rethinking everything, or admitting that instead of a shining clear eyed hero, you were really just overwhelmed by the illusion, too simple minded to find your way out of it. It’s much easier to blame the victim. After all, either they are at fault, or your theory is at fault. We see it here with trickle down, Laffer curve types. The poor MUST have character flaws, because they fail to reap the obvious benefits of lower corporate taxes and right to work laws. Some people are just beyond help.

    I don’t know how much of a Buddhist perspective this is, I think I found it in a self-help book back in the ’70s.

  8. maha  •  Jul 17, 2015 @9:05 am

    Goatherd — Right; and the part about “The belief becomes entwined with their sense of who they are” is critical. If you think about it, everything about ourselves that makes us “me” is a relationship to other people or human organizations. Put another way, we cannot describe ourselves as unique humans without referencing a relationship. We are sons or daughters, husbands and mothers; we identify with a profession or a culture or ethnicity or something else. We cannot be who we think we are unless everything else is the way we think it is. So if someone is heavily ego-invested in the superior virtues and characteristics of X, then everything not-X must be inferior. And then confirmation bias kicks in. Etc.

  9. Coarsehair  •  Jul 17, 2015 @10:56 am

    This must be the first time I have ever seen or heard of Paul Krugman being cited or introduced without the added descriptor “Pulitzer-Prize winning economist”.

    My congratulations for your proper temerity.

  10. maha  •  Jul 17, 2015 @11:42 am

    “My congratulations for your proper temerity.” In these parts, introductions to Krugman are not necessary.

  11. Coarsehair  •  Jul 18, 2015 @10:31 am

    But, the descriptor gives weight to his blatherings!

  12. c u n d gulag  •  Jul 18, 2015 @11:46 am

    Bobo Brooks, blathers.

    Krugman gives sage advice.

    Unfortunately, people pay more attention to the former, than the latter…

  13. goatherd  •  Jul 19, 2015 @9:39 am

    Probably no one will read this post, and we may all have varied opinions about Dominique Strauss-Kahn. But, this article is worth a look. If you scroll down about a third of the way there is a translation of his letter in ENGLISH. So don’t get freaked out.

    http://www.lemonde.fr/economie/article/2015/07/18/a-mes-amis-allemands-le-texte-de-dsk-qui-fustige-les-conditions-de-l-accord-avec-la-grece_4688728_3234.html



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