Oxi. By an overwhelming margin, 61% of the Greek people said “no” to the austerity plans proffered by European finance ministers in exchange for re-financing the country’s debt. No one knows exactly what will happen now, especially later this month when Greece owes a huge payment on its debt, and as the country’s banking system totters on the edge of collapse.
The Greek vote raises some profound issues. First, the international finance system must devise a better approach to sovereign debt crises than a reflexive turn to austerity. That has been tried for five years and it has done little to revive the Greek economy. That economy suffers from several problems that are not unique to Greece but are worse there than elsewhere, most especially, systematic tax evasion. But, the people are scarcely sovereign anymore, in Greece or elsewhere, as democracies around the world are flush with corruption and evasion and irresponsible decision-making.
Second, divided sovereignty may be needed to confront some issues, but it is a recipe for disaster in the normal routines of government. In a time of war, allies always relinquish some of their sovereignty to one another in the interests of the common objective. In order to face the environmental degradation of the planet, nation-states will have to relinquish some of their sovereignty in order to achieve progress. But, the Eurozone’s granting of control over monetary policy to its central bankers, while fiscal policy remains subject to state authority, was a recipe for disaster. The European central bankers do not answer to the voters of any country, least of all a small and poor country like Greece. The game is rigged to benefit the rich and the powerful.
Third, countries that live off debt, which is to say most countries, will eventually find themselves in the same situation as Greece. A country can incur a certain amount of debt, especially in order to meet an emergency, such as a war, or to undertake necessary investments in infrastructure or education that hold the promise of greater rewards, and the ability to pay back the debt, down the road. But, politicians are rarely as scrupulous about meeting such basic standards of fiscal responsibility. When George W. Bush entered the White House in 2001, with the country running a surplus, instead of continuing on the path of debt reduction, he enacted a massive tax cut. The belief in trickle down economics, which his father had once, rightly called “voodoo economics,” was that the tax cuts would spur economic growth sufficient to offset the loss of revenues. It was a sham. All Western industrialized countries face the specter of increasing obligations to an aging population. None of them have discovered the means to meet that looming crisis.
Fourth, the whole filthy, rotten system needs a re-examination. The money that the European bankers were putting on the table in the negotiations with Greece was not money that would actually go to the Greek government, except for a minute. That money was mostly destined to go to repay debt, debt held by already wealthy banks in the rest of Europe. Like a drug dealer cultivating a new client, those banks lent money to Greece in the first place knowing that Greece had not undertaken the kind of reforms necessary to repay those loans. They know, too, that they would be in a position to demand payment. Like most referenda, the choice of a simple yes or no hides the better, more complicated options, but when push came to shove, the Greek people were not wrong to say no. Their country had become beholden to the bond markets. Yesterday, they declared their freedom. The consequences may be grim, especially at first, for the Greek people. But, they have their country back and they must now come together to determine what they will do with their new found freedom.
It is well past time for the world to consider a round of debt forgiveness of the kind that occurred at Berlin, of all places, in 1953, when the Western nations got together and forgave most of Germany’s debt obligations. That historical fact makes the current intransigence of the German government towards Greece even more morally suspect. In Puerto Rico, a similar need for debt forgiveness is needed, but the island is prevented from undertaking the kind of bankruptcy process that would allow it to restructure its debt. Groups like JubileeUSA are working to find a solution before Puerto Rico becomes an American equivalent of Greece. It is strange, too, that no presidential candidate has so far jumped on this issue seeing as Puerto Rican voters along the I-4 corridor in central Florida hold the balance of power in that state’s presidential elections. Even those who are eager to gain those votes are afraid to wander into this policy quagmire that is sovereign debt. The one thing we know for sure is that debt forgiveness has worked before. Yes, everyone’s 401k’s would take a hit. But, everyone’s 401k is being artificially propped up by the current system. We can reckon today, or we can reckon ten years from today, but the reckoning will come due.
At its deepest level, the crisis in Greece calls for a fundamental re-evaluation of the world economy from the bottom up instead of the top down. This is exactly what Pope Francis has called for, first in Evangelii Gaudium and most recently in Laudato Si’. Today’s world economy mirrors the economy of the first Gilded Age, before Teddy Roosevelt took on the trusts. Then it was Rockefeller and Carnegie and Morgan who controlled vast swaths of economic activity and were able to purchase elections too. Today it is the Koch Brothers and the Adelsons and the Democratic fat cats too. We are told that the laws of the market must be allowed to work their magic, but the laws of the market are human constructions. The Sabbath, which was made by God, was made for man, not man for the Sabbath, the Master reminds us. How much more true is that of the laws of the market?
I read an article a few weeks back in Politico. It spoke of Hillary Clinton using the “language of grievance” associated with the “pitchfork left.” The language in question did not sound like the language of grievance to me. It sounded like the language of social justice. And, those who dismiss the left and our pitchforks should remember that pitchforks still hurt when, in desperation and grief, they become instruments of political expression. Yesterday, the Greek people raised their pitchforks. They will be the first ones hurt. But, it is the international class of financiers, and their apologists in the academy and the halls of political power, whose day is coming. Either they will lead the re-evaluation of our current, unjust socio-economic structures or they will deserve whatever punishment the people, the demos, hands out to them when that day comes.