Greece: Democracy in Action

The Greek people expressed themselves with utmost clarity. In response to an incomprehensible question posed to them by their fairly elected Prime Minister, the Greeks voted by a wide margin for the precipice instead of self-discipline. They also voted consciously for blackmail, because their government had explained to them that the “No” vote they gave would put pressure on Greece’s creditors (which include ordinary European Union taxpayers and, to a small extent, through the International Monetary Fund, US taxpayers as well.) The Greek government cynically campaigned for the same “No” vote.

Greece just joined Argentina to form a group of countries where the population deserves what’s coming to it because of its deliberate dishonesty, articulated through perfectly legitimate democratic channels.

As usual the urban poor in Greece – those who have no hens and no apple trees (like my parents in the fifties) – will be the ones to suffer the most as a result of irresponsible collective choices.

When was the last time anything good for the poor ever came out of an election won by any Left at all, anywhere, at any level? Please, remind me.

Greece Needs a Radical Transformation

Having rejected austerity with the “no” vote on the referendum, Greece now sits on the edge of an even worse recession and economic collapse, unless the lenders write off or postpone the debt payments even further. The problem is that the Greek politicians have not provided a program of major policy reforms.

Only with radical changes could Greece rise like a phoenix from its economic mess. These are the measures which could quickly make Greece the most prosperous economy on earth.

1. Amend the constitution to eliminate all restrictions on peaceful and honest enterprise and human action. There would be free trade, without tariffs and quotas, with all countries.

2. Leave the European Union.

3. Crank up the printing presses and give each Greek citizen 10,000 new-drachma in paper currency. The new-drachma would be payable for taxes at a one-to-one ratio to the euro. One new-drachma would also pay for first-class postage to European countries. No new-drachmas would be created after this distribution except to pay previously-existing governmental pensions. Banks would be free to issue private currency redeemable in new-drachma.

4. Immediately replace the income tax, the value-added tax, and all other taxes with a tax on land value and a pollution tax. Replace judicial environmental restrictions with the levies on pollution based on the measured damage. Enable citizens to sue polluting firms that are not paying a pollution tax based on the damage. Allow real estate owners to self-assess their land value with the condition that the state could buy their land at their assessment plus 25 percent, and lease it back to the owner of the building at current market rentals.

5. Decentralize all government programs and bureaucracies other than the military to the 13 provincial “regions.” The Greek constitution already prescribes that the administration of the country be decentralized. The land value tax would be collected by the regional governments, which would then pass on a portion to the national government.

6. Pay the foreign lenders with futures contracts payable in new-drachmas maturing in 2025.

Greek democracy was restored in 1974. The politicians sought votes by legislating a welfare state funded by borrowing. With radical reforms, national welfare programs can be phased out as employment increases and programs are shifted to the regional governments.

A prosperity tax shift would bring in massive investment and quickly eliminate unemployment and tax evasion. Billions of euros held in foreign banks would come back to Greece to finance investment and production.

Without radical reforms, Greece will be stuck in debt, austerity, and poverty. Radical reforms are the only way out.

Talking to Greeks and Talking to Germans

Germans and Greeks, despite the glaring differences between their national administrations, do not hate each other. Perhaps the relationship is more akin to that of an older to a younger brother. The elder is mature, self-assured, and judicious in action. He looks at his younger brother, playing with toys, weeping when he stubs his toe, begging for cookies, and other youthful activities with some measure of aloof disdain, but with greater measure of pity. Or, perhaps the relationship is like a tired, Stoic householder with his shrill harpy of a wife. He brings home the bacon, and she spends it all and demands more. Or a number of other interesting metaphors which I have failed to conceive. I suppose my lack of vision here has something to do with the simple fact that I have never gotten the two of them, the German and the Greek, in the same room together. Instead, I have only talked to one, and then to another, at different times and in different places. What they have to say to each other while apart is, in some ways, what quarreling brothers have to say to each other: you are immature, well you are mean!, but, you deserve it, but I don’t! and so forth. It’s also like the tired husband and his old lady: please be more fiscally sound, no, give me more!, but I already gave you-, NO, more! and so on. Who really knows how the exchange might play out, or if these media stereotypes at all hold true, if they came together to talk?

In Patras, on the first night of the last weekend of Carnival, I was milling about the central square waiting for the floats to come by. In one hand I held a souvlaki, the most delicious street food made by man after burritos, and in the other, a bottle of sweet local wine. “A house specialty” the server told me, “very good with souvlaki.” Greeks are a raucous people, and in these times even their holidays are not as enjoyable as they once were. So, naturally, they were holding a protest in preparation for the large crowds that were to come. I spoke with Maria, a local schoolteacher.

  • Self: “I can’t read Modern Greek very well. Can you tell me what those slogans say?”
  • Maria: “Yes, well, I don’t know how to say it in English. But, we owe a lot of money, and we don’t want to pay.”
  • S: “Okay, but why shouldn’t you pay?”
  • M: “Our governments took out the loans for us, we didn’t know about them, and now we’re here. Why should we have to pay for something we didn’t agree with?”
  • S: “Valid points, valid points. But, you all benefitted from that money, right? Your government hired a lot of civil servants on that money. And, you could have voted for a more austere party that wouldn’t have taken bad loans, but you enabled PASOK and the others to accept disastrous loans that Greece could not sustain.”
  • M: “Yes, those things are true. But we don’t want to pay, and we can’t pay. Very few people have jobs, so they can’t take more money from us. All the bailout goes to is the debt. There is nowhere for the money to come from. We need jobs, not more pain.”
  • S: “Certainly, and I wish you luck in that quest.”

At another time, at a taverna in Meteora, I had a caveman-like conversation with a gaggle of old Greek men, having dinner with their wives.

  • Old Greek man one: “Me, I am fat communist. I have very important work tomorrow. I drink coffee, I drink tea, I read newspaper. Very important!”
  • Old Greek man two: “Bah. You always so lazy, Kostas.”
  • Old Greek man three: “We like Tsipras. He [points to OGM2], he capitalist. He no like Tsipras. Tsipras make Greece strong! [laughter]”
  • Me: “But what about the debt?
  • OGM1: “Debt no important, Tsipras will do good.”
  • OGM3: [Says nothing, shakes head, spins worry beads]

There seems to a be a certain cavalier attitude amongst the Greek people, whether young or old. The old are happy and fat, living on their pensions from the government, which despite recent cutbacks still seem sizable enough to allow for daily trips to the local taverna. They look on the struggles of the youth with kindly pity, but without the necessary foresight to see that their present happiness is built on the suffering of their descendants. It seems that a man can never escape his times and his view of the world. This view is dominant amongst the older citizens of Hellas unless, like OGM3, they have to do serious work for a living. He was an olive and tomato farmer, and was struggling to make a profit in the face of an onerous tax burden and the shrinking market for his products, most of which he was now forced to ship abroad. Throughout the dinner his face oscillated between one of benevolent, bemused distraction, and one of painful contemplation. The young, by contrast, are bitter and cynical. They have no jobs, no prospect for practical work, and no use for their university degrees. They spend their time, like many children of the West, in idle amusements like smoking, drinking, and fornicating at college parties. As Russell observed in his History of Western Philosophy, in times of decay there are always two countervailing tendencies in man. One leads to a resigned morality, convinced that the world is terrible and all we can do is respond to the terror. This is the ethic of the Stoic, which cut its teeth as the Hellenic world decayed and made way for Rome. Another leads to an unrestrained libidinous and orgiastic hedonism, which has no aim and no long term satisfaction. The worship of Dionysus, or of strange mystery cults, social fads, and passing fancies. You can guess which road the youth have taken. They are correct in saying that they really shouldn’t have to pay, because the burden foisted on them was made before their time. But they are correct for a world that is ideal, where Germany does not assume that a debt contracted is a debt that must be paid, regardless if the beneficiaries do the paying or not. They are, as Homer says, between a rock and a hard place: pay the penalty to Charon and eventually cross the river, or spit in his face and feel the pain all at once. Germans are more annoyed than anything at the behavior of their southern neighbor. One beautiful morning in Freiburg, in southern Germany, I was drinking tea with my host, Matthias, and asked him what he was reading in the paper.

  • Matthias: “This nonsense” [tosses the paper my way]
  • Self: “So Greece wants World War Two reparations? Didn’t Germany already pay?”
  • M: “Yes, but the Greeks are saying that we only paid individual reparations, and not structural reparations. Hitler forced the Greek national bank to give him a loan roughly equaling 11 billion Euros in Reichsmarks. But I don’t think it will go anywhere.”

The next day, while I was on a bus to Hamburg, I met a German named Vincent. We talked amiably in Hochdeutsch until he realized I wasn’t a local, which only happened when I said those four magic words: “Ich kann nicht verstehen…” His attitude towards the Greeks was less of bemusement, more of annoyance.

  • Vincent: “These people are ridiculous. They want reparations now? And then I heard they want to give European papers to thousands of illegal immigrants and send them by bus to Germany. This would be funny if it weren’t so sad.”
  • Self: “Yes, but I understand them. The young didn’t make the debt, and they can do nothing about it now. There are no jobs, no opportunities for them at home. What should they do?”
  • V: “Beyond me. But their government is out of place. We have given them so much, and they have nothing to show for it. In the past couple weeks two foreign firms have tried to invest in Greece, but the Greeks wont let them. ‘No no, this is a public part of the economy’ or ‘no no, we won’t privatize this!’ It’s ridiculous. They can’t even help themselves.”

It’s a position I also sympathize with because, like many dilemmas such as these, both sides are in the right. Greece destroyed its own position with years of financial mismanagement, though the real crooks are still free while the burdens they created are borne not by them, but by the young. Germany gave bailout money to Greece, but on harsh terms which have done little to ameliorate the problems. Both have alienated each other with rhetoric and with stupid actions, which is reflected in the sentiments of their people. Like an older brother, Germany has indulged Greece in its flights of fancy for some time now. But I think they will soon pull out the rug from under their younger ward, and let them rot.

Secession within the EU?

While I’m on the topic of secession, I thought I’d point readers to the upcoming vote in Catalonia to see if they want to secede from Spain. Central to my arguments for secession is the role that new states would have within a broader free trade zone (like the U.S. or the E.U.). For Catalonia, the British paper Telegraph reports:

Catalonia wants to collect its own taxes, to control how they are spent and it seems prepared to break away from Spain to do so.

But with a clear road map yet to be outlined the process of separating from Spain promises to be burdened with hurdles.

While Catalans prize their role as citizens of Europe, EU officials have warned that membership of the union won’t be automatic. Instead Catalonia would have to gain admission, joining the queue of a list of new European nations seeking membership, and the process would likely be blocked by a vengeful Spain.

This is key to not only Catalonia’s success, but also the success of secessionist movements everywhere. If regions within current states want independence, they have to be sure to not confuse political independence with economic independence. The latter will only lead to poverty. I highlight this point because new states formed during the beginning of the post-colonial revolution of the 60’s and 70s thought that economic independence was the key to liberty. How wrong they were. Continue reading

A European Union of More Nations?

Wouldn’t that be so bad ass? Or am I just a geek?

The New York Times picks up on concepts that libertarians have been talking about for years. From the article:

The great paradox of the European Union, which is built on the concept of shared sovereignty, is that it lowers the stakes for regions to push for independence.

Has the NYT been reading Notes On Liberty? That’s a tongue-in-cheek question, of course, but one that makes me feel smug and sexy at the same time!

I have largely addressed the crisis in Europe from a political standpoint on this blog, and I don’t see that changing much over the next few years. Fiscal responsibility and civil society can only flourish if political institutions are well-defined.

The NYT article decided to quote a scholar at the European Council on Foreign Relations (which is not *sigh* a think tank dedicated to furthering the interests of a small, elite circle of bankers and industrialists) instead of me: Continue reading

Separatism (Secession) in Spain, and the Rest of the World

Separatist agitations in Spain have prompted some observers to reconsider the concept of secession as a viable option in politics again. The BBC has a very good report here, and the Economist has an even better one here.

When I was taking an Honors course on Western civilization and we got to the European Union, a thought immediately came to my head and I shared it with the class: does the European Union mean the demise of the big nation-states of Europe?

My hope is that it will, but my Professor and my Left-leaning classmates either thought ‘no’ or had not thought about this question at all. One sexy girl did think it was possible, though I think she was just humoring me so that I would ask her out on a date (yes, I did, but she couldn’t get into UCLA, though, so she ended up at Berkeley!).

I thought about the confederation of states in Europe that the EuroZone has created, and remembered that many regions within the nation-states of Europe have harbored separatist sentiments since being absorbed into the nation-states of Europe (sometimes hundreds of years ago, sometimes decades ago), as well as the peaceful split-up of Czechoslovakia into two states within the EuroZone.

The purpose of the nation-states was to streamline trade between regions by standardizing trading policy and eliminating parochial tariffs that regions within the nation-states had erected over the course of centuries. So, in what is now Germany, for example, there were hundreds of small states that each had their own economic policies, and most of these states had erected protectionist tariffs, even on neighboring states. The German state standardized trading policy in what is now Germany so that a tariff-free zone of trade eventually emerged within Germany. The federal set-up of the United States accomplished the same thing.

Now, though, the European Union has essentially taken the place of the nation-state as the chief entity in charge of standardizing trading policies in Europe. My line of thought leads me to conclude that this political setup is a great opportunity for regions that have been absorbed into larger nation-states to assert more fiscal (local taxes) and political (local elections) independence because of these region’s new interdependence with a larger part of the European economy thanks to the elimination of tariffs between the larger nation-states currently in place. In short, the confederation has provided the opportunity for smaller states to emerge while at the same time eliminating the parochial and self-defeating aspects (trade policy) of small state polities that often accompanies “smallness.” The best of both worlds has the chance to flower: local governance and total participation in world trade.

I realize that the EuroZone shot itself in the foot with the creation of a central bank and the attempts to delegate to itself ever more political power, but with these two blemishes notwithstanding the European Union is a good thing for both peace and prosperity.

The question of secession in political science has recently emerged as a good one for many scholars, but unfortunately their focus has tilted heavily towards Europe and Canada (Quebec and Nunavut). If we apply this concept to other regions of the globe – especially China, Africa, the Middle East and India – then the notions of violence and despotism that Westerners largely harbor towards these regions disappears.

I hope this makes sense. If it doesn’t you know where the ‘comments’ section is!

States and Secession: Lamenting the Failure of the Euro Zone

The Guardian has a so-so map on secessionist movements in Africa that’s worth checking out. I say it’s only so-so because it doesn’t really cover all the secessionist movements in the region, just the violent ones or the ones favored by Western diplomats.

I’m interested in secessionist movements because of the effects that they have on nationalism, one of the most dangerous ideologies to haunt mankind since the industrial revolution. Nationalism is probably worse than racism, or at least on par with it, when it comes to ideas gone horribly wrong.

That’s why I support free trade between states, and the deeper the better. The true tragedy of the EuroZone crisis is not the inevitable and predictable collapse of the euro but the fact that anti-liberal policies like the central bank and more political integration between states (and away from the people) are being misconstrued as liberal, in the classical sense.

The smaller the states the better, and the freer the trade the better. Mexicans should be able to travel and live in the US and Canada the same way that Nevadans are able to travel and live in California. The EuroZone could have been beautiful, but the pressure for a central bank and more control from a center, in Brussels, has probably ended it. It’s a good primer on how beautiful ideas often don’t pan out the way people would like them to.

Here’s how to fix the EuroZone crisis:

  1. Eliminate the monopoly of the central bank on creating money and credit.
  2. Open up the EuroZone market to more goods from the rest of the world (especially agricultural products from developing states).

I also think it’d be a good idea to keep Brussels as limited as it is. Doing so will not only allow more room for local policies to be experimented with and tested against other policies, but it will continue to erode the nation-state as well. What we were seeing prior to the crisis in the EuroZone is more calls for autonomy from state capitals throughout the EuroZone,  and a powerlessness on the part of states to do anything about it.

So instead of France and Spain, two states, the world may have seen up to five or six states in their stead, all interacting with each other economically while retaining nominal political independence from each other.

What a shame.