Crisis, governments and the micro-macro conundrum

Layoffs and salary cuts are individual firm responses to a crisis that may make sense from a micro perspective- it is about saving money – but they will have dire consequences on the macro level.

I lived through this in Greece. Ten years ago, every firm was expecting the worst to come from the memorandum. They started making people redundant, pulling out from planned investment and cutting salaries. Unemployment went up, demand collapsed, public revenue went down, more austerity measures were needed and the downward spiral deepened. The country ended up losing one third of its economy in just four years.

Will it now be Greece on steroids everywhere?

The side effects of myriads of micro adaptations appear on the macro level. This is a key problem for economics and is particularly challenging for Austrian economics. Entrepreneurs creatively respond to a crisis by adopting a cautious and defensive approach long before some of them could spot new opportunities for investment and take positive action to exploit them. But if they all choose to first play ‘defense’, they shape the macro-environment in patterns that keeps telling most of them “keep on protecting yourself”, “there are more risks than opportunities out there”. Both supply and demand are on a continuous downward spiral. While some discerning entrepreneurs will spot some opportunities even in the direst of the circumstances, their plans need time to materialise and some may never come to fruition. In the meantime, most economic actors are not well positioned to start what they know to do well, and many have already lost their money in activities that went downhill.

On the other hand, the side effects of a large top down intervention such as the global lock down confirms the Austrian critique that central planning is also a risky endeavour. In an effort to control a complex reality, radical top-down interventions can divert investment to the specific activities they prop up, which appear sustainable for as long as this diversion lasts. Restrictive measures can also backfire, such as Greece’s shock austerity that was intended to balance the budget in Greece, or can prolong a precarious environment, such as the debt-fuelled bailouts elsewhere to save the banking system.

The problem is that policymakers do not have the tools to gain a full grasp of any potential unintended or undesired consequences from their actions. When they focus on one range of analysis, such as preventing a spike of deaths during the epidemic, the measures they take can generate a cascade of negative side effects in areas off their alarmed radar which they may have no idea how to arrest or fix.

I don’t see this micro-macro antithesis as an automatic validation of post Keynesianism in the sense that capitalism is always inherently unstable. It is unstable in periods of crisis when the micro and the macro can become a contradiction.

Exogenous shocks periodically happen. But it is worth studying what post Keynesians state: a crisis can emerge endogenously as in the financial markets.

The way out may be to think in terms of resilience rather than stability. I am inspired by Hilton Root’s forthcoming book Network Origins of the Global Economy. Resilience is the capacity of a system to accommodate turbulences and absorb shocks in recurrent episodes of instability. The system is unstable but can withstand the stresses.

Are multiple adjustments by adaptive agents able to bring about resilience in a system? Or do we need a central node to gain control and bring about order? Is a centrally-induced order a structure of relations that can be resilient over time, given that it depends on the health of the central node and knowing that the capacity of governments to understand and predict is limited?

From the Comments: Yes, the EU is, and will continue to be, democratic and voluntary

Here’s Barry countering a good, common, anti-EU argument:

Denmark Maastricht Treaty: after a referendum rejected it, opt outs were negotiated and the Treaty was approved by referendum with the opt outs

There was no referendum in Italy on the Nice Treaty, or if there was evidence appears to have disappeared from the net. Maybe it’s a beneficiary of the right to be forgotten law.

France and Netherlands: Constitution was dropped. Replaced by less ambitious Lisbon Treaty.

Italy: same comment for Lisbon Treaty as for Nice Treaty

Greece: Euro bailout referendum The rejection of the bailout package was a referendum held in Greece only for an agreement affecting all member states of the Eurozone. They did not wish to change the terms of the bailout and how would it be democratic for a vote in one state to override the wishes of the elected governments in other states. The elected Greek government was free to choose to leave the Euro if it was not willing to accept the terms for a bailout, The elected government and the national assembly chose to stay in the Eurozone and continue bail out negotiations on terms acceptable to the other states.

All states choose freely to remain in the EU apart from the UK, which has not provided a brilliant example so far of the advantages of withdrawal. When the UK voted to leave, the EU respected the result and entered into negotiations while the UK Parliament failed to agree on a withdrawal plan. States which stay in the Union are to some degree constrained by other stages of the union, as applies to the member states of the USA or the states which make up federal Germany.

Here is more from Barry on Brexit. And here is his stuff at NOL on the European Union. Tridivesh has some interesting stuff on the EU, too.

For a more skeptical take on the EU, try Edwin. Or Chhay Lin.

Nightcap

  1. The making of an Anti-Semitic myth Jacob Soll, New Republic
  2. Lessons from Greece Scott Sumner, MoneyIllusion
  3. Identity norms Robin Hanson, Overcoming Bias
  4. South Korean courts and Japanese diplomacy Masao Okonogi, the Diplomat

RCH: 10 most brutal massacres in history

That’s the subject of my latest at RealClearHistory (I submitted it before the vicious, anti-Muslim shooting in New Zealand occurred). An excerpt:

7. Chios massacre (March – July 1822). The Ottomans were bad people for a few centuries during the Middle Ages (RealClearHistory has more on the Ottomans here). In 1822, Istanbul massacred 52,000 Greeks on the island of Chios during the Greek War of Independence. The massacre was used deftly by imperial proponents in London, Paris, and Moscow, and further isolated the Ottomans from European diplomacy. As for the inhabitants of Chios, most were apathetic toward the rebellion until the massacre.

Here’s another one:

5. Massacre of the Latins (1182). In the 12th century, Roman Catholics in Constantinople, the capital city of the Roman Empire, were known as Latins and in 1182 they were slaughtered, driven out of the city, or sold into slavery. Tens of thousands of people are estimated to have died. The massacre occurred because the vast majority of non-Roman Catholic inhabitants were much poorer than the Latins of the city, due to the latter’s connections to the wealthy city-states on the Italian peninsula (Venice, Genoa, Pisa, etc.). The massacre also made it harder for the Pope to unify the Christian world, as the split between Catholic and Orthodox sects only became more hardened.

Lots of bad things have happened in Turkey and Greece and over the years. Please, read the rest. There’s more massacres, but also thoughts on the genocide-versus-massacre debate, and the sheer lack of knowledge that humanity possesses in regards to its own history.

Nightcap

  1. The last (effortless) rulers of the world Branko Milanovic, globalinequality
  2. How TikTok is rewriting the world John Herrman, New York Times
  3. Empires of the weak: European imperialism reconsidered Peter Gordon, Asian Review of Books
  4. The place that launched a thousand ships Sean McMeekin, Literary Review

Some quick thoughts from Athens

I spent the last week and a half in Greece (mainly Athens and other historical sites in the Peloponnese) thanks to the Reason, Individualism and Freedom Institute, and explored ancient political philosophy in a modernly turbulent state. I’m writing this in Naples. Here are a few thoughts I had from the first couple days in Athens.

There is a strong antifa presence (at least judging from graffiti, small talk with some locals and the bios of Grecian Tinder girls). I can’t help but imagine the American antifa pales in comparison. Our black bloc — thrust into the spotlight in mostly superficial college campus debates — tends to be enthusiastic, whereas the antifa in Hellas, culturally sensitive to millennia of dictatorships, entrenched aristocracies, Ottoman annexation, great power puppeteering and a century of neighbouring fascist regimes, must be somber and steadfast. Our antifa crowd has so little targets to find Ben Shapiro a worthy protest, whereas Golden Dawn, the ultranationalist, Third Reich-aesthetics Metaxist party gets 7% in the Hellenic Parliament. Nothing here is spectacle. (Moreover, the extreme-right in Greece, according to our tour guide, has been known to worship and deify mainstream Christian figures as well as the ancient gods spawned of Uranus and Gaia. Umberto Eco’s immortal essay Ur-Fascism explained phenomena like this as the ‘syncretic’ element of fascist traditionalism.)

Moving past the fascists and antifa, in general Greece is left. The Communist Party of Greece, KKE, gets about 5% of the votes and displays a sickle and hammer. More telling still, plenty of the leftist graffiti is actually representing the KKE. Political parties tend to de-radicalize, or are supposed to in theory, and the fringe ideologues disavow the party for centrism or weakness (it’s funny to think of American socialists spray-painting the initials of the CPUSA). The graffiti stretches all the way to Lesvos, of Aristotle’s biology and Sappho’s poetry, and to Corinth of the cult of Aphrodite, but is most prominent in downtown Athens.

Athens has an anarcho-friendly district with a rich history called Εξάρχεια, Exarcheia. Antifascist tagging is complimented by antipolice, antistate, antiborders and LGBT designs, the Macedonian question is totally absent, and posters about political prisoners stack on each other like hotels on ruins. Our friends at KEFiM warned us about Exarcheia — it has a history of political/national xenophobia, and one member had been violently assaulted — but I had already visited on the first day. Aside from a recently blown-up car, it wasn’t too different from Berkeley — nice apartments and restaurants juxtaposed with street art and a punk crowd, drug dealing, metal bars on windows. Granted, this was in daylight and I saw only what was discoverable with Google maps. Still, I had the fading remains of a black eye and my usual clothing is streetwear, so maybe I wasn’t too out of place — even as an American and thus most hated representative of that target of so much antifascist graffiti, NATO.

Much of the larger politics of Greece were not easy to discover from our various tour guides. Just like the ancient myths of the country, they constantly contradict each other.

The Athens underground metro was incredibly clean and modern — infinitely more than in Atlanta, San Francisco, Los Angeles, etc. — while their roads are constipated and chaotic. Duh, the city itself is one of our most ancient settled, and so roads have proceeded in a particularly unorganized fashion. But it did cause me to consider the beauty that on a planet where our civilizations literally build on each other generation after generation — and, in an uncommon historical epoch where conquering is out of fashion — sometimes the only place to go is down. Humans have expanded our surface area in dimensions completely unfathomable to the diasporic colonizers from ancient Crete.

The syncretic chaos of the streets, though nauseating to the newcomer, lends itself to almost divine levels of flânerie, such that one can walk hours without reaching any particular destination and feel accomplished. Nothing much looks the same when Times Square melts into an ancient agora melts into a Byzantine church melts into the beach. Attica is wildly heterogeneous and beautiful; modernist adherents to classical Greek conceptions of precision-as-beauty should be humbled.

I should add also that my first impressions of Athens (and Catania) was how much it looked like something out of a videogame. The condition of 21st century man is that, upon visiting foreign cities for the first time, he will invariably compare them to Call of Duty maps.

On a few occasions, enough for me to notice but not enough for me to declare it a custom, my server (who sits me, takes my order and waits on me) gave me extra food on the side. This only happened at small restaurants that aren’t overly European and might be an orange juice, fruit bowl or something small and similar. Every time, of course, I left a larger tip. These actions put us in a sort of gamble. For the waiter to bring me something periphery, he might expect a grander gratuity. Then, when I notice the extra item, I have to assume that it’s not just a mistake — that he didn’t think I ordered something extra which will appear on my tab. He and I are both sort of gambling our luck. Of course, it’s not a real gamble — in every instance we were at least partially sociable prior and lose nothing substantial if it doesn’t work out. What is interesting is that we’ve removed ourselves just a little from the law — I am only legally obligated to pay for what I ordered; he is only legally obliged to bring me what I paid for. Still, without the legal backdrop, everyone leaves happy. Left-libertarians would like it.

(As everyone knows, the Greeks are very hospitable and friendly, and this is a testament to that. A counter-example: I went to a gay club for the first time in the rainbow district of Athens. I can’t speak enough of the tongue to talk to women anyway, and there is at least a chance that some guy will buy us drinks. Nobody buys us drinks. The only conclusions are that we’re not handsome enough or the Greeks are not as friendly. It has to be the latter.)

I should quickly add something about coffee. Where it not for the drought of drip coffee, I could easily stay in the Mediterranean forever. Alas, to literally order an “iced coffee” — kafe frappe — you are ordering a foamy concoction with Nescafé. To order a Greek coffee (known as a “Turkish coffee” before tensions in the 1960’s) means an espresso-type shot with grounds/mud at the bottom. But, the coffee culture is fantastic — the shops are all populated with middle-aged dudes playing cards, smoking rollies, and shooting the shit. I don’t think I need to describe the abominable state of American coffee culture. Entrenched in their mud, the Greeks resisted American caffeine imperialism. Starbucks tried and failed to conquer the coffee market: there were already too many formulas, and the Greeks insisted on smoking inside.

Percentages that Fairly Scream and, “Catastrophe” is a Greek Word

The WSJ of 7/9/15 shows a comparative table for some European Union countries of spending on pensions as a share of GDP. This comparison denotes roughly the drag effect that payments to retirees has on the whole national economy. To no one’s surprise, Greece tops the list with 14.4%. Germany is at 9.1%. This may seem like a small difference but when it’s turned into actual, absolute figures, the difference becomes downright striking. They scream!

The 5.3 percentage points difference can be applied to both countries’ GDPs (or GDPs per capita, same thing in this case). The International Monetary Fund gives Germany’s GDP per capita for 2014 at about $46,000 and Greece’s at about $26,000*. Pensions cost Germany $4,150 annually for each man, woman and child. Pensions cost Greece $3,400 annually for each Greek. It does not look like the Greeks should be able to afford this kind of disproportionate burden.

Suppose Greece’s pensions took the same bite out of its GDP as Germany ‘s does out of its GDP, 9.1% . In this scenario, today, the Greek economy would have about $1,400 each year unspoken for for each man, woman and child. This money would still be available for spending, as it is through pensions. It would also, however, be available for both public and private investment.  That’s $1,400 each year; that’s a lot by any standard. That’s money needed to rejuvenate the Greek aging economic plant.

How realistic would such a change be, involving raising the legal age of retirement, I mean? The Germans’ and the Greeks’ life expectancies are virtually identical ( 80.44 vs 80.30, in CIA Handbook). There seems to be a little wiggle room to move there. Note that raising the age at which people can claim a pension is doubly beneficial: It reduces the number of pensioners while raising the number of workers who support the pensioners. Some will argue that raising the age of retirement is a pipe-dream in a country such as Greece where there is chronically high unemployment. I think this reasoning is wrong. Many Greeks don’t find a job because investment in Greece is insufficient. People need tools to work. What is certain is that the current dishonest Greek government policies, soundly supported by the exercise of a majority of Greeks’ votes cast, are not going to draw foreign investment. The money to improve both Greeks’ chances of employment and their productivity will have to come from within. One significant source is described above: Close the pension option for one or more years to healthy Greeks. It will provide both ready investment money and confidence abroad.

Note that raising the legal age of retirement is a purely political decision. The Greeks can do it any time they want. They can do it overnight. Perhaps, there will soon arise a political party in Greece that will proclaim the truth: It’s not the mean lenders, it’s us!

This is a fairly simplistic reasoning, I know. The general age of the population places constraints on the practicality of raising the age of legal retirement (but an older population also makes it more desirable; think it through). I have heard leftist demagogues on National Public Radio argue that the big bite that pensions take out of the Greek economy is not the Greeks’ fault, that it results more or less directly from the fact that Greece has an old population. Sounds good but the fact is that the Germans are, on the average, quite a bit older than the Greeks (Median age of 46.5 vs 43.5 according to Wikipedia.) Don’t believe experts on NPR, not even on simple facts!

Alternatively, the Greeks could begin collecting their moderate taxes like the Germans instead of like the Italians. They might also remember that “catastrophe” is a Greek word.

* The figures are “PPP” meaning that they take differences in buying power in the two countries into account.

From the Comments: Greece, the Euro zone, and Russian prowess

Dr Amburgey writes:

I just returned yesterday from a week in Athens for an academic conference. There seemed to be a big socio-economic divide in voting intentions. The unemployed and menial workers were definite No votes. The Yes votes were physicians and a few academics. Personally I think they should bag the euro and go back to the drachma.

Brandon: how long do you think it will be before Putin is making deals in Athens? Might be nice to have a friend in the EU when sanctions come up again. Port privileges for the Russian navy would be very conveniently located as well.

Jacques has a good, thoughtful response (“Leaving the Euro zone does not require leaving the European Union”) that I wholeheartedly agree with (and that I’ve blogged about here and here), and it appears Dr Amburgey is in agreement with us (though does he think Greece should stay in the EU?). Contra Dr Foldvary, I do not think there is any need for Greece to leave the EU. If anything, the EU should be adding more states, though not expanding its geographic space.

Regarding Russia, I simply don’t know. Russia – along with Turkey, Iran, and China – is a society that is very hard to understand let alone predict (I would add India/Pakistan to this list, but the states of the Indian subcontinent are traditional post-colonial states and are therefore much easier to predict; the other four were never conquered or carved up by imperial cartographers). The whole Crimea debacle still has me smarting. Nevertheless I’ll add my thoughts to the conversation.

I don’t think Athens will grow closer to Moscow. There are two major reasons:

  1. Greece fears Russia, which is why Athens has remained in NATO for so long.
  2. Most Greeks – even the ‘No’ voters in this recent referendum – don’t want to leave the EU; Greeks overwhelmingly want to be a part of ‘Europe’.

There are couple of minor reasons, too, though I don’t know how minor they are. 1) Greece is not Ukraine. 2) Russia’s economy is in shambles. Greeks have a higher standard of living than do Russians.

On the flip side, the Greeks are always thinking about the Turks. If an opportunity presents itself (though I cannot think of any arising), Athens may start to edge closer to Russia (a traditional enemy of Turkey) if it thinks Ankara is getting antsy about its former province. This is pretty extreme, though. Also, Russia’s economy may be in shambles, but it seems like Moscow always has plenty of money for military expenditures, and rent stemming from a Russian port in the Mediterranean Sea might be too tasty to resist for a country saddled with so much debt.

At this point I don’t think Greece has much clout in European politics, so I don’t see Moscow viewing Athens as a reliable friend in Brussels.

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.

Around the Web: Greece Edition

  1. Tyler Cowen has been owning this debate.
  2. Unfortunately, Greek citizens have been too fed up with the rest of the world to listen.
  3. (Perhaps libertarians and their arguments were just late to the party.)
  4. This is still the best concise sociological analysis of Greece and the EU I’ve come across.

It’s worth noting here that the overwhelming majority of ‘No’ voters – the ones who just rejected the EU after their elected, far Left leader walked out of talks days before said talks were scheduled to end – don’t want to leave the EU. Confused? See the Cowen link.

Matthew and I had a dialogue on Greece awhile back here at NOL that might be of interest.

Dear Greeks:

I hear you can’t pay your debts again. I am a little sorry but you brought it on yourselves. A few reminders.

Your country is a democracy. The way you got into this pickle is through the stupid, self-indulgent policies of those you elected. You did it again in your last election by bringing to power a bragging leftist party in the old Stalinist mold. What did you think they would do: Frighten the European Union, The International Monetary Fund (Number one stockholder the US), Germany, the world, into submission, into erasing your debt? Think!

The reason Germany is your principal creditor is that one of your previous governments begged Germany for help and it agreed to help. The Germans did not cram loan after loan down your throat; you asked. The big sillies thought you would be honorable and pay up as agreed. Do you care about your future reputation, your honor, your children’s future ability to walk in the world with their heads up? Here is a basic rule of politeness which is also a moral rule: When somebody gives you a hand, you don’t bite it viciously.

There are several reasons your government can’t pay its debts. One reason is that your political class is corrupt trough and through. Another is that you are reluctant to pay taxes the way normal people do in the European Union. Too many Greeks want to work and pretend-work for the government instead of doing real work. And your government still owns stuff no government anywhere should ever own because governments always make a mess of running them, resorts, among others.

Another reason why your government can’t pay its bills is that your country is genuinely poor for a European country. There too, you have a lot of explaining to do. For one thing, you have been living above your means for a long time, pretending you were more or less like Danes, or Germans. Well, the truth is that you are not, not even close; Danes and Germans are very productive; you are not. So, you should not have ever expected to work short weeks and to take long summer vacations, like Danes and Germans. Such privileges do not come automatically with membership in the Union, you know. You should look over the border on the despised neighbors, the Turks, instead. They don’t pretend to themselves that they are already rich; they go to work early and they close their shops late. Many of them work six days a weeks. Over the past ten years, the growth rates of their economy has left yours in the dust. Coincidence?

And you only make yourself even more scorned with your treatment of others. The real horrors that Nazi Germany inflicted on Greece more than 70 years ago are not much of an excuse anymore. A previous government of yours, an elected government, accepted reparations a long time ago. And, by the way, in 1945, Germany was much more devastated than Greece, and still in 1948. See where the Germans are now, and where you are? Any comment?

And do you ever wonder why the Estonians, in the stultifying Soviet prison for fitly years, never ask for new loans to pay back older loans? And how long anyway did you expect German workers to work until age 69 so your public servants could continue to retire at 63? Are you out of your minds?

One last thing: You are not exactly Classical Greece. Stop wrapping yourselves in Aristotle’s toga. Really study Socrates. He chose to die than cheat even a little. Neither he nor Aristotle was a whiner. That’s why they are still remembered and honored.

In the end, I wish you well. Everyone can unlearn bad habits and learn basic rationality, even late in life. I hope you soon leave that club where you don’t belong. I hope further that you can make your way back. Begin by getting up at 6 every morning. Also, learn the obvious: socialism does not work well for rich countries; it’s miserable for poor countries.

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.

From the Comments: On the Impossibility of Secession Within the European Union

Dr Stocker brings my musings on secession and the European Union back to reality:

Some good historical analysis here, but I’m not so sure about the conclusion. I certainly support a right for regions to secede, but not all EU member states recognise such a right. Spain is the obvious example, since while it gives a high degree of autonomy to regions, including enhanced autonomy for Catalonia and the Basque country, it does not recognise any right to secede except through a law passed by the Cortes (parliament of Spain), which is extremely adverse to allowing any procedure for secession.

Greece has been extremely adverse to secession by Kosovo from Serbia, and does not recognise Kosovo, on the basis that a majority vote within a region-aspirant nation is not enough to justify secession under international law, if opposed by the nation from which the secession is taking place. I suspect there are some other countries with similar barriers to secession.

They’d do well to recognise that right, but the EU can’t force this kind of change on existing member states since unanimous consent would be required for the necessary treaty changes, and even without that barrier, the idea of the EU forcing countries to accept a right to secede and then define when and how that right to secede, which could create conflict with counties like the UK which do recognise the possibility of secession by referendum within the relevant region-aspirant nation, as in the current Scottish vote.

The time might come in the future when all EU countries might recognise a right to secede and then recognising that right could be a requirement for membership. However, it is not Putin’s Russia that would be concerned. Recent events in Ukraine show Putin’s agents fomenting violent secessionism in Crimea etc and a rigged referendum in Crimea. Of course Putin’s meddling is not the same a secessionism exercised peacefully and through fair voting, but such differences are likely to be overlooked by many in light of the still unfinished Ukraine crisis.

My response can be found here. Longtime reader A. Herkenhoff chimes in as well.

Expanding the Liberty Canon: Pericles and the Funeral Oration

Pericles (495-429 BCE) was one the most remarkable figures of an age of great figures, that is Golden Age Athens, the time of Socrates, Plato and Aristotle in philosophy, Aeschylus, Sophocles and Euripides, in tragedy, and so on. The building most associated with Golden Age Athens, the Parthenon temple on the Acropolis (sacred hill at the centre of ancient Athens) was commissioned by Pericles. He was a friend of the philosopher Anaxagoras, sponsored tragic performances, and so was a full part of the city life, apart from his political role.

Pericles was an aristocrat descended from powerful figures in Athenian political history, and though he was associated with furthering Athenian democracy, was respected as a personality of admirable character by critics of democracy like Plato and Aristotle. In the ancient context, democracy means direct decision making by citizens gathered at in an assembly, where they make laws and decide on the major state actions of the time.

For the contemporary critics of democracy, Pericles’ excellence as a character enabled him to ameliorate what they saw as the irrationality and short term thinking of the citizen mass, and İt seems to me there is a kind of groping towards the modern understanding of democracy as the best way of getting the best leaders (of the least bad available) into power through a competitive character testing process. The Athenian city state, like other Greek states of the time was small compared with any modern city, so the political process was very personalised.

As I pointed out with regard to Aristotle, the Greek city states, including Athens, were not ideal with regard to equally of rights by modern standards. A significant part of the population (estimates of the proportion vary) were slaves, or unfree in some way, women had no political rights, and very limited legal rights, and the respect for the right  individuals to be different from, or independent of, majority religious and customary thinking, was very limited by modern standards. However, we have to make some allowance for the times when judging thinkers and give credit to those who made some progress with regard to liberty, however limited they seem by our standards. Our standards came from somewhere and evolved over time, so that we should take some interest and give some respect, with regard to those who something to move thinking in the right direction.

Pericles is different from most people, maybe everyone in this series of posts, because despite his high level of culture he was not a writer, or even a practitioner of philosophical debate like Socrates, who wrote nothing but inspired others to write down what they thought was true to his thought. What we have from Pericles is the record of his life, and most importantly for present purposes, a speech attributed to him by Thucydides (460-395 BCE). That is the historian, usually recorded as the second known historian (in the west) after Herodotus. He was an Athenian aristocrat and army general who wrote The History of the Peloponnesian War after being pushed out of his command role. The war concerned was a thirty year war between Athens and Sparta, which like its closest allies was  located in the Peloponnesus land mass south of Athens. The book is unfinished but is still a classic of history, international relations, and military thought, widely read by students and specialists within those fields. It is a book that should be read by anyone interested in the history of political thought and ideas of liberty, though more because of its importance in adjacent fields rather than its own contribution to political thought.

The exception is the few pages of a speech Pericles apparently made at a funeral of soldiers during the war. We have no way of knowing how far the speech records any words ever uttered by Pericles. Thucydides was and is respected for his commitment to objectivity and reliable evidence, particularly by way of contrast with Herodotus, so it seems plausible that the recorded speech is at least as honest attempt to report what Pericles really thought, given what Thucydides knew about him. The lack of any other record, and the tendency of ancient historians even Thucydides, to report speeches based on what they thought people should have said in certain situations makes it hazardous to presume any further.

Here is a link to the speech. Other versions and postings should be available through an online search for ‘Pericles Funeral Speech’, and the same applies to Thucydides text as a whole.  Anyway, here is a link to the translation by Thomas Hobbes, edited by the nineteenth century English radical William Molesworth, posted at the Online Library of Liberty.

What Pericles (strictly speaking what Thucydides tells us Pericles said, but I will leave that as assumed from now on) argues in his speed is that the fallen soldiers did not just die in the cause of defending their homeland, but an idea of a political system represented by that homeland.  That is, according to Pericles, Athens makes concrete the best principles by which a city can organise itself and people can live together.

Those principles are listed in order to contract Athens with Sparta, in which citizens formed a military aristocracy, and supposedly led an ascetic military life style in every way, according to the strictest morality and with minimal private property. Pericles proclaims that in Athens everyone can share in government and that no one is excluded from office by poverty. Thought poverty is not shameful failure to struggle to overcome poverty is. Everyone can live their life their own way and respects everyone else’s rights in that regard. The Athenians show courage in war which comes from their determination to defend their way of life, not a life time of brutal military discipline. Their courage is even greater than the Spartans and is based on a life that recognises goods and values other than military courage.

The Athenians are not closed off from the world (an implicit contrast with the apparently autarkic Spartans) and enjoy items imported from all countries. They have wealth, but want to use if for great things not just to be rich for its own sake. Their society includes beauty and variety to such an extent that they are educating all of Greece in such things. The Athenians do not need a Homer to glorify their courage in that way, which has its own motivation. The point of the reference to Homer is presumably that the heroes in Homer’s epics are motivated by the glory of war, and the hope of living on in memory and poetry as great warriors. Homer referring of course to the two epic poems attributed to a poet of that name, The Iliad and The Odyssey, in which the idea of war as the means to the greatest possible glory plays a large part. Pericles is presumably saying that the Athenians have more to their lives and the society which they are defending then the desire to achieve status through slaughter in battle. Pericles is still advocating a spirit that might seem brutal to us, in which states celebrate their triumphs over states; as Pericles suggests it is great to be famous for terrible  acts as well as acts of goodness. If we compare Pericles with Homer, we can see some progress.

Pericles of course represented a people of state which turned other Greek states into colonies, and destroyed them if they did not comply, and forced them to pay for its architectural glories, but it is a sad reality that nations in which liberty advanced in some significant respects were often involved at the same time in imperialist and exploitative projects, in which people excluded from moral sympathy and political rights paid a terrible price. We do not need to overlook or excuse the the very considerable faults of Pericles and the ancient Athenians, however, to recognise that they were drawn to ideas which in the course of human history have become applied in universal and inclusive ways.

A brief conclusion to Pericles’ speech endorses one of those inexcusable Athenian attitudes, which is the assumption of women’s inferiority and the desirability of their social invisibility. A major qualification needs to be made to Pericles’ deplorable remarks. He lived with and had children with one of the remarkable women of his time who was certainly not socially invisible, Aspasia (470-400 BCE). She was from the Greek colony in Miletus, western Anatolia and is known through attacks made upon her at the time. There is a lack of definitive evidence about her life, but it seems definite that she had wealth of her own and paid tax. Additionally, it can at least it can be said that she was used to attack Pericles because she was taken as a woman who was too free in her opinions, and led too public a life in which she displayed her considerable culture and intelligence. So even in this area where Pericles’ thoughts are disappointing, the status of women, he may have had a personal influence undercutting the words attributed to him.