In my most recent Verdict column, I described why the conditions that Europe’s leaders have imposed on Greece are both unreasonable and economically myopic. What is most puzzling, however, is that Greece’s creditors—led by the German government—continue to demand that Greece engage in policies that will make it impossible to pay back its loans. It is a modern version of a debtors’ prison, with punishment being meted out for perceived bad behavior, no matter the fact that the punishment itself precludes making things right.
Today, in the second part of this two-part series, I will first explain how the German-led policy regime is likely to hurt not just Greece’s people, but people across Europe and even in the United States and elsewhere. Then, after describing how the current Greek government is being unfairly faulted for its strategies and policy agenda, I will devote the remainder of the column to an exploration of the misplaced moralism in the Greek crisis, exposing in particular how the arguments from German policymakers amount to blaming the victims of the very policies that they and Europe’s other leaders insisted upon imposing on the Greeks.
How the Greek Crisis Could Affect the Rest of the World
The most immediate victims of the cruel policy regime being imposed on Greece are, of course, the Greek people. Suffering under years of austerity, with measured unemployment rates of 25 percent overall and more than 50 percent for young would-be workers (both of which are surely underestimates), the Greek people elected a government earlier this year that promised to try to mitigate those damaging policies. We now know that Europe’s leaders are completely unwilling to change, and the new policy regime that they are inflicting on Greece is in many ways worse than what existed before.
This new policy regime is a time bomb, which means that there will soon be yet another Greek crisis. When that happens, beyond the predictable claims that (despite having done everything they have been ordered to do) this is still somehow the fault of the Greeks, the economic instability in Europe will worsen. Even now, the other European countries with relatively weak economies—in particular, Spain, Portugal, and Italy—are looking at what happened to Greece and wondering whether they should do what Greece has not yet dared to do, which is to leave the Eurozone.
Those countries with the weaker economies have, after all, been put on notice that Europe’s leaders are pitiless, using the Greek crisis to set an example for anyone else who might consider asking for a reduction in austerity policies. The lesson that those countries might instead learn, then, is that membership in Europe is no longer an especially appealing prospect. Back when it appeared that the stronger countries were trying to integrate Europe in a way that helped everyone, membership looked like a good idea. Now, why would anyone want to join, or to stay? If it were not so disruptive and costly to leave the Eurozone, Greece and others surely would have done so already.
Even serious discussions of a euro breakup are destabilizing, but actually doing it would harm everyone. Germany’s economy would take a hit because it would no longer be able to free-load on the weak currency that (as I described in my most recent column) is making Germany’s economy look artificially strong. The rest of Europe’s economies would also surely be harmed by the proposed or actual exit of one or more countries from the common currency.
And those are only the direct economic effects. Although there are 19 countries that currently use the euro, there are 28 countries in the European Union (EU). One of those non-euro-using countries is the United Kingdom, the government of which has promised to hold a public referendum on whether Britain should leave the EU entirely. Watching the disastrous way in which the Germans have led the EU throughout the current crisis, and the weakness of the French leaders in trying to steer an alternative path, surely will give a strong push to the anti-EU side in that election.
If the UK were to leave the EU, that would be a huge blow to European unity, with political and economic damage sure to follow. But that is not the only way in which Europe could be damaged. Greece itself, now that its elected left-leaning (but very pro-Europe) government has been forced to accept ever harsher policies, will surely see increasing flirtations with truly radical politics. And because economic suffering so often brings out the worst in people, we could expect to see the rise of some very scary right wing, foreigner-bashing demagogues.
In some ways, this parade of horribles could be both good and bad for the United States in the short term. The dollar will strengthen (which has mixed effects), and U.S. investments will be seen as a safe haven from a disintegrating Europe. Still, in a globalized world, it is surely a bad thing when our trading partners are weakened, and it is even worse for the United States when once-stable democracies are pushed toward extremism. The United States has a lot at stake, but Europe’s leaders have made it clear for years that they are willing to ignore advice from the United States, pursuing instead self-destructive policies based on fantasies of their own moral rectitude.
Victim-Blaming and Politics: Demonizing Greece’s Government
One of the more dispiriting aspects of the Greek crisis has been witnessing the sneering contempt that Europe’s leaders heap upon Greece’s government. In part, this is because the 2015 elections in Greece brought to power a party called Syriza, which translates to “coalition of the radical left.” As I explained in a post on Dorf on Law shortly after that election in January, however, the government of Prime Minister Alexis Tsipras has been anything but radical.
Indeed, Tsipras has done everything possible to keep Greece in the Eurozone, and he has never proposed anything remotely leftist during his time in office. His government has simply said that it would be better for Greece—and for all of Europe, including Greece’s creditors—to reduce (but not reverse) the extreme austerity measures under which Greeks have suffered for the past five years. “We’re willing to live under austerity, but not quite such extreme austerity,” is nowhere to be found in Karl Marx’s writings.
Nonetheless, Europe’s leaders have done everything possible to bully, diminish, and blame the Tsipras government. Does that sound like an overstatement? According to a report in The Washington Post on July 13:
During a pivotal meeting with [German Chancellor Angela] Merkel, French President François Hollande and European Council President Donald Tusk, Tsipras at one point received a thinly veiled threat that if he walked away and left the euro, Greece risked going it alone geopolitically, too. According to two officials in Brussels with knowledge of the exchange, the specter was raised of aggression from Turkey—a neighboring nation viewed in Greece as a historic antagonist.
If that report is true, the leaders of Germany, France, and the European Council threatened the leader of Greece, suggesting that they might stand aside if Turkey were to become aggressive. That would be shocking under any circumstances, but it is especially troubling because Greece is a member of the EU and Turkey is not. Suggesting such a thing is simply shocking.
Even the way that the Tsipras government has handled itself has been the subject of constant sniping during the crisis. European leaders and commentators routinely describe the Greek government as “amateurish,” and (as I described in my most recent Verdict column) they suggest that Greece’s leaders have tried to engage in “political blackmail.” That is what psychologists call “projection.”
When the German-led negotiating team, earlier this month, offered a harsh take-it-or-leave-it deal to the Greek government, Tsipras was faced with the possibility of agreeing under extreme duress to a package of policies that directly conflict with the platform on which he was elected. He could have said, “You know what, I’ll just say no,” but instead he gave the Greek people an opportunity to say, “Well, when we elected you, we hoped that Europe would be more reasonable, but that has not happened. We hereby allow you to break your campaign promises, under these new and unfortunate circumstances.” Tsipras thus called for a public referendum.
Nonetheless, this exercise in democracy was widely mocked across Europe. Somehow, asking one’s constituents their views on the matter is not allowed. When the Greek people then said no to Europe’s extreme demands, the subsequent deal offered by Europe’s leaders was inexplicably harsher than the package that they had offered only a week before. Or perhaps it was not inexplicable, because it certainly appears to be gratuitously inflicted punishment for the no vote.
Finally, reports emerged a few days ago that the Tsipras government had engaged in contingency planning during the debt negotiations this summer. In particular, they attempted to be prepared for the possibility of an exit from the Eurozone. This prudence is somehow being described as another example of the Greek government’s perfidy. Yet, as Paul Krugman has pointed out, it would be shocking if the Greek government had not engaged in such planning. Any responsible government should have done exactly what the Tsipras government did.
We have thus reached the point where it is clear that Greece’s government is being held to an impossible standard. If it does something, it is blamed, but if it had not done that very thing, it would surely also be blamed. A government that has tried to pull back even the slightest bit from the European orthodoxy is thus vilified and isolated.
Victim-Blaming and the People: Group Blame and Greece’s Citizens
What is perhaps most upsetting about the Greek situation, however, is the way in which the supposed failings of Greek governments—the current Tsipras government, but also the non-leftist governments before it—are now being used as an excuse to harm the Greek people.
It is easy to see the temptation. Greece claims to be a democracy, and so its people are responsible for the governments that they elect. Therefore, if those governments fail to stem systemic corruption, or fail to collect all of the taxes that are owed (especially by the richest Greeks), then that must ipso facto be the fault of everyone in Greece. They all, apparently, deserve to suffer.
No one, however, could reasonably take such group blaming seriously. The central problem with corruption is that it subverts the rule of law; so if a country tries to elect reformers, but the reformers are corrupted, it is not the people’s fault that they have been betrayed. When countries like Germany supported leaders with (to put it mildly) nefarious agendas, the enlightened view was that the German people are not inherently bad, but that their political system allowed bad men to come to power. The Greek situation is hardly that extreme, but in any case, it makes no sense to say that the Greek people must suffer for the sins of their leaders.
This is especially important because, as noted above, the economic suffering in Greece (and in Spain, Portugal, Italy, Ireland, and elsewhere) is especially concentrated on young people. More than half of the people who should now be building their lives in a thriving economy have instead graduated into a world that has nothing to offer them. They did not elect the series of governments that for decades failed to clean up corruption, or that allowed Greek millionaires and billionaires to shirk their tax responsibilities. Nonetheless, they are now being told that they have no hope, because the most powerful people in Europe are unhappy with Greece’s leaders.
As one American observer noted, in describing his recent conversations with German economists and policymakers, the Germans view this in entirely unsympathetic terms. “Debtors who default, they explained, would simply have to suffer, no matter how rough and even unfair the terms of the loans.” Faced with the argument that the policies being imposed upon Greece now amounted to “a new version of the 1919 Versailles Treaty that would bring in a future ‘chaotic and unreliable’ government in Greece,” these German leaders puzzlingly responded “that they were furious about being compared to Nazis and terrorists.”
There is nothing good about the current situation in Greece. That country’s government has been anything but perfect, of course, but the current crisis was caused not by Greece’s governmental failures. The global economic crisis put Greece in an unsustainable position, and its membership in the Eurozone put it at the mercy of its creditors. Those creditors have, unfortunately, convinced themselves that they are the true victims, and that Greece’s citizens should suffer because of some real, but irrelevant failures of their government. This is not just cruel. It is a recipe for disaster.
(Note: At the end of Part One of this series of columns, I wrote that as part of today’s column, I would “explain a disturbing parallel between the moralizing that Europe’s leaders have used to condemn Greece’s people to years of pain and ideologically similar victim-blaming in the United States.” Because of the length of today’s column, I have decided to move that discussion into a blog post today at the Dorf on Law blog.)