Reprinted with permission of Washingtons Blog
Once one oligarchy falls, it will threaten to topple a long line of oligarch dominoes.
A great many narratives invoking Greece are being tossed around, but only one really encapsulates the unvarnished truth: the Oligarchs blew it. The oligarchs in both Greece and the European Union/ECB had the opportunity a few years ago to trade some of their outsized wealth and political power for stability and sustainable expansion.
Instead, they chose to not just cling to every shred of their outsized wealth and power but to actively increase it. Their greed and hubris has now put their entire system of parasitic wealth extraction at risk of collapse. Their political stranglehold on power has been weakened, and there’s no going back: they blew it, and now it’s too late. The debt-serfs have finally had enough.
If you enter Greece in the custom search box on this site, six pages of blog entries come up. I have addressed the situation in Greece many times; this summarizes my conclusion:
Greece, Please Do The Right Thing: Default Now (June 1, 2011)
Thankfully, many in Greece have reached the same conclusion, for the same reasons:
The basic problem is that Greece Is a Kleptocracy (June 28, 2011). Greece has shown the world how oligarchies can expand their wealth and power even as their populace slides deeper into poverty. A recent article, Misrule of the Few: How the Oligarchs Ruined Greece, lays out the key dynamics.
Writer Pavlos Eleftheriadis pulls no punches:
“Greece has failed to address (rising wealth/income inequality) because the country’s elites have a vested interest in keeping things as they are. Since the early 1990s, a handful of wealthy families – an oligarchy in all but name – has dominated Greek politics. These elites have preserved their positions through control of the media and through old-fashioned favoritism, sharing the spoils of power with the country’s politicians. Greek legislators, in turn, have held on to power by rewarding a small number of professional associations and public-sector unions that support the status quo. Even as European lenders have put the country’s finances under a microscope, this arrangement has held.”
The vested interests have obscured the cold reality of rising inequality by focusing obsessively on “growth” as the fix-all to inequality.
But this is exactly backward. As Eleftheriadis observes:
“The fundamental problem facing Greece is not slow economic growth but political inequality. To the benefit of a favored few, cumbersome regulations and dysfunctional institutions remain largely unchanged, even as the country’s infrastructure crumbles, poverty increases, and corruption persists. Greek society also faces new dangers. Overall unemployment stands at 27 percent, and youth unemployment exceeds 50 percent, providing an ideal recruiting ground for extremist groups on both the left and the right. Meanwhile, the oligarchs are still profiting at the expense of the country – and the rest of Europe.”
All the blather about “growth” is just propaganda to misdirect our attention from the real problem: the total domination of governance and finance by a class of vested interests and mega-wealthy cartels/oligarchies.
The solution is straightforward: default on all debt by no longer making interest payments. There is no way Greece can pay back the $240 billion of current debt, and sooner the delusion that this can be renegotiated to preserve the oligarchy is smashed, the better.
As for the big threat of kicking Greece out of the euro currency—since most Greeks are already impoverished, how can they get any poorer? The reality is poor countries prosper by making their goods and services cheaper via currency devaluations, and by paying a healthy rate of interest on capital so capital is attracted and invested productively, as high interest rates make speculative, marginal gambles soberingly risky.
The only people with enough wealth left to worry about a return to a sovereign currency are the wealthy who own the assets and who depend on handouts from the E.U.
As the old saying has it, you can’t get blood from a turnip. The impoverished face little downside from leaving the stranglehold of the euro, and only upside from a return to a sovereign currency controlled by the Greeks rather than the E.U. or the European Central Bank (ECB).
The threat of expelling Greece from the euro is hollow. A return to a sovereign currency puts the responsibility for prudent management of government expenditures and debt back in the hands of the Greek people and the leaders they elect. Why is that something terrible?
If the new leadership of Greece pursues policies of fiscal prudence, high interest rates, zero-tolerance for corruption and freeing up the Greek economy to encourage small-scale enterprise, any decline in Greece’s sovereign currency will be brief. If they pursuemeet the new boss, same as the old boss policies, then the Greek people will remain shackled in poverty.
We have to remember that the lenders who entrusted capital to marginal borrowers took the risk and therefore have to absorb the losses. In this case, the irresponsible lenders include sovereign nations that acted to protect their own oligarchies.
Why? Once one oligarchy falls, it will threaten to topple a long line of oligarch dominoes.