Dear America,
The Greek fiscal crisis--the country's debt and deficit--is a function of two competing interests demanding to be satisfied. The loudest voice is that of the financial establishment in Europe, which has already lent Greece over $200 billion, the loan being necessitated by the Greek government's misstatement of its indebtedness over the course of a decade or so until the financial crisis that started in 2008 eventuated. Austerity measures were demanded of the Greeks and they complied as best they could, but the Greek economy shrank dramatically, and Greek unemployment is now at 25%, causing enormous hardship in the country, which in turn has resulted in exacerbation of the national debt and deficit problems. In consequence, Greece can not meet its repayment obligations relative to the funds lent by the European and world financial institutions and they are demanding further fiscal restraints. On the other side are the Greek people and the populist government that won control of the government in the most recent elections, whose mandate to ease austerity measures was reified by a victory in a referendum held last Sunday. The Greek people do not want the Greek government to cut any deeper into Greek muscle and bone in order to satisfy the demands of nations that, for the most part, have far fewer problems than they do. And in the debate between Greece and the international establishment, the focus has come to be on Greece's pension, or social security system. Everyone concedes that Greece should crack down on corruption and that government fiscal policy needs to be reformed so as to reduce reliance on borrowing to finance the government's programs, but the question is, does that mean raising more government revenue or cutting benefits, as is being proposed for the Greek social security system. Does this all sound familiar?
In this country, as well as across the world, the battle between capital and labor rages, and it is not different in Europe from what it is here, except that we have a true federal system in which all of the states stand together under a single political banner whereas in Europe, that political amalgamation does not exist. Thus, when a fiscal crisis develops in one of the member countries of the European Union, it's every country for itself, in this case a European coalition led by Germany and France primarily against Greece. It's as if Mississippi developed a debt problem and the rest of the American states--as individual entities, not as the United States--demanded a painful resolution. There is no apparent sense of common destiny in Europe, even though the Euro-zone was intended to create one. And now, the Greek people have gotten into the act by empowering a government that they insist pursues their interests as people, not as a national institution, and the main focus has become the social security, or pension system, which obviously affects nearly every Greek personally. In fairness, it must be acknowledged that the Greek retirement age--61--was lower than everyone else's, but it has been raised to 63, albeit Germany's was raised to 67 in recent years. Still, the issue of how the Greek government wants to address the funding of its generous retirement system isn't as clear cut as the European creditors would have everyone believe. The Greeks have proposed to increase income taxes on business, but the creditors insist that the Greek business climate militates against that. Instead, the Euro-zone wants Greece to increase the burden on its people by diminishing pension benefits. It's the classic supply-side versus Keynesian economics debate with the Greek people taking the latter position and institutional Europe the former. It's Bernie Sanders versus Ronald Reagan. It's liberals versus conservatives and capital versus labor. The real issue in Greece is, when the economy slows, do you help the wealthy produce more at lower cost by reducing the working person's share of the pie, or do you enhance labor's share with the intention of increasing demand, and thus spurring more production and job growth.
I am not aware of a political position being taken in this country by our political establishment, but the Greek crisis is essentially a debate like the one that we are having here, and our conversation will only intensify between now and the 2016 election. It seems to me that we are approaching a breaking point in the alliance between those with money and those who work that we refer to as capitalism. The starting point for economics as a system of organization and distribution of wealth is arguably the feudal period, when wealth was a function of birthright and labor was everyone who lacked a connection to those with inherited political power: monarchs and noblemen. After evolving through the gilded age and the abuses of labor that changed our ethos and laws in the first third of the twentieth century, we have had a brief period of enlightenment from which we are now emerging in a retreat to the past and the inequities that spawned misery and penury for the masses and vast, ever-increasing wealth for a select few, many of whom have nothing but hereditament in one form or another to commend them.
I see the Greek debt crisis as the paradigm that the world will follow in decades to come. We will increasingly question other right of those who control the wealth of the world, and of this nation in particular, to control those whose labor produces it in consequence, their common weal. We should be watching Greece, and we should be demanding that our politicians tell us where they stand. Because as goes Greece, so will go this nation eventually, not as a function of debt, but as a function of enlightenment and equitability.
Your friend,
Mike
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