Monday, June 25, 2012

And the Good Ship Greece Sails On: ‘Letter’ [from Greek economist] to an Italian Colleague

While they are dithering, fiddling as Athens, Rome, Madrid, Lisbon, Dublin are burning, our societies are descending into a mire in which hope vanishes, prospects are annihilated, life is cheapened, and where the only winners are the misanthropes, the ‘haters’, the seekers of scapegoats in the form of the ‘alien’, the Jew, the ‘different’, the ‘other’. As the lights are literally going out in my country, with families ‘choosing’ to have their electricity supply discontinued in order to put food on the dinner table, thugs ‘patrol’ the streets in search of the ‘enemy’. Nazi ideology is getting another chance, like hunger and dispossession, to infect, once again, our social fabric. And as our institutions, our trades unions, our cultural norms and organisations are turning into empty shells, little, if anything, stands in the way of the bigots, the racists, the exploiters of generalized pain and helplessness. Alas, the serpent’s egg is hatching again in Europe, and for the same reasons it did back then.

Your country and mine share a lot more of this sorry history than we care to admit. Before the war, both our societies spawned and tolerated fascist regimes. Your Mussolini and our Metaxas may have ended up waging war against one another, but they were both products of political failures and economic disasters that are eerily similar to the shared fate of our two countries today. I know that a strange and weird geography is at work in Europe today: Ireland is at pains to argue that it is not Greece, Portugal to claim that it is not Ireland, Spain screams that it is not Portugal and, of course, Italy wants to believe that it is not Spain. We must, I submit to you, cast this idiotic denial of our common malaise aside. Sure, Italy is not Greece but, nevertheless, the predicament that Italy is increasingly finding itself in as I am writing these lines cannot be usefully separated from the predicament of my country. Our disease may have resulted in a higher fever than the one you are experiencing but, believe me, it is the same virus. Your fever will rise tomorrow to the level at which ours is today.

Many people I know outside of Greece, including fellow economists, make the mistake of thinking of what Greece is experiencing as a deep recession. Let me tell you that this is no recession. This is a depression. What is the difference? Recessions are mere downturns. Periods of reduced economic activity and increased unemployment. As you and I teach our students, recessions are to capitalism that which Hell is to Christianity: unpleasant but essential for the ‘system’ to function. Periods of recession can be redemptive, in the sense that they ‘weed out’ of the economic eco-system the less efficient, the firms that should not really be in business, the products that are out of fashion, the productive techniques that are obsolete, the dinosaurs to coin a metaphor.

However, what is going on in Greece is no recession! Here, everyone is going under. Efficient and inefficient alike. Productive and unproductive. Potentially profitable and loss making enterprises. I know of factories that export everything they make to satisfied customers, that have full order books, a long history of profitability; and, yet, they are on the brink of bankruptcy. Why? Because their foreign suppliers will not accept their bankers’ guarantees in order to provide them with the necessary raw materials, as no one trusts the Greek banks anymore. But with the credit circuits well and truly broken, this Crisis is sinking every ship, wrecking every boat, ensuring that the whole of society drowns. And the more we cut wages, the more we increase taxes, the more we reduce benefits to the unemployed, the deeper the hole into which everyone is drawn. If anyone wants to explain the concept of a vicious circle, today’s Greece is a perfect case study.

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