Richard Wolff talking:
I think the real importance of what is happening in Greece is that fundamentally a poor corner of Europe has said it will no longer absorb the disproportionate burden of this crisis and of the bailouts that have been used to cope with it. Basically, what is going on here is that the richer countries of Europe, led by Germany, are shifting the burden of all these crises—that they are responsible for—onto people in Greece. They never imagined that in trying to do that they would generate their worst nightmare: a left-wing political organization that goes from 4 percent of the vote a few years ago to an ability to call out a referendum and get 60 percent of the people to support them. So, they have generated a response, and that struggle, of which this is only one step, is what’s being played out here. And that’s why it’s relevant to the rest of Europe and to the United States, everywhere where there is mounting evidence of people saying, “No, we will not continue to absorb the costs of a system that works in this dysfunctional way.”
I think the Germans face a choice. They’re worried that as the richest country, as the country that controls the situation, and as a country that historically has benefited from the very thing that Greece now wants, which they don’t want to give to the Greeks, that they face the risk that if they crush Greece, it will produce the reaction Paul has described. On the other hand, they will send a message to the Spanish, to the Italians, to the Portuguese and others, who are basically in a very similar situation, only they’re much larger, and the Germans are therefore afraid they’ll have to bail out all of Europe. They can’t afford it. They’re terrified. On the other hand, if they don’t cut a deal with Greece, then they face the possibility of left-wing governments in these other countries and a whole transformation, and they’re choosing between them.
The irony here, the historical irony, is something I think we need to understand. Back in 1953, the Germans, with a very crushed economy—in that case, because of the Great Depression and the fact that they lost World War II—went to the United States, France and Britain and said, “We can’t join you as a bulwark against the Soviet Union unless you relieve us of our enormous debts, which are hampering our ability to grow.” Across 1953, they had meetings in London. When those meetings concluded, with the so-called London Agreement, here’s what Germany got from the United States, France and Britain: 50 percent of their outstanding debt, which was very high, was erased, and the other 50 percent of their debt was stretched out over 30 years. In effect, Germany got the relief of all of its basic indebtedness, based on two world wars that they were held accountable for, and that enabled them to have the so-called Wirtschaftswunder, the economic miracle that happened. They now refuse to give to Greece what they got. They refuse to allow Greece to have the chance to solve its economic problems just the way Germany asked for and got. And this discrepancy between these two countries is producing a stress inside Europe that is, what Paul Mason correctly points to, fundamentally dangerous to the whole project of a United States of Europe.
basically, what the Greeks would achieve if they left the European Union is they would revert to their own currency. They could go back to the drachma, which was their currency before, or a new one. And once they control their own currency, they can also control the relative worth of that currency, relative to others. If that currency becomes much, much cheaper relative to the euro, which is what will happen, then everything priced in that local currency will appear very cheap to people with dollars or people with euros. And suddenly a Greek vacation will become much cheaper than a vacation anywhere else. Greek olive oil will outprice everybody else’s. And that has traditionally been the way that a country blocked into this dead end crawls its way out of that dead end. It’s painful, but they at least have the prospect that their goods will become very attractive around the world, what they have to sell, and they’ll begin to recoup.
The reason they want to go more and more in that direction is that the austerity imposed on them since 2010 has given them lots of suffering with no improvement, with no chance to get out of it, therefore they were choosing between a proven dead end and a difficult strategy, but one that has in the past worked and might in the end work again here, especially if leaving the euro meant they could also cancel their debts, with or without the approval of their creditors, the way the Germans arranged it. But if they had less debt and a cheaper drachma as their own currency, that’s a strategy that at least has a chance, whereas what they were in was endless promises that it will eventually work, that never came true.
they’re being squeezed by 25 percent or more unemployment, by a cutback in public sector, which is the largest part of their economy, of about 40 percent since 2010, drop in their actual wage. Businesses are closing because they can’t solve the payments problem that Paul talked about. So you have a general disintegration that has been worse in Greece than in any other country. That’s why they keep saying, “We’ve been the ones who have borne the brunt of all of this. And don’t make us do more. That’s unjust and not solidarity with the rest of Europe.” So, they’re struggling to keep their pensioners having enough to live, to prevent, for example, the continued exodus. They have lost tens of thousands of young Greek citizens, who were educated at the expense of the Greek economy and are now taking what they’ve learned to go to other countries and work and be productive over there. A country like Greece, which is small to begin with, can’t keep hemorrhaging its best and brightest young people at the same time that everybody else’s salary is collapsing. This is an economy that—where you have to look for a metaphor, go back to the depths of the Depression in the 1930s, when we had comparable kinds of situation of desperate people and rampant poverty. They want out of that, because, otherwise, they face an indefinite future of this kind of behavior.
the more the Europeans squeeze the Greeks, with a left-wing government, that government, especially strengthened by that referendum now, has to sooner or later—and Paul referred to this—go after the wealth that’s there in order to solve some of these problems. They should have done that a long time ago, but they never had a leftist government with a mindset to do it. Now they do. And that’s the great danger, that you’re converting a problem of European disequilibrium and inequality into a real class struggle between the mass of the Greek people, on the one hand, and the one place where wealth exists inside Greece, among the rich and the corporations, to help them solve a problem. So you’ve converted a European problem into a class struggle. And if Syriza can pull that off, the message sent to the comparable groups in every other European country is a staggering reconception of what the future of Europe may look like, where the words “anti-capitalism” become a unifying slogan for people across that continent. Merkel’s great danger is that in pushing as hard as she has, she may reap a whirlwind of results.
The Germans are victims of their own propaganda. They converted an economic crisis into a nationalist, we-versus-them mentality—we, Germans who work hard, against the Greeks, who don’t. Reminded me of nothing so much as Mr. Romney’s unfortunate remark in the last campaign where he divided Americans into the 47 percent moochers and the 53 percent who work hard, trying to get the 53 percent to believe they were carrying the other 47. That’s what the Germans have done. “We Germans work very hard, and we’re carrying these lazy Greeks.” This—put aside the questionable issue of whether the Germans ought to play such a nationalist card, given their history, but this is a way of solidifying opposition to what’s going on, and this is a very, very dangerous track. But she may be trapped by it. She has done it now. So, as Paul said, her own people wouldn’t support making a deal. She’s made that impossible for herself.
France that the anti-austerity position was taken by the far right, by Madame Le Pen, who has become an important political leader in France, who declared her solidarity with Syriza. That’s why the complicated politics of this. She sees the future of an anti-capitalism in France enabling her right wing to capture that kind of idea. But it’s a sign that the—below the surface, the anger about austerity, the resentment of the burdens of this crisis being shifted onto average people, is becoming a European problem. And the Germans may discover that they have isolated themselves yet again in European history by being the champion of something which is provoking a backlash larger than anything they had foreseen.
the American government is more interested with a stable Europe than with provoking this kind of a split inside Europe, partly because of the ramifications here in this country, where the same anti-austerity is building. That’s one of the causes for the support for Bernie Sanders, for example. But he’s also concerned that the Germans are making a classic political error, going way too far, and that this will disturb global markets. The economic recovery in this country is very weak and very fragile, and that doesn’t want disturbance to come from a powerhouse like Europe.
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Richard Wolff, emeritus professor of economics at University of Massachusetts, Amherst, and visiting professor at New School University. He hosts a weekly national radio program called Economic Update on about 45 radio stations, including Pacifica stations WBAI, KPFA, KPFK and KPFT. He’s the author of several books, including, most recently, Democracy at Work: A Cure for Capitalism.
— source democracynow.org