Let’s face it Murdoch’s business model is integrated with where the money and power is and it’s not in the grips of 99% of individual Australians who in the main only say hi to their fellow Australians in passing. News Corp is an instrument ensuring division in diversity not the unity of Multiculturalism we are all so proud of. (ODT)
This year will be an important year for three of the world’s oldest, continuing democracies – the United States, the UK and Australia.
The US will decide, post-Mueller, whether Trump’s presidency is terminal. The UK will decide whether to tear up a half a century of European integration. And Australia faces a general election.
The core objective of course is to avoid a Royal Commission that would lay bare the the way US Citizen Murdoch does business.
This popular belief that nobody really does or can know anything is the perfect soil for an authoritarian leader to take root.
Only if we can trust each other to try to be honest can we hope to rebuild something resembling a truly functioning democracy. Otherwise, sooner or later this country will be seduced by the siren song of yet another strong and authoritative voice.
Humans are finite creatures and any truth we lay claim to will of necessity be partial, multi-faceted, and complex. At our best, we see only part of what is there and articulate only part of what we see. The promise of democracy — when it works — is the possibility of combining all those partially glimpsed and imperfectly reported realities into a still imperfect, but nevertheless better, whole.
Mr Trump, as we well know, isn’t particularly partial to “facts”. He didn’t care about them in 1989 when he took out a full page ad in the New York Times calling for the death penalty for a group of innocent teenagers, and he doesn’t care about them now.
Mr Trump knows he’s lying. He doesn’t care. His supporters know he’s lying. They don’t care either.
On April 9, 2019, Israel will hold general elections. Israelis will head to the polls to choose their elected leaders and representatives. If they are unhappy with the way things are going, like citizens of democracies around the world, their votes will help shape the ideological and political direction of the government and the institutions it controls.
When a Corporation controls the State you have Mussolini’s version of heaven (ODT)
Going after Labor leaders is one of Rupert’s favourite pastimes. Rather than hunting lions in Africa or tigers on the Punjab – That’s way too dangerous and way too hard and goes nowhere towards right wing corporate control and exploitation of society.
If there’s one man in the world who might ever possibly build a device to control the weather and freeze us all unless the governments of the world pay him several hundred billion dollars and recognize Fox News’s copyright of the phrase “Fair and Balanced,” it would be Rupert.
leaked audio of Georgia Secretary of State Brian Kemp—currently under fire for spearheading voter suppression efforts as he also runs for governor of the state—saying that the get-out-the-vote operation of his Democratic challenger “continues to concern us, especially if everybody uses and exercises their right to vote.”
In the 21-minute recording of Kemp’s remarks at a closed-door campaign event in Atlanta on Friday, obtained by Rolling Stone, he expressed concerns about Stacey Abrams’s voter turnout mobilization, which has ramped up in response to Kemp suspending more than 53,000 voting registrations—mostly of black voters—and purging 107,000 more from the rolls.
Why the ABC is essential
The singling out of ABC journalists tends to confirm that it is not just a matter of correcting errors of fact as the government maintains but, rather, a desire to eliminate dissent, as Waleed Aly writes for Fairfax. Aly contends that the week is one in which the ABC has been recast as an organisation more concerned with keeping the government happy than with the non-negotiability of journalistic independence.
For Ali, “it’s about a civic culture that is slowly falling apart: a political class with fewer civic boundaries, less concerned with the independence of institutions, and a muscular intolerance of dissent.
It’s also a ruling class is happy to cling to power by mounting increasingly legalistic, hair-splitting defences.
But common to all democracies is a free press. Some of these even have a proudly independent national broadcaster free from political interference. And they’ve cut away the dead albatross; the decay corpse of neoliberalism from around their necks leaving them to invest in schools and hospitals not the service delivery of privatised and outsourced health care and educational options. And banks set up not to profit out of need and vulnerability but to supply the funds to develop a civil society.
When Australian Conservatives conflate Australia with all Australians and then claim disagreeing with their prescribed laws,policies, actions and ideology amounts to being unpatriotic then the most unpatriotic and undemocratic claims are being made by Conservatives themselves.(ODT)
The ongoing fight in Britain is fundamentally not over those few marginal racists who still believe in some Jewish conspiracy to take over the world, but over whether labeling Israel as a colonial-settler state is anti-Semitic, or whether anti-colonial resistance to Israeli settler-colonialism and racist laws constitutes anti-Semitism, or whether questioning the legal and institutional religious, racial and colonial privileges accorded to Israeli Jews over the indigenous Palestinians constitutes anti-Semitism.In naming its state “the Jewish people,” the Zionist movement conflated and conflates its colonial project with all Jews, even when the majority of world Jewry did not support the movement and continues to refuse to live in, and become citizens of, Israel
This is a most perplexing debate for any political observer, as it is Israel that claims to be “the Jewish state,” and that it represents the Jews of the world, even though a majority of them are not Israeli citizens.
Supporters of Israel cannot have it both ways: They cannot claim that the Zionist movement has a right to colonize the land of the Palestinians in the name of Jews, and that the movement has the right to privilege Jews and to oppress and discriminate against the Palestinian people in the name of Jewish people, and that it has the right to pass racist laws in the name of Jews, and that it has a right to name its state “the Jewish people” for whom it speaks, and then after all that advance the claim that those who condemn Israel are condemning Jews.
The narrative needs to change to reflect the democratic reality that governments work for us, writes Noely Neate.
Climate activists across the globe celebrated Thursday after the lower house of the Irish legislature passed a divestment bill with support from all parties, effectively ensuring that Ireland will become the first nation in the world to fully divest public money from the fossil fuel industry.
Ms Guthrie cited a forthcoming report by Deloitte Access Economics, commissioned by the ABC, which she said would reveal the broadcaster contributed $1 billion to the national economy last financial year – about a third of which fed into the broader media landscape. In addition to its 4000 employees, the ABC helps to sustain more than 2500 full-time equivalent jobs across the supply chain – such as artists, writers and technicians – Ms Guthrie said, citing the Deloitte research.”Amid the debate over the ABC’s purpose and its funding, we should all remember that there are 2500 jobs outside public broadcasting at risk in any move to curtail our remit and activities,” she warned.
Admonishing the ABC’s critics in government, Ms Guthrie asserted there was a sinister agenda at work involving overtures to the Coalition’s base.Related Article Footage from Liberal Party meeting reveals who voted to sell the ABC “In a complex world it is too easy for the powerful to do their work in dark corners: t so-“Good journalists call that out. Today, I want to channel some of that skill and emphasise real facts in what has become an increasingly febrile debate over the value and future of the ABC.”
Media silence enabled a successful attempt by the Government to withhold information from the New England electorate in order to achieve an outcome favourable to that government. Is there much more worthy of investigation, one has to ask, than the deliberate withholding of information from voters in order to influence the outcome of an election?
Since John Howard came to prominence, and in the time since, especially under Abbott, the practice of politics now repulses people. We have been so let down by leadership that you would be hard-pressed to find 10% of the population who “trust” our politicians.
The myriad corruption scandals engulfing Israeli Prime Minister Benjamin Netanyahu have, on a near daily basis, been growing and spreading like cracks in a windshield. True or not, the the question of if King Bibi’s reign is coming to an end feels like it has officially been supplanted by predictions about when the house of cards will come crashing down.
Trump’s refusal to release the response of the Democratic minority on the House Intelligence Committee to the declassified Nunes memo cherry-picking intelligence reports has been decried as a politicization of intelligence. It has been pointed out by legal scholar Laurence Tribe that Congress could in any case override Trump and declassify the Democratic response itself, if the GOP representatives wanted to. So this controversy isn’t about Trump or Nunes. It is about a Republican Party determined not to play fair.
While these analyses is certainly correct, they miss a crucial problem with our declining democracy in the United States: classified documents are inherently undemocratic and should be rare.
– Essentially an offer that says ‘Get Out or We Will Make Your Life a Living Hell, or Worse.’The Platform Provides 3 Choices for Palestinians: Accept Ethnic Cleansing, Bend the Knee to Apartheid or Expect Even More Violence
Perhaps the good judges did not review the results of a 2016 public opinion survey, by +972 Magazine’s own Dr. Dahlia Scheindlin, which found that only 45 percent of Jewish Israelis had a favorable opinion of “human rights.” Asked specifically about human rights “organizations,” those favorability numbers dropped to 31 percent — a marked deterioration from a similar survey conducted five years earlier.
Source: Bulldust | The Monthly
The future of journalism and democracy lies in news and analysis that reflects the interests of ordinary people, says John Passant.
It doesn’t take a genius to understand the consequences for democracy if we lose investigative reporters to an army of Perez Hiltons. Should we consider public funding?
After 10 months of administrative detention, it appears the army no longer views Omar Nazzal as a dangerous threat — just like countless other administrative detainees who sit in prison for months, if not years. Palestinian journalist Omar Nazzal was released from Israeli prison on Monday after 10 months in administrative detention. Upon his release, Nazzal, a member of the General Secretariat of the Palestinian Journalists’ Syndicate, was welcomed by family members and supporters outside Ofer military prison, near Ramallah. [tmwinpost] Nazzal, 55, was first detained in April at Allenby Bridge while trying to leave the West Bank en route to an…
Greg Palast’s documentary told how millions of minority votes were discounted through a voter crosscheck program. Now, Palast demands that the DOJ investigate the crosscheck system.
Donald Trump’s tweets yesterday about “the millions of people who voted illegally in 2016” and “serious voter fraud in Virginia, New Hampshire and California” cannot be dismissed as just another Twitter meltdown from the president-elect.
By Loz Lawrey ABC radio grew my mind. I mean it. Each working day, throughout my career in the building industry, I listened exclusively to one of our public broadcaster’s fine radio stations as I toiled at my trade. While my body performed familiar routine activities on this physical plane, my mind travelled the world,…
Australian Electoral Commission regional manager, Mark Eachbox
Australia’s political duopoly only perpetuates a watered down democracy, which is now little more than a regional office for corporate interests, writes Andrew Chambers.
If Donald Trump is elected president of the United States, London’s new mayor would be barred from entering the country because he’s a Muslim.
The draft law, which passed the first of three votes on Monday, would allow the expulsion of Arab MKs from the Knesset. It is one of several recent steps by the Netanyahu government to limit…
This isn’t a choice between ‘Jewish or democratic’ — the only question is whether Israel can still become a true democracy. For some years, the center and left in Israel has committed itself to the…
The question triggered by the Arab uprisings of 2011 was always: why did it take so long?
Anas Khateeb placed behind bars for three comments he made online.
Iranian President Hassan Rouhani on Monday called for a united front to fight extremists in the Middle East and said Tehran was ready to help “bring about democrac
From laissez-faire economics in 18th-century India to neoliberalism in today’s Europe the subordination of human welfare to power is a brutal tradition
Starving people clamour at the gates of a workhouse during the Irish famine,’One eighth of the population was killed – one could almost say murdered – by the British refusal [to set] policies that offended the holy doctrine of laissez-faire economics.’ Photograph: Hulton
Greece may be financially bankrupt, but the troika is politically bankrupt. Those who persecute this nation wield illegitimate, undemocratic powers, powers of the kind now afflicting us all. Consider the International Monetary Fund. The distribution of power here was perfectly stitched up: IMF decisions require an 85% majority, and the US holds 17% of the votes.
The IMF is controlled by the rich, and governs the poor on their behalf. It’s now doing to Greece what it has done to one poor nation after another, from Argentina to Zambia. Its structural adjustment programmes have forced scores of elected governments to dismantle public spending, destroying health, education and all the means by which the wretched of the earth might improve their lives.
The euro will be stuck with austerity unless it learns to embrace democracy
The same programme is imposed regardless of circumstance: every country the IMF colonises must place the control of inflation ahead of other economic objectives; immediately remove barriers to trade and the flow of capital; liberalise its banking system; reduce government spending on everything bar debt repayments; and privatise assets that can be sold to foreign investors.
Using the threat of its self-fulfilling prophecy (it warns the financial markets that countries that don’t submit to its demands are doomed), it has forced governments to abandon progressive policies. Almost single-handedly, it engineered the 1997 Asian financial crisis: by forcing governments to remove capital controls, it opened currencies to attack by financial speculators. Only countries such as Malaysia and China, which refused to cave in, escaped.
Consider the European Central Bank. Like most other central banks, it enjoys “political independence”. This does not mean that it is free from politics, only that it is free from democracy. It is ruled instead by the financial sector, whose interests it is constitutionally obliged to champion through its inflation target of around 2%. Ever mindful of where power lies, it has exceeded this mandate, inflicting deflation and epic unemployment on poorer members of the eurozone.
The Maastricht treaty, establishing the European Union and the euro, was built on a lethal delusion: a belief that the ECB could provide the only common economic governance that monetary union required. It arose from an extreme version of market fundamentalism: if inflation were kept low, its authors imagined, the magic of the markets would resolve all other social and economic problems, making politics redundant. Those sober, suited, serious people, who now pronounce themselves the only adults in the room, turn out to be demented utopian fantasists, votaries of a fanatical economic cult.
Those sober, suited, serious people turn out to be demented utopian fantasists, votaries of a fanatical economic cult
All this is but a recent chapter in the long tradition of subordinating human welfare to financial power. The brutal austerity imposed on Greece is mild compared with earlier versions. Take the 19th century Irish and Indian famines, both exacerbated (in the second case caused) by the doctrine of laissez-faire, which we now know as market fundamentalism or neoliberalism.
In Ireland’s case, one eighth of the population was killed – one could almost say murdered– in the late 1840s, partly by the British refusal to distribute food, to prohibit the export of grain or provide effective poor relief. Such policies offended the holy doctrine of laissez-faire economics that nothing should stay the market’s invisible hand.
When drought struck India in 1877 and 1878, the British imperial government insisted on exporting record amounts of grain, precipitating a famine that killed millions. The Anti-Charitable Contributions Act of 1877 prohibited “at the pain of imprisonment private relief donations that potentially interfered with the market fixing of grain prices”. The only relief permitted was forced work in labour camps, in which less food was provided than to the inmates of Buchenwald. Monthly mortality in these camps in 1877 was equivalent to an annual rate of 94%.
As Karl Polanyi argued in The Great Transformation, the gold standard – the self-regulating system at the heart of laissez-faire economics – prevented governments in the 19th and early 20th centuries from raising public spending or stimulating employment. It obliged them to keep the majority poor while the rich enjoyed a gilded age. Few means of containing public discontent were available, other than sucking wealth from the colonies and promoting aggressive nationalism. This was one of the factors that contributed to the first world war. The resumption of the gold standard by many nations after the war exacerbated the Great Depression, preventing central banks from increasing the money supply and funding deficits. You might have hoped that European governments would remember the results.
Greek debt crisis: Tsipras gets ultimatum to reach deal or face Grexit – as it happened
On Sunday, European leaders will meet for a summit that will decide whether Greece gets another bailout or leaves the eurozone
Today equivalents to the gold standard – inflexible commitments to austerity – abound. In December 2011 the European Council agreed a new fiscal compact, imposing on all members of the eurozone a rule that “government budgets shall be balanced or in surplus”. This rule, which had to be transcribed into national law, would “contain an automatic correction mechanism that shall be triggered in the event of deviation.” This helps to explain the seigneurial horror with which the troika’s unelected technocrats have greeted the resurgence of democracy in Greece. Hadn’t they ensured that choice was illegal? Such diktats mean the only possible democratic outcome in Europe is now the collapse of the euro: like it or not, all else is slow-burning tyranny.
It is hard for those of us on the left to admit, but Margaret Thatcher saved the UK from this despotism. European monetary union, she predicted, would ensure that the poorer countries must not be bailed out, “which would devastate their inefficient economies.”
But only, it seems, for her party to supplant it with a homegrown tyranny. George Osborne’s proposed legal commitment to a budgetary surplus exceeds that of the eurozone rule. Labour’s promised budget responsibility lock, though milder, had a similar intent. In all cases governments deny themselves the possibility of change. In other words, they pledge to thwart democracy. So it has been for the past two centuries, with the exception of the 30-year Keynesian respite.
The crushing of political choice is not a side-effect of this utopian belief system but a necessary component. Neoliberalism is inherently incompatible with democracy, as people will always rebel against the austerity and fiscal tyranny it prescribes. Something has to give, and it must be the people. This is the true road to serfdom: disinventing democracy on behalf of the elite.
The rise of the Houthi movement in Yemen, the militias of Iraq, Hezbollah in Lebanon and even the Syrian Arab Army of Bashar al-Assad are being configured by many analysts as evidence of a wide-ranging Iranian Shiite incursion into the Middle East. The Saudi bombing campaign in Yemen, Israel’s recent bombing of Hezbollah bases in southern Syria, and Gulf Cooperation Council unease about Iraq’s Tikrit campaign are all a result of this theory of “the Shiite Crescent,” a phrase coined by King Abdallah II of Jordan. But is Iran really the aggressor state here, and are developments on the ground in the Middle East really being plotted out or impelled from Tehran?
It is an old fallacy to interpret local politics through the lens of geopolitics, and it is a way of thinking among foreign policy elites that has led to unnecessary conflicts and even wars. Polarized analysis is only good for the military-industrial complex. The United States invaded Lebanon in 1958, ostensibly on the grounds that Druse shepherds protesting the government of Camille Chamoun were Communist agents. A retired State Department official once confessed to me that many in Washington were sure that the overthrow of the Shah of Iran in 1979 by Ayatollah Khomeini was planned out in Moscow. On the other hand, I met a Soviet diplomat at a conference in Washington, DC, in 1981 who confessed to me that his country simply could not understand the Islamic Republic of Iran and was convinced that the CIA must be behind it. I would argue that Israel’s Benjamin Netanyahu and many Saudi and Gulf analysts have fallen victim to this “geopolitics fallacy.”
Iraqi Shiite militias can’t be read off as Iranian instruments. The Peace Brigades (formerly Mahdi Army) of Muqtada al-Sadr are mostly made up of Arab slum youth who are often suspicious of foreign, Persian influences. They became militant and were made slum-dwellers as a result of US and UN sanctions in the 1990s that destroyed the Iraqi middle classes and then of the US occupation after 2003. The ruling Dawa Party of Iraqi Prime Minister Haider al-Abadi does not accept Iran’s theory of clerical rule, and in the 1980s and ’90s many Dawa Party stalwarts chose to live in exile in London or Damascus rather than accept Iranian suzerainty. At the moment, Iraq’s Shiite parties and militias have been thrown into Iran’s arms by the rise of ISIL, which massacres Shiites. But the alliance is one of convenience and can’t just be read off from common Shiism.
Lebanon’s Hezbollah is strongly aligned with Iran. But it was formed around 1984 under the tutelage of the Iraqi Dawa Party in exile, and its main project was ending the Israeli occupation of 10 percent of Lebanon’s territory, which began in 1982. Its rival, the Amal Party, was more middle-class and less connected to Iran, even though it was also made up of Shiites. Exit polling suggests that some half of voters who vote for Hezbollah among Lebanese Shiites are nonreligious; they are supporting it for nationalist reasons and seeking self-defense against Israeli incursions. Lebanon is a country of only 4 million, and the Twelver Shiites are only about a third of the population, some 1.3 million, most of whom are children. The way in which Hezbollah has been built up in the Western imagination as a major force is a little bizarre, given that they have only a few thousand fighters. At the moment, they have a strong alliance with Lebanese Christians and Druze because all three generally support the government of Bashar al-Assad in neighboring Syria. But Lebanese politics are kaleidoscopic, and that political dominance could change abruptly. Lebanese Shiites are no more cat’s paws of Iran than are Lebanese Christians, many of them now allied with the Shiites and Alawites as well.
In the case of Syria, the Baath regime of Assad is a coalition of Alawite Shiites, secular Sunnis, Christians and other religious minorities. It has no ideological affinity with Iran’s right-wing theocracy. Even religious Alawites bear little resemblance to Iranian Twelver Shiites, having no mosques or ayatollahs and holding gnostic beliefs viewed as heretical in Tehran. But the question is moot, since those high in the regime are secular-minded. Iran has sent trainers and strategists to help Damascus against hard-line Salafi Sunni rebels, and is accused of rounding up some Afghan and other mercenaries for Damascus. Syria’s geopolitical alliance with Iran came about because of Syria’s isolation in the Arab world and need for an ally against nearby threats from Israel, Iraq and Saudi Arabia.
In neither Iraq nor Syria has Iran invaded or even sent infantry, rather supplying some special operations forces in aid of local Iraqi and Syrian initiatives, at government request. In both countries, Iran has Sunni clients as well as Shiite ones. In both countries, local forces reached out to Iran for patronage in the face of local challenges, not the other way around.
In Yemen, as well, the Zaydi Shiites, about a third of the population, bear no resemblance to Iran’s Twelvers. It is like assuming that Scottish Presbyterians will always support Southern Baptists because both are forms of Protestantism. The rise of the Houthi movement among Yemeni Zaydis involved a rural, tribal revolt against an authoritarian nationalist government and against the attempts by Saudi Arabia to proselytize Zaydis and make them into hard-line Sunnis, called Salafis. The Houthi family led a militant counter-reformation in favor of renewed Zaydi identity. Since the nationalist government of deposed president for life Ali Abdullah Saleh got crucial foreign aid from the Saudis, he gave the Saudis carte blanche to influence Yemeni religious culture in the direction of an intolerant form of Sunnism. The nationalist government also neglected the Zaydi Saada region in the north with regard to services and development projects. Yemeni tribes in any case do not necessarily foreground religion when making alliances; many Sunni tribes have joined the Houthis politically. While Netanyahu and the Saudis, along with deposed president number-two Abdu Rabbu Mansour Hadi, accuse Iran of fomenting the Houthis, they are a local movement with local roots, and there is no reason to think that that their successes owe anything to Iran. Indeed, most of their success since last summer apparently derives from a decision by former president Saleh to ally with them and direct elements of the Yemeni army to support them or stand down in the face of their advances. To turn around and blame these developments on distant Iran is absurd.
The motley crew of heterodox forms of Shiite Islam, Arab socialist nationalists of the old school, rural tribal good ol’ boys and slum-dwelling youth that are shaking the Middle East status quo are not evidences of Iranian influence, or, in Netanyahu’s words, “conquest.” In each case, these local forces have reached out to Iran for patronage, and perhaps there was some broad, vague, Shiite soft power involved. As noted, however, Iran also has many Sunni clients, from the Iraqi Kurds to Hamas in Gaza.
From the 1970s forward, the Egyptian nationalist regime under Anwar El Sadat turned conservative and allied with the United States and Saudi Arabia, promoting political Islam culturally and unregulated markets economically. Thereafter, a status quo prevailed in the Arab world of nationalist presidents for life and monarchs and emirs, most of them US clients and amenable to neoliberal economic policies stressing the market and distributing wealth upward from the working classes. Either explicitly or implicitly, they gave up opposition to Israeli expansionism. They crushed formerly powerful socialist, Communist and labor movements, and used oil money to bribe the public into quiescence or deployed secret police to torture them into going along. That status quo was latently Sunni, in that most elites were drawn from that branch of Islam, including the president of Iraq and the prime minister of Lebanon—neither of which are Sunni-majority societies.
In the past decade, that cozy order has broken down, in part at the hands of a new generation of Arab millennials unwilling to put up with it, but also at the hands of working-class grassroots movements. It also broke down internally. On the one hand, the nationalists in the Arab world are increasingly suspicious of the Saudi fondness for promoting Salafi fundamentalism. Thus, the Algerian and Egyptian officers are not as enthusiastic about the rebellion in Syria as are the sheikhs. And even the Americans, big champions of anti-Communist fundamentalism from Eisenhower to Reagan, have now drawn a line at Al Qaeda and ISIL, finding even Iran preferable. On the other hand, disadvantaged insurgents have risen up from below. The most important thing about these challengers is probably not that many have a Shiite coloration but that they reject the condominium of the Egyptian officer corps and the Saudi monarchs, with their American security umbrella, their free-market policies and their complaisance toward Israeli militarism (though, not all the pro-Iran movements have all of these concerns—Syria went neoliberal in the past two decades, for example). Iran is being entrepreneurial in supporting these insurgents against the prevailing order. It hasn’t conquered anything. If it has become more influential, that is an indictment of the old Sadat status quo.
NEW YORK — When the euro crisis began a half-decade ago, Keynesian economists predicted that the austerity that was being imposed on Greece and the other crisis countries would fail. It would stifle growth and increase unemployment — and even fail to decrease the debt-to-GDP ratio. Others — in the European Commission, the European Central Bank, and a few universities — talked of expansionary contractions. But even the International Monetary Fund argued that contractions, such as cutbacks in government spending, were just that – contractionary.
We hardly needed another test. Austerity had failed repeatedly, from its early use under U.S. President Herbert Hoover, which turned the stock-market crash into the Great Depression, to the IMF “programs” imposed on East Asia and Latin America in recent decades. And yet when Greece got into trouble, it was tried again.
Greece largely succeeded in following the dictate set by the “troika” (the European Commission the ECB, and the IMF): it converted a primary budget deficit into a primary surplus. But the contraction in government spending has been predictably devastating: 25 percent unemployment, a 22 percent fall in GDP since 2009, and a 35 percent increase in the debt-to-GDP ratio. And now, with the anti-austerity Syriza party’s overwhelming election victory, Greek voters have declared that they have had enough.
So, what is to be done? First, let us be clear: Greece could be blamed for its troubles if it were the only country where the troika’s medicine failed miserably. But Spain had a surplus and a low debt ratio before the crisis, and it, too, is in depression. What is needed is not structural reform within Greece and Spain so much as structural reform of the eurozone’s design and a fundamental rethinking of the policy frameworks that have resulted in the monetary union’s spectacularly bad performance.
Greece has also once again reminded us of how badly the world needs a debt-restructuring framework. Excessive debt caused not only the 2008 crisis, but also the East Asia crisis in the 1990s and the Latin American crisis in the 1980s. It continues to cause untold suffering in the U.S., where millions of homeowners have lost their homes, and is now threatening millions more in Poland and elsewhere who took out loans in Swiss francs.
Given the amount of distress brought about by excessive debt, one might well ask why individuals and countries have repeatedly put themselves into this situation. After all, such debts are contracts — that is, voluntary agreements — so creditors are just as responsible for them as debtors. In fact, creditors arguably are more responsible: typically, they are sophisticated financial institutions, whereas borrowers frequently are far less attuned to market vicissitudes and the risks associated with different contractual arrangements. Indeed, we know that U.S. banks actually preyed on their borrowers, taking advantage of their lack of financial sophistication.
Every (advanced) country has realized that making capitalism work requires giving individuals a fresh start. The debtors’ prisons of the 19th century were a failure — inhumane and not exactly helping to ensure repayment. What did help was to provide better incentives for good lending, by making creditors more responsible for the consequences of their decisions.
At the international level, we have not yet created an orderly process for giving countries a fresh start. Since even before the 2008 crisis, the United Nations, with the support of almost all of the developing and emerging countries, has been seeking to create such a framework. But the U.S. has been adamantly opposed; perhaps it wants to reinstitute debtor prisons for over indebted countries’ officials (if so, space may be opening up at Guantánamo Bay).
The idea of bringing back debtors’ prisons may seem far-fetched, but it resonates with current talk of moral hazard and accountability. There is a fear that if Greece is allowed to restructure its debt, it will simply get itself into trouble again, as will others.
This is sheer nonsense. Does anyone in their right mind think that any country would willingly put itself through what Greece has gone through, just to get a free ride from its creditors? If there is a moral hazard, it is on the part of the lenders — especially in the private sector — who have been bailed out repeatedly. If Europe has allowed these debts to move from the private sector to the public sector — a well-established pattern over the past half-century — it is Europe, not Greece, that should bear the consequences. Indeed, Greece’s current plight, including the massive run-up in the debt ratio, is largely the fault of the misguided troika programs foisted on it.
So it is not debt restructuring, but its absence, that is “immoral.” There is nothing particularly special about the dilemmas that Greece faces today; many countries have been in the same position. What makes Greece’s problems more difficult to address is the structure of the eurozone: monetary union implies that member states cannot devalue their way out of trouble, yet the modicum of European solidarity that must accompany this loss of policy flexibility simply is not there.
Seventy years ago, at the end of World II, the Allies recognized that Germany must be given a fresh start. They understood that Hitler’s rise had much to do with the unemployment (not the inflation) that resulted from imposing more debt on Germany at the end of World War I. The Allies did not take into account the foolishness with which the debts had been accumulated or talk about the costs that Germany had imposed on others. Instead, they not only forgave the debts; they actually provided aid, and the Allied troops stationed in Germany provided a further fiscal stimulus.
When companies go bankrupt, a debt-equity swap is a fair and efficient solution. The analogous approach for Greece is to convert its current bonds into GDP-linked bonds. If Greece does well, its creditors will receive more of their money; if it does not, they will get less. Both sides would then have a powerful incentive to pursue pro-growth policies.
Seldom do democratic elections give as clear a message as that in Greece. If Europe says no to Greek voters’ demand for a change of course, it is saying that democracy is of no importance, at least when it comes to economics. Why not just shut down democracy, as Newfoundland effectively did when it entered into receivership before World War II?
One hopes that those who understand the economics of debt and austerity, and who believe in democracy and humane values, will prevail. Whether they will remains to be seen.