The Corrupt Economics Behind Greece’s Troubles

It seems certain that the political economy textbooks of the future will include a chapter on the experience of Greece in 2015.

On July 5, 2015, the people of Greece overwhelmingly voted “NO” to the austerity ultimatum demanded by what is colloquially being called the Troika, the three institutions that have the power to shape Greece’s future: the European Commission, the International Monetary Fund, and the European Central Bank.

The people of Greece have stood up for the rights of working people everywhere.

Background

Greece has experienced six consecutive years of recession and the social costs have been enormous.  The following charts provide only the barest glimpse into the human suffering:

Infographics / Unemployment

Infographics / Unemployment

Infographics / Social Impact

Infographics / Social Impact

Infographics / Poverty

Infographics / Poverty

While the Troika has been eager to blame this outcome on the bungling and dishonesty of successive Greek governments and even the Greek people, the fact is that it is Troika policies that are primarily responsible. In broad brush, Greece grew rapidly over the 2000s in large part thanks to government borrowing, especially from French and German banks.  When the global financial crisis hit in late 2008, Greece was quickly thrown into recession and the Greek government found its revenue in steep decline and its ability to borrow sharply limited. By 2010, without its own national currency, it faced bankruptcy.

Enter the Troika. In 2010, they penned the first bailout agreement with the Greek government. The Greek government received new loans in exchange for its acceptance of austerity policies and monitoring by the IMF. Most of the new money went back out of the country, largely to its bank creditors. And the massive cuts in public spending deepened the country’s recession.

By 2011 it had become clear that the Troika’s policies were self-defeating. The deeper recession further reduced tax revenues, making it harder for the Greek government to pay its debts. Thus in 2012 the Troika again extended loans to the Greek government as part of a second bailout which included . . . wait for it . . . yet new austerity measures.

Not surprisingly, the outcome was more of the same. By then, French and German banks were off the hook. It was now the European governments and the International Monetary Fund that worried about repayment. And the Greek economy continued its downward ascent.

Significantly, in 2012, IMF staff acknowledged that the its support for austerity in 2010 was a mistake. Simply put, if you ask a government to cut spending during a period of recession you will only worsen the recession. And a country in recession will not be able to pay its debts. It was a pretty clear and obvious conclusion.

But, significantly, this acknowledgement did little to change Troika policies toward Greece.

By the end of 2014, the Greek people were fed up. Their government had done most of what was demanded of it and yet the economy continued to worsen and the country was deeper in debt than it had been at the start of the bailouts. And, once again, the Greek government was unable to make its debt payments without access to new loans. So, in January 2015 they elected a left wing, radical party known as Syriza because of the party’s commitment to negotiate a new understanding with the Troika, one that would enable the country to return to growth, which meant an end to austerity and debt relief.

Syriza entered the negotiations hopeful that the lessons of the past had been learned. But no, the Troika refused all additional financial support unless Greece agreed to implement yet another round of austerity. What started out as negotiations quickly turned into a one way scolding. The Troika continued to demand significant cuts in public spending to boost Greek government revenue for debt repayment. Greece eventually won a compromise that limited the size of the primary surplus required, but when they proposed achieving it by tax increases on corporations and the wealthy rather than spending cuts, they were rebuffed, principally by the IMF.

The Troika demanded cuts in pensions, again to reduce government spending. When Greece countered with an offer to boost contributions rather than slash the benefits going to those at the bottom of the income distribution, they were again rebuffed. On and on it went. Even the previous head of the IMF penned an intervention warning that the IMF was in danger of repeating its past mistakes, but to no avail.

Finally on June 25, the Troika made its final offer. It would provide additional funds to Greece, enough to enable it to make its debt payments over the next five months in exchange for more austerity.  However, as the Greek government recognized, this would just be “kicking the can down the road.” In five months the country would again be forced to ask for more money and accept more austerity. No wonder the Greek Prime Minister announced he was done, that he would take this offer to the Greek people with a recommendation of a “NO” vote.

The Referendum

Almost immediately after the Greek government announced its plans for a referendum, the leaders of the Troika intervened in the Greek debate. For example, as the New York Times reported:

By long-established diplomatic tradition, leaders and international institutions do not meddle in the domestic politics of other countries. But under cover of a referendum in which the rest of Europe has a clear stake, European leaders who have found [Greece Prime Minister] Tsipras difficult to deal with have been clear about the outcome they prefer.

Many are openly opposing him on the referendum, which could very possibly make way for a new government and a new approach to finding a compromise. The situation in Greece, analysts said, is not the first time that European politics have crossed borders, but it is the most open instance and the one with the greatest potential effect so far on European unity…

Martin Schulz, a German who is president of the European Parliament, offered at one point to travel to Greece to campaign for the “yes” forces, those in favor of taking a deal along the lines offered by the
creditors.

On Thursday, Mr. Schulz was on television making clear that he had little regard for Mr. Tsipras and his government. “We will help the Greek people but most certainly not the government,” he said.

European leaders actively worked to distort the terms of the referendum. Greeks were voting on whether to accept or reject Troika austerity policies yet the Troika leaders falsely claimed the vote was on whether Greece should remain in the Eurozone. In fact, there is no mechanism for kicking a country out of the Eurozone and the Greek government was always clear that it was not seeking to leave the zone.

Having whipped up popular fears of an end to the euro, some Greeks began talking their money out of the banks. On June 28, the European Central Bank then took the aggressive step of limiting its support to the Greek financial system.

This was a very significant and highly political step. Eurozone governments do not print their own money or control their own monetary systems. The European Central Bank is in charge of regional monetary policy and is duty bound to support the stability of the region’s financial system. By limiting its support for Greek banks it forced the Greek government to limit withdrawals which only worsened economic conditions and heightened fears about an economic collapse. This was, as reported by the New York Times, a clear attempt to influence the vote, one might even say an act of economic terrorism:    

Some experts say the timing of the European Central Bank action in capping emergency funding to Greek banks this week appeared to be part of a campaign to influence voters.

“I don’t see how anybody can believe that the timing of this was coincidence,” said Mark Weisbrot, an economist and a co-director of the Center for Economic and Policy Research in Washington. “When you restrict the flow of cash enough to close the banks during the week of a referendum, this is a very deliberate move to scare people.”

Then on July 2, three days before the referendum, an IMF staff report on Greece was made public. Echos of 2010, the report made clear that Troika austerity demands were counterproductive. Greece needed massive new loans and debt forgiveness. The Bruegel Institute, a European think tank, offered a summary and analysis of the report, concluding that “the creditors negotiated with Greece in bad faith” and used “indefensible economic logic.”

The leaders of the Troika were insisting on policies that the IMF’s own staff viewed as misguided.  Moreover, as noted above, European leaders desperately but unsuccessfully tried to kill the report. Only one conclusion is possible: the negotiations were a sham.

The Troika’s goals were political: they wanted to destroy the leftist, radical Syriza because it represented a threat to a status quo in which working people suffer to generate profits for the region’s leading corporations. It apparently didn’t matter to them that what they were demanding was disastrous for the people of Greece. In fact, quite the opposite was likely true: punishing Greece was part of their plan to ensure that voters would reject insurgent movements in other countries, especially Spain.

The Vote

And despite, or perhaps because of all of the interventions and threats highlighted above, the Greek people stood firm. As the headlines of a Bloomberg news story proclaimed: “Varoufakis: Greeks Said ‘No’ to Five Years of Hypocrisy.”

The Greek vote was a huge victory for working people everywhere.

Now, we need to learn the lessons of this experience. Among the most important are: those who speak for dominant capitalist interests are not to be trusted. Our strength is in organization and collective action. Our efforts can shape alternatives.

Cross-posted at Reports from the Economic Front.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

#blacklivesmatter and the Optimum Balance of Hope and Despair

There is a whole social science to the optimal balance of victory and defeat in social movements and social change. Consider two political cartoons by Mike Luckovich. This from June 21:

Luckovich-slider

And this one from June 25:

luckovich

Did he really just demand the removal of the Confederate flag and then mock people who would celebrate its removal? Is that how much things change in a week? But in periods of social change, moving the goal posts is what it’s all about. And there’s nothing wrong with that.

The Charleston massacre was a horrific reminder of how it seems some things never change. But they do change. Dylann Roof was caught and may be put to death, legally. And it turned out that, not only had the Confederate flag only been flying at the South Carolina capitol for a few decades, but it actually could be taken down in response to public outrage. And yet, that’s not the end of racism.

Anthea Butler, a religion and Africana studies professor at Penn, who wrote an op-ed in the Washington Post, was on the On Point radio show. She was talking to host Tom Ashbrook, when she got this:

Tom Ashbrook: If you ask me, I understand that feeling and that vivid response. At the same time, I, and maybe you, Anthea Butler, Dr. Butler, don’t want to lose, or not recognize, or lose the progress that has been made. And this is nowhere near paradise…

Anthea Butler: But what kind of progress? What kind of progress? This is what we keep talking about. And I don’t understand, when you say, “We’ve made progress.” How have we made progress when the president of the United States has been constantly questioned because he is partially a Black man? And so you talk progress — and this is the kind of talk we’re going to hear all week long after this.

TA: But he’s president, madam.

AB: He is president.

TA: Well, that’s a pretty big deal…

AB: That is a big deal, but to some people in this country, like Dylann Roof, that is the end of this country. That’s why you had the kind of phrase that he said, that all your politicians, the right Republican politicians have been saying, “Take our country back.” And so, I want to talk about the rhetoric that’s happened…

Ashbrook has a point about progress, of course, but it’s just the wrong time to say that, days after a racist massacre that seems as timeless as a Black-churches burning. At that moment there could be no progress.

For whatever reason, Ashbrook turned to progress on the interpersonal level:

TA: We did see White people in South Carolina, in Charleston, pour into the churches alongside African Americans over this weekend.

AB: Yes we did. But you need to understand the distinction here. I don’t doubt that there are well-meaning, good White people, good White Christians, who are appalled at this. I understand that. But when you have a structural system that continues to do this kind of racial profiling, the kinds of things that are going on with the police in this country, the kinds of issues that we’ve had. The problem becomes this: you can talk about progress all you want, but reality is another thing altogether.

Again, it’s progress, but focusing on it at that moment is basically #AllLivesMatter. President Obama also tried to keep his eyes on the prize, in his appearance on the WTF podcast:

Racism, we are not cured of it. And it’s not just a matter of it not being polite to say “nigger” in public. That’s not the measure of whether racism still exists or not. It’s not just a matter of overt discrimination. Societies don’t, overnight, completely erase everything that happened 200 to 300 years prior.

Outrage ensued about his use of “nigger,” but White House Press Secretary Josh “earnest non-racist white guy” Earnest doubled down:

The President’s use of the word and the reason that he used the word could not be more apparent from the context of his discussion on the podcast.  The President made clear that it’s not possible to judge the nation’s progress on race issues based solely on an evaluation of our country’s manners.  The fact is that we’ve made undeniable progress in this country over the last several decades, and as the President himself has often said, anyone who lived in this country through the ‘50s and the ‘60s and the ‘70s and the ‘80s notes the tremendous progress that we’ve made.  That progress is undeniable. But what’s also undeniable is that there is more work that needs to be done, and there’s more that we can do.  And the fact is everyone in this country should take some inspiration from the progress that was made in the previous generation and use that as a motivation and an inspiration to try to make further progress toward a more perfect union.

Now is no time to talk about progress, some say. With Black church members being gunned down and churches burning, and one appalling, outrageous video after another showing the abuse of Black citizens by police, having a Black president is not a victory. So much so that maybe he’s not really Black at all. Frank Roberts writes of Obama’s “Amazing Grace” moment:

With Obama … blackness has been reduced to a theatrical prop; a shuck-and-jive entertainment device that keeps (black) audiences believing that the President “feels their pain” — at precisely the same time that he fails to provide a substantive policy response to black unemployment, over-incarceration, and/or racialized state violence.

The social scientist in me objects, because the rate of progress is not determined by the victory or tragedy of the moment, or by the blackness of a man. And Obama probably has done more than any other president (at least recently) to address Black unemployment, incarceration, and racialized state violence. That’s not a moral or political statement — and it doesn’t imply “enough” — it’s an empirical one.

Movements use good news for legitimacy and bad news for urgency.  When something goes well, they need to claim credit and also make sure their supporters know there is more work to be done. When something awful happens they place the troubles in the context of a narrative of struggle, but they don’t want to appear powerless because that saps support and undermines morale.

An extended version of this post is at Family Inequality.

Philip N. Cohen is a professor of sociology at the University of Maryland, College Park. He writes the blog Family Inequality and is the author of The Family: Diversity, Inequality, and Social Change. You can follow him on Twitter or Facebook.

“American Parties” in Other Countries

Using pictures with the tag #americanparty on Instagram, Buzzfeed put together a non-scientific collection of what “American Parties” thrown in other countries look like. it’s an interesting window into how they view us. Themes include red cups, popcorn, marshmallows, and sports jerseys. Happy 4th of July weekend everyone.

Visit the original post for the whole set of “American Party” photos or you can browse the hashtag yourself. Here’s my favorite, from Russia:7

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Celebrating the Great Battle of 4th of July

If Mexicans celebrated the 4th like Americans celebrate Cinco de Mayo:

From Flama.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

OK Cupid Data on Sex, Desirability, and Age

Flashback Friday.

The number crunchers at OK Cupid recently looked at how age preferences disadvantage older women on the site.  First, the post’s author, Christian Rudder, points out, the distribution of singles is pretty matched by sex at most ages:

But that doesn’t necessarily mean that women and men of the same age are reaching out to one another.

Women at most ages state a preference to date men who are up to eight years older or eight years younger:

But men show a decided preference for younger women, especially as the men get older:And, Rudder notes, men target their messages to women even younger than their stated preference.  In this figure, the greenest areas represent where men are sending more messages and the red areas are where they are sending less:

So, even though men and women are more-or-less proportionately represented on the site, men’s decided preference for younger women makes for many fewer potential dates for older women.

Here’s what the dating pool looks like for 21-year-olds (the blue = men seeking women who are 21; the pink = women seeking men who are 21):

For 25 year olds:

For 30 year olds:

Rudder offers this summary measuring how a person’s desirability changes over time:

He writes:

…we can see that women have more pursuers than men until age 26, but thereafter a man can expect many more potential dates than a woman of the same age. At the graph’s outer edge, at age 48, men are nearly twice as sought-after as women.

Thus opportunities for dating are shaped by the intersection of gender and age to the detriment of women over 26 and men under 26.

Originally posted in 2010.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Nearly Half of Black and Latina Scientists Mistaken for Janitors or Assistants

A new survey of 557 female scientists found widespread experiences of discrimination and alienation in the workforce that varied in interesting ways by race.7

While all types of women reported experiencing these forms of discrimination in large numbers — and 100% of a sub-sample of 60 interviewed for the study reported at least one — the race differences are interesting:

  • Black women were especially likely to need to prove and re-prove competence.
  • Asian and white women, especially, received pressure to withdraw from the workplace after having children.
  • Asian women were most likely to be pushed to perform a stereotypically feminine role in the office, followed by white and then Latina women. Black women rarely reported this.
  • Latina and white women were most likely to feel supported by other women in the workforce; Black women the least.
  • And almost half of Black and Latina women had been mistaken for janitors or administrative assistants, compared to a third of white women and a quarter of Asian women.

The study, by law professor Joan Williams and two colleagues, can be found here.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Why Do People Hate the Word “Moist”?

Hey, they did a study.

20150629_001830

Psychologist Paul Thibodeau and three colleagues decided that it was time to take a closer look at the word “moist,” writing:

The word “moist” … has been the subject of a Facebook page (called “I HATE the word MOIST”) with over 3,000 followers and was rated as the least liked word in the English language by a Mississippi State Poll … ; feature articles have been written in Slate Magazine … and The New Yorker … ; and popular TV shows like“How I Met Your Mother” (“Stuff”) and “The New Girl” (“Birthday”) have devoted entire plot-lines to the comic consequences of word aversion.

Now it’s not just anecdotal. Thibodeau found that between 13 and 21% of people have an aversion to the word.

But why?

Is it just a gross-sounding word? If so, then people who hate moist should also hate foist and rejoiced. Verdict: No. Hating the sound moist is independent of one’s appreciation for words that rhyme.

Is it because it makes people think of sex? Verdict: Yes! Priming people to think of sex versus, say, cake, makes people dislike the word more. Bonus: People who scored higher on a measure of disgust for bodily functions were more likely than those who scored lower to claim an aversion to the word.

So, if you don’t like the word moist, get your mind out of the gutter. And, if your aversion is severely hampering your life, just think about cake!

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

This Month in SocImages (June 2015)

SocImages News:

Phew. What a month.

You like!  Here are our most appreciated posts this month:

Thanks everybody!

Editor’s pick:

Top post on Tumblr this month:

With over 15,000 likes and shares, I’m so happy to be helping bring awareness to this issue. At Tumblr, this month’s top post: Defensive architecture aimed at the homeless as a deliberate, considered kind of cruelty.

Social Media ‘n’ Stuff:

Finally, this is your monthly reminder that SocImages is on TwitterFacebookTumblrGoogle+, and Pinterest.  I’m on Facebook and most of the team is on Twitter: @lisawade@gwensharpnv@familyunequal, and @jaylivingston.

Finally…

Bye-bye June 2015; we’ll remember you forever.

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Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.