More on the Greek crisis

One thing that seems to be forgotten in the parliamentary votes and the protests is what is the political situation in terms of party support? It’s quite fascinating, in an academic sort of a way.

The new poll, carried out by Public Issue for Skai, showed ND to have inched forward to 31 percent, consolidating its growing popularity, while PASOK continues to languish in fifth place with 8 percent.
The poll, carried out on a sample of 1,002 people last week, showed the Communist Party (KKE) and the Coalition of the Radical Left (SYRIZA) to be holding firm at 12.5 and 12 percent respectively. But the Democratic Left has surged in popularity, garnering 18 percent of the public vote (up 4.5 percent since last month).
All together, the leftist parties garner an impressive 42.5 percent, but as KKE has ruled out cooperating with other parties, the figure is misleading.
Support for the right-wing Popular Orthodox Rally (LAOS), the third party in the tripartite coalition, slipped to 5 percent — from 8 percent during its heyday in 2010 — while the extreme-right Chrysi Avgi (Golden Dawn) has surged to 3 percent, hitting the threshold for entering Parliament.

Fianna Fáil must count themselves lucky not to have seen their vote slump to the level of PASOK. But note a few key features. Democratic Left developed out of Synaspismos, a part of the SYRIZA coalition of parties. Perhaps it is its very newness which is part of its appeal. And the popularity of party leaders is also worth noting:

The poll’s results for parties are broadly reflected in the support for the politicians that lead them. Democratic Left leader Fotis Kouvelis tops the list, attracting the support of 56 percent of respondents, followed by 41 percent for SYRIZA’s Alexis Tsipras and ND chief Antonis Samaras with 31 percent.

For parties explicitly left of ‘mainstream’ social democracy to reach 42 per cent is quite remarkable. That there seems no way to wield that support – however transient it may be – into something that can provide a real potential for change in the society is depressing.

All that said here’s a most interesting take from late last year on the Greek crisis which dovetails with the piece posted earlier today. It is written by Theodora Oikonomides whose bio says that:

She has worked with various humanitarian organisations in the field of education in emergencies and chronic crises in the Middle East and Sub-Saharan Africa from 1998 to 2009, and was an advisor to the Special Secretary for Intercultural Education in the Greek Ministry of Education in 2009-2010.”

It’s importance, I think, is in that as well as discussing the reasons for the ‘austerity’ measures which in a sense are now well rehearsed, it outlines clearly – almost dispassionately, what the effects of that ‘austerity’ in Greece have been at ground level, away from the series of policy measures described earlier. But there’s also a strength in it in that it describes the dysfunctional aspects of the Greek socioeconomic set up and how the initial measures were welcomed by many because they seemed set to make a break with that dysfunction.

Much of what is said about the dysfunctions of the Greek economy is true. Greece has a very high number of civil servants relative to total population, and a significant number of them were recruited not on the basis of need, but as a gesture of political favouritism. It is a fact that the bureaucracy is slow, inefficient and wasteful. Tax evasion is rampant at all levels of society, but more shockingly so among the rich and very rich. Corruption is endemic. Business-related legislation is so arcane that it is an obstacle to entrepreneurship. Statistics provided by the Greek government to the European Union are notoriously poor, and in some cases, such as the government budget deficit figures, outright lies. All these are realities that the Greek people are fully aware of and wish to change. When the very first batch of austerity measures was announced in the beginning of 2010, many Greeks not only accepted them, but even supported them, because they agreed that sacrifices had to be made to correct the worst dysfunctions of the state.

This doesn’t strike me as a society resistant to change.
But she continues:

But reality is that austerity measures are enforced selectively. For example, the government announced with great fanfare in 2009 that it would crack down on tax evasion among the rich, yet no results of significance were ever seen. Similarly, corruption has not decreased since the 2009 elections – as a matter of fact, the Comptroller-General’s 2010 report on corruption in state-run institutions says that corruption has increased, and increased considerably. …
Since 2010, the 758,000 civil servants of Greece have taken multiple pay cuts. Pensioners have also taken substantial cuts. Tax exemptions have been revoked even for the poor, and VAT has been increased to 23% on pretty much everything. The minimum taxable income has been brought down to Ђ8,000 per year, and income tax rates have been increased. The knock-on effect for businesses has been disastrous, with 1 in 3 businesses shutting down since 2009. As of June 2011, the official unemployment rate in Greece stood at above 16%. Greece’s largest labour union, GSEE, estimates actual unemployment at 20-22% of the working-age population.

What’s astounding is the counter intuitive aspect of this. If one takes measures that makes a situation worse, and across a protracted time period, then there comes a point where one has to face up to the possibility that the course of action that is being taken is the wrong one. A medicine that merely further depresses a patient – if we’re dealing in dodgy metaphors, is one which isn’t much of a medicine. And note that this is across a range of metrics, indeed across pretty much all metrics. Could things be worse for the Greeks? Well yes, but it’s moving to a point where that becomes a matter of degree.
And most depressingly, but again dovetailing with the analysis earlier today,

Because the fiscal targets agreed between Greece and the troika were unrealistic from the start, because the government failed to crack down on tax evasion and corruption, because a grand privatization programme to generate revenue never materialized, because the recession is not only huge, but deepening every day, the same scenario plays out every time a new tranche of the “bailout” loans to Greece is to be disbursed.

It is that unrealism as regards the targets that is so hard to understand. There’s a realpolitik about these matters, obviously, a sense that those in prominent positions in the EU do not with to be seen to be wrong, whose adherence to orthodoxies is such that they cannot conceive of alternatives or even an amelioration of existing approaches, that to turn the supertanker from its present course is too great a challenge. And yet, and yet. This was true from the start when a greater set of options were possible.

The sense is of an EU that was, and is, not fit for purpose. Whose leaders, such as they are, were winging it from the off with no clear or coherent way forward and who constrained by their own national political preoccupations [and never was that more clearly so than in the case of Merkel] have resiled from making the sort of large scale compacts necessary to secure Greece both within the eurozone but also to ensure that any changes made in relation to altering the dysfunctional aspects of that society were bearable by the population and made across a timescale that would allow their downsides to be ameliorated as best as possible.

She continues:

Troika inspectors come to Athens to check the accounts of the state and find that little or no progress has been made. They demand that the government speed up the pace of reforms and implement further austerity measures to fill the gaps in the budget. The government meekly agrees and announces more austerity. A vote takes place in parliament, with thousands of people demonstrating outside and getting beaten and tear-gassed ever more violently by the riot police. The measures are voted upon, the easy ones – pays cuts, tax hikes – are implemented, the difficult ones go to the dustbin of history, Greece receives the loan tranche, and the same story repeats itself a few months later.

This treadmill like process where the situation instead of improving merely worsens leads to the following outcomes.

The problem now is that so many austerity measures have already been voted that the government is resorting to desperate moves in the hope of further cutting expenditures and generating revenue. On 27 September, parliament approved an additional tax on homeowners ranging from Ђ3 to Ђ20 per square meter of property, regardless of income and ability to pay, with very few exceptions. Furthermore, this tax will be collected through the electricity bill, with the explicit threat that power will be cut off to those who don’t pay. In my neighbourhood of Athens, this means an extra Ђ396 tax for 60 sq meters in a 15-year-old building, even for the unemployed on monthly benefits of Ђ461.50.

What’s also worth remembering is that the current measures going through parliament are in addition to everything she has discussed already.

This is astounding stuff really, the impoverishment of the citizenry of a modern democratic state in the heart of the European Union. But as noted earlier today, the response from representatives in the EU is equally astounding as noted in the earlier post on the CLR today.

And her prognosis?

In September this year, Greeks were called upon to pay not only their regular income taxes but also an emergency tax decided as part of an earlier austerity package, in addition to various contributions for health insurance and pensions for some professional groups. Many could not afford the emergency tax, and people demonstrated in front of banks on 30 September, the official deadline to pay it. The new property tax will come with the October and December electricity bills, and there again it is likely that many Greeks will not be able to pay. It is not clear exactly when the new cuts to salaries and pensions will be enforced, but some are expected as early as the end of October. Those Greeks who cannot evade taxes cannot pay. It is that simple. Therefore, a Greek default will happen sooner rather than later. What the consequences will be for Greece and for Europe is anyone’s guess.

And her warning is explicit:

To anyone who lives in Athens, it is obvious that austerity is not “helping the Greek economy get back on its feet.” Vagrancy is on the rise, dumpster-diving for food is becoming a common sight, and drug addiction, depression and suicides are increasing dramatically. The insistence of creditor countries that the Greek sovereign debt be paid back in full – the “haircut” agreed on 21 July turned out to be another sham for anyone who looked at the small print – means that Greece is caught in a debt trap with the ensuing deflation and recession. The people of Greece feel that they are being sacrificed on the altar of the euro to save other Eurozone economies from the domino effect. But the social and political cost is huge, with common people losing faith in the values of parliamentary democracy, and increasingly frequent incidents of social violence, particularly against marginalised groups such as immigrants and Roma people. In short, Greece in 2011 is a repeat of Weimar Germany after the Great Depression. We all know how that specific bit of history turned out.