Monday, 18 June 2012

Reflections on Greece

In a commentary written yesterday, Paul Krugman noted that the "Greek election [...] ended up settling nothing. The governing coalition may have managed to stay in power, although even that’s not clear (the junior partner in the coalition is threatening to defect). But the Greeks can’t solve this crisis anyway. The only way the euro might — might — be saved is if the Germans and the European Central Bank realize that they’re the ones who need to change their behavior, spending more and, yes, accepting higher inflation. If not — well, Greece will basically go down in history as the victim of other people’s hubris".

You can read the rest of his piece here. Comments?


Paul Hunt said...

It’s not just Germany. Germany is broadly representing the views of most of the better-governed northern and central EU member-states. There is an impasse. The less well-governed PIIGS ( + FR and BE to an extent) are unwilling to accept the reforms of governance and the structural reforms that are required to allow governing politicians to secure the consent of their voters to the fiscal and monetary policies required to save the Euro project.

What makes it more difficult is that the necessary reforms of governance and structural reforms are being opposed by the disingenousness, dishonesty and hypocrisy of those on the so-called left. This highlights the problem in Ireland:
but it is equally relevant in the other PIGS.

The interests of the vast majority of citizens - sitting broadly in the middle of the spectrum, wishing to get on with their lives and desiring a more prosperous tomorrow for themselves and the next generations - are being trampled on by monopoly-profit gougers and rent-seekers on both the left and right. And many are being pushed in to the arms of the right (which is certainly not in their interests) by their disgust at the antics of the left.

And what is making it even worse again is that for the infrastructure and utility sectors, where there is huge scope for efficient investment and expansion - to counteract fiscal adjustment and to boost future economic performance - governing politicians, policy-makers and regulators are locked in to various manifestations of failed policy and regulatory models that are preventing this efficient investment and expansion. And the economists, not surprisingly, are loth to admit that the economic underpinning of these models is totally unfit for purpose.

Ernie Ball said...

Wow, Paul Hunt insisting on "structural reform" in a comment to a blog post. Who would believe it?

Paul, "structural reform"--which is just code for making the world safe for predatory capitalism--is what got the world into this mess.

Paul Hunt said...

Hi, Ernie,

I was under the impression - obviously in error - that you reserved your snide pseudonymous swipes for the more widely read blogs.

The conflict between capital and labour is only one of the key conflicts that require resolution in the application of democratic governance in the advanced economies. For me, the conflict between producers/providers and consumers/users is perhaps of equal importance - even if capital and labour - and the agents of government which both have suborned - have been successful in suppressing and smothering this conflict to the detriment of the interests of the vast majority of citizens everywhere.

The other conflict which has surfaced - in the main because the state pursues such a dominant and expansive role in most economies and societies - is the conflict between those who perceive they are not getting value for money from the taxes they pay and those who seek to maximise their receipts from taxation. And capital and labour are equally avaricious subsidy junkies - with capital being quite a bit more successful in the last 20 years.

In addition it is a disgrace that trades unions, in additional to their collective representation activities, have not evolved in to agencies providing welfare, training and pension provision for thier members with appropriate back-up and support from the state.

So when I talk about 'structural reforms' I am looking at reforms to tackle all of these conflicts.

You are perfectly free to wallow in your Marxist dialectic, but it is clear to me that a large majority of citizens - in Ireland and elsewhere - are not convinced, and will remain unconvinced, that this speaks to the reality of thier daily lives.