Monday, July 27, 2015

More Varoufakis: "Plan B"

Former Greek Finance Minister Yanis Varoufakis is still causing consternation in the eurozone a Member of the Greek Parliament.

There was some melodramatic rending of garments and gnashing of teeth over a recording of Varoufakis on July 16 (Peter Spiegel, Varoufakis unplugged: the London call transcript FT Brussels Blog 07/27/2015; emphasis in FT transcript):

That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space. This was very well developed and I think it would have made a very big difference, because very soon we could have extended it using apps on smart phones. It would become a functioning and functional parallel system. Then of course this would be euro denominated, but at a drop of a hat, it could be converted to a new drachma.

Now let me tell you, and I thank this is a quite fascinating story, what difficulties I faced. The general secretariat of public revenues, within my ministry, is controlled fully and directly by the troika. It was not under control of my ministry, of [unclear] ministry, it was controlled by Brussels. The general secretary is appointed, effectively, through a process that troika-controlled and the whole mechanism within. It’s like Inland Revenue in the United Kingdom being controlled by Brussels. I am sure as you’re hearing these words, your hair is standing up. Ok. So problem number one.

The general secretariat of information systems, on the other hand, was controlled by me as minister. I appointed a good friend of mine, a childhood friend of mine, who had become a professor of IT at Columbia University in the States, and so on, I put him there because I trusted him to develop the system. At some point, a week or so after we moved into the ministry, he calls me up and says to me: “You know what, I control the machines, I control the hardware. I don’t control the software.” The software belongs to the troika-controlled general secretariat for public revenues.

What do we do? So we had a meeting, just the two of us, nobody else knew. He said: “Listen, if I ask for permission from them to start implementing this programme then the troika will immediately know we are designing a parallel system.” Well, I said, “That won’t do, we don’t want to reveal our hand at this stage.” So I authorised him, and you can’t tell anyone that, this is totally between us, to hack ...
Despite the fainting-couch routine from Varoufakis' critics, this is pretty straightforward. (Peter Spiegel and Kerin Hope, Yanis Varoufakis defends ‘Plan B’ tax hack Financial Times 07/27/2015) There is no reason I can see to think the hack was actually done, since Prime Minister Alexis Tsipras didn't give Varoufakis the go-ahead for the additional preparations for a new national currency that would have required the hack:

So, we decided to hack into my minister’s own software programme in order to be able to bring it all, to just copy, just copy the codes of the tax systems’ website onto a large computer in his office, so he can work out how to design and implement this parallel payment system. We were ready to get the green light from the prime minister when the banks closed in order to move into the general secretariat of public revenues, which was not controlled by us but is controlled by Brussels, and to plug this laptop in and to energise the system.

I’m trying to convey to you the kind of institutional problems that we had, and institutional impediments to carrying out an independent policy for ameliorating the affects of having our banks being closed down by the ECB. [emphasis in FT transcript]
And even if they had done the hack, if it was a necessary move to set up a new currency in the face of ECB strangling their national financial system to force them into compliance with Angela Merkel's draconian austerity program, what's the problem?

And from what Varoufakis says, maybe François Hollande has been putting up more resistance to Merkel behind the scenes than I was aware of:

The French are terrified. They’re terrified because they know if they’re going to shrink their budget deficit to the levels that Berlin demands the Parisian government will certainly fall. There is no way that they can politically handle the kinds of austerity which is demanded of them by Berlin. And when I say by Berlin, I mean by Berlin, I don’t mean Brussels. I mean Berlin.

So they are trying to buy time. This is what they’ve been doing now, as you know, for a couple of years. They’ve been trying to buy time in terms of an extension of the time period during which they will have to reduce their deficit to below 3.5 per cent, 3 per cent, the Maastricht criteria in the Stability and Growth Pact.

At the very same time, Wolfgang Schäuble has a plan .... This is one of the very sweet moments in one’s life when one does not have to theorise, because all I did was to convey the plan as Dr Schäuble described it to me. The way he described it to me is very simple. He believes the eurozone is not sustainable as it is. He believes there has to be some fiscal transfers, some degree of political union. He believes for that political union to work without federation, without the legitimacy that a properly-elected federal parliament can render, can bestow upon an executive, it will have to be done in a very disciplinarian way. He said explicitly to me that a Grexit, a Greek exit, is going to equip him with sufficient bargaining power, with sufficient terrorising power in order to impose upon the French that which Paris is resisting. What is that? A degree of transfer of budget-making powers from Paris to Brussels. [emphasis in FT transcript]
Varoufakis' parliamentary office put out this statement, which he put on his blog (07/27/2015):

During the Greek government’s negotiations with the Eurogroup, Minister Varoufakis oversaw a Working Group with a remit to prepare contingency plans against the creditors’ efforts to undermine the Greek government and in view of forces at work within the Eurozone to have Greece expelled from the euro. The Working Group was convened by the Minister, at the behest of the Prime Minister, and was coordinated by Professor James K. Galbraith. (Click here for a statement on the matter by Professor Galbraith).

It is worth noting that, prior to Mr Varoufakis’ comfirmation of the existence of the said Working Group, the Minister was criticized widely for having neglected to make such contingency plans. The Bank of Greece, the ECB, treasuries of EU member-states, banks, international organisations etc. had all drawn up such plans since 2012. Greece’s Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans.

Ever since Mr Varoufakis announced the existence of the Working Group, the media have indulged in far-fetched articles that damage the quality of public debate. The Ministry of Finance’s Working Group worked exclusively within the framework of government policy and its recommendations were always aimed at serving the public interest, at respecting the laws of the land, and at keeping the country in the Eurozone.

Regarding the recent article by “Kathimerini” newspaper entitled “Plan B involving highjacking and hacking”, Kathimerini’s failure to contact Mr Varoufakis for comment and its reporter’s erroneous references to “highjacking tax file numbers of all taxpayers” sowed confusion and contributed to the media-induced disinformation. The article refers to the Ministry’s project as described by Minister Varoufakis in his 6th July farewell speech during the handover ceremony in the Ministry of Finance. In that speech Mr Varoufakis clearly stated: “The General Secretariat of Information Systems had begun investigating means by which Taxisnet (Nb. the Ministry’s Tax Web Interface) could become something more than it currently is, to become a payments system for third parties, a system that improves efficiency and minimises the arrears of the state to citizens and vice versa.” That project was not part of the Working Group’s remit, was presented in full by Minister Varoufakis to Cabinet, and should, in Minister Varoufakis’ view, be implemented independently of the negotiations with Greece’s creditors, as it will contribute considerable efficiency gains in transactions between the state and taxpayers as well as between taxpayers.

In conclusion, during the five months of negotiations that gripped Europe and changed the debate throughout the Continent, the Ministry of Finance did everything possible to serve the public interest against many odds. The current media campaign to besmirch these efforts will fail to dent the legacy of a crucial five month struggle for democracy and common sense. [emphasis in original]
The Jamie Galbraith statement to which he links is also at Varoufakis' blog (07/27/2015):

I spent five months from early February through early July in close association with the Greek Finance Minister, Yanis Varoufakis, and was part of the Working Group that did contingency planning for potential attempts to asphyxiate the Greek government, including aggressive moves to force the country out of the euro. Since a great deal of public confusion has now arisen over this effort, the following should be stated:(1) At no time was the Working Group engaged in advocating exit or any policy choice. The job was strictly to study the operational issues that would arise if Greece were forced to issue scrip or if it were forced out of the euro.

(2) The group operated under the axiom that the government was fully committed to negotiating within the euro, and took extreme precautions not to jeopardize that commitment by allowing any hint of our work to reach the outside world. There were no leaks whatever, until the existence of the group was disclosed by the former Finance Minister himself, in response to criticism that his ministry had made no contingency plans when it was known that forces within the Eurozone were planning the forced exit of Greece.

(3) The existence of preliminary plans could not play any role in the Greek negotiating position, since their circulation (before there was a need to implement them) would have destabilized government policy.

(4) Apart from one late, inconclusive telephone conversation between MP Costas Lapavitsas and myself, we had no coordination with the Left Platform and our Working Group’s ideas had little in common with theirs.

(5) Our work ended for practical purposes in early May, with a long memorandum outlining major issues and scenaria that we studied.

(6) My work in this area was unpaid and unofficial, based on my friendship with Yanis Varoufakis and on my respect for the cause of the Greek people. [my emphasis]

New Varoufakis profile with additional information on the Greek/Troika negotiations

A new, long article in The New Yorker based heavily on on-the-record comments from Yanis Varoufakis gives more details on the Greek negotiations with the Troika: Ian Parker, The Greek Warrior 08/03/2015 issue; accessed 07/27/2015.

Varoufakis tells about the call he received a couple of days after he had taken office from Jeroen Dijsselbloem, the Finance Minister of the Netherlands and the head of the Eurogroup, composed of the finance ministers of the 19 eurozone countries:

On the phone, Varoufakis recalled, Dijsselbloem “was perfectly pleasant,” asking, “What do you want to do?” Promising to negotiate in good faith, Varoufakis requested the bridge. According to Varoufakis, Dijsselbloem said, “Sounds reasonable. I’ll fly in in a couple of days.”

“It was downhill from that moment,” Varoufakis said.

Arriving in Athens, Dijsselbloem asked the same question, and Varoufakis gave the same answer. This time, Dijsselbloem replied, “That will not do.” (“I have no doubt that he was pulled into line between the telephone conversation and the visit,” Varoufakis told me. He declined to name Germany explicitly, but added, “You can imagine.”) Varoufakis asked Dijsselbloem, “Are you threatening me, on Day One, with Grexit?” Dijsselbloem said that a crashed program wouldn’t necessitate Greece’s exit from the euro.

“But the banks will shut down,” Varoufakis said.

“Yes, sure,” Dijsselbloem replied. (Last week, a spokesperson for the Dutch finance ministry said, “We never comment on reports of discussions held behind closed doors. Mr. Dijsselbloem is trying to enjoy a government summer recess. I would advise Mr. Varoufakis to do the same.”)
There are also some memorable quotes from Mr. V, including, "Honey, I shut the banks."

Also, this indirect quote: "sharks are not placated by a little blood."

Sunday, July 26, 2015

Stiglitz on bad macroeconomics and Troika policy of Greek corruption and tax collection

Joe Stiglitz has yet another piece explaining what a disaster the Troika's latest agreement forced on Greece really is. And how astonishing the stubborn ignoring of basic macroeconomics in the euro crisis really is: Greece, the Sacrificial Lamb New York Times 07/25/2015

He also refers to the lessons of other crises, including that of Argentina in 2001-3:

Back in 1998 in Indonesia, I saw how the I.M.F. ruined that country’s banking system. I recall the picture of Michel Camdessus, the managing director of the I.M.F. at the time, standing over President Suharto as Indonesia surrendered its economic sovereignty. At a meeting in Kuala Lumpur in December 1997, I warned that there would be bloodshed in the streets within six months; the riots broke out five months later in Jakarta and elsewhere in Indonesia. Both before and after the crisis in East Asia, and those in Africa and in Latin America (most recently, in Argentina), these programs failed, turning downturns into recessions, recessions into depressions. I had thought that the lesson from these failures had been well learned, so it came as a surprise that Europe, beginning a half-decade ago, would impose this same stiff and ineffective program on one of its own.

Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina: The macro-policies demanded by the troika will lead to a deeper Greek depression. That’s why the I.M.F.’s current managing director, Christine Lagarde, said that there needs to be what is euphemistically called “debt restructuring” — that is, in one way or another, a write-off of a significant portion of the debt. The troika program is thus incoherent: The Germans say there is to be no debt write-off and that the I.M.F. must be part of the program. But the I.M.F. cannot participate in a program in which debt levels are unsustainable, and Greece’s debts are unsustainable.
He also discusses what the Troika's actual position is on two items that are on the Troika's standard catalogue of neoliberal "reforms," fighting corruption and better tax collection:

One underlying problem in Greece, in both its economy and its politics, is the role of a group of wealthy people who control key sectors, including banks and the media, collectively referred to as the Greek oligarchs. They are the ones who resisted the changes that George Papandreou, the former prime minister, tried to introduce to increase transparency and to force greater compliance with a more progressive tax structure. The important reforms that would curb the Greek oligarchs are largely left off the agenda — not a surprise since the troika has at times in the past seemed to have been on their side.

As it became clear early on in the crisis that the Greek banks would have to be recapitalized, it made sense to demand voting shares for the Greek government. This was necessary to ensure that politically influenced lending, including to the oligarchic media, be stopped. When such connected lending resumed — even to media companies that on strictly commercial terms should not have gotten loans — the troika turned a blind eye. It has also been quiescent as proposals were put forward to roll back the important initiatives of the Papandreou government on transparency and e-government, which dramatically lowered drug prices and put a damper on nepotism. [my emphasis]

Christos Koulovatianos and John Tsoukalas (Why debt sustains corruption in Greece and vice versa Vox 20 July 2015) give some background on how excessive debt in Greece actually reinforces the corruption that the Troika claims it wants to combat:

The high cost of servicing the enormous outstanding debt in Greece simply makes non-cooperation more profitable for parties. If parties cooperate, they face a high cost of servicing the debt, especially due to the tight fiscal-surplus requirements. This fiscal burden makes party members think that a partial default and a gang war for rents is more profitable for them, even in a state of economic chaos. This strategic speculation keeps Greece in a trap, because non-cooperating rent-seeking groups engage into a tragedy-of-the-commons equilibrium of excessive rent seeking. Markets pre-calculate the implied fiscal profligacy, Grexit scenarios return with positive probability, investment becomes discouraged, and the debt-to-GDP ratio increases due to a shrinking economy(Greece has lost 26% of its 2008 GDP until year 2014).
And this from Stiglitz on tax collection is mind-boggling:

Normally, the I.M.F. warns of the dangers of high taxation. Yet in Greece, the troika has insisted on high effective tax rates even at very low income levels. All recent Greek governments have recognized the importance of increasing tax revenues, but mistaken tax policy can help destroy an economy. In an economy where the financial system is not functioning well, where small- and medium-size enterprises can’t get access to credit, the troika is demanding that Greek firms, including mom and pop stores, pay all of their taxes ahead of time, at the beginning of the year, before they have earned it, before they even know what their income is going to be. The requirement is intended to reduce tax evasion, but in the circumstances in which Greece finds itself, it destroys small business and increases resentment of both the government and the troika. [my emphasis]
As Joe Stiglitz puts it, "None of this makes sense even from the perspective of the creditors. It’s like a 19th-century debtors’ prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay."

Greek crisis: Tsipras' mistake in negotiations with the Troika

Georg Diaz in a thought-provoking column, Glossar zur Krise: Der Wandel in den Worten Spiegel Online 24.07.2015, talks about how the euro "crisis" has morphed into a permanent condition, a kind of state of emergency as normalcy.

So there will continue to be new chapters of the Greek crisis. Here I want to comment on what I understand to be the fault of Alexis Tsipras' government in the recent negotiations.

My perspective is very different from the disputes within his Syriza Party. One of Tsipras' responses to his internal Syriza critics is provided by The Greek Analyst, Tsipras’s nonpaper slamming SYRIZA dissenters 07/21/2015.

Tsipras made a very practical call taking into account the risks and opportunities within the very narrow range of options that German Chancellor Angela Merkel had successfully established as the dominant leader in the EU. Syriza had a clear policy of solving their debt crisis within the eurozone. It was the program on which they were elected. It was established in internal discussions and disputes within Syriza. It was a clear distinction from the explicit goal of leaving the eurozone and establishing a separate currency, which everyone seems to assume would be called the drachma, like the last separate Greek currency.

That goal was advocated by the Communist Party and the far-right Golden Dawn, as well as by some members of Syriza. But that approach was rejected by Syriza. Part of Syriza's hope, which presumably persists, is that hopefully sooner than later, they will gain effective allies in other eurozone countries. Upcoming Portuguese and Spanish elections could provide some of that support. In fact, Merkel's hardline opposition to any departure from the draconian austerity program in Greece is due to her determination to scare Portuguese and Spanish voters from elected anti-austerity governments.

How realistic Syriza's hope in that regard is, is another question. Recent public grumbling by the social-democratic governments of France and Italy have provided some encouragement on that front. On the other hand, France's President François Hollande was elected in 2012 promising to oppose Merkel's austerity program. Once elected, he hardly made any pretence of resistance to it. Maybe one of these days, he will actually get around to it.

Prime Minister Matteo Renzi of the Democratic Party in Italy has even more rational reasons than the government of France to oppose austerity measures. But since taken office in early 2014, he has been singing from the neoliberal hymnbook pretty faithfully. And the language of faith is appropriate here. Austericide economics is very much a faith-based devotion, not evidence-based economics. Susanna Böhme-Kuby in Bulldozer Renzi Blätter für deutsche und internationale Politik 07/2015 describes his demonstrated commitment to deflationary, neoliberal policies.

The one big miscalculation that I can see in the Tsipras government's approach to the negotiations is that, given the enormous determination by Merkel and her Finance Minister Wolfgang Schäuble to crush Greece's political resistance to their austerity program was that to attain meaningful concessions within the eurozone, he had to be prepared to actually exit the eurozone. And that Tsipras wasn't willing to do.

Wolfgang Münchau describes this correctly, if in a way somewhat less sympathetic to Tsipras' dilemma than I would be, in Grexit remains the likely outcome of this sorry process Financial Times 07/19/2015

Alexis Tsipras should never have hired Yanis Varoufakis as his finance minister. Or he should have listened to him, and kept him on. But instead the Greek prime minister chose the worst of all options. He followed Mr Varoufakis’ advice of rejecting the offer of the creditors - until last week. But having done this, Mr Tsipras committed a critical error by rejecting Mr Varoufakis’ plan B for the moment when the country’s banks closed down: the immediate introduction of a parallel currency - IOUs issues by the Greek state but denominated in euros. A parallel currency would have allowed the Greeks to pay for their daily transactions when cash withdrawals were limited to €60 a day. A total economic collapse would have been avoided.
In Wie Deutschland den Euro sprengt Spiegel Online 20.07.2015, he emphasizes how shortsighted a self-destructive Germany's behavior in those negotiations really were. The short-term destruction, of course, hits Greece. The longer-term destruction will eventually wreck Germany's leadership in the EU if it is not corrected by future, post-Merkel governments. There he writes:

Die Griechenlandkrise hat uns gezeigt, dass eine ökonomisch nicht nachhaltige Situation in kürzester Zeit alle politischen Tabus sprengt. Das Primat der Politik kann sich langfristig nicht über ökonomische Logik hinwegsetzen.

Aus ökonomischer Sicht ist Griechenland im Euroraum nicht mehr lebensfähig. In diesem Punkt hat Wolfgang Schäuble recht. Aus griechischer Sicht wäre ein Austritt besser.

[The Greece crisis has shown us that an economically unsustainable situation can int the shortest time blow up all political taboos. The primacy of politics cannot in the long run prevail over economic logic.

From an economic point of view, Greece is no longer viable in the euro area. On this point, Wolfgang Schäuble is correct. From the Greek point of view, an exit would be better.]

Christiane Amanpour interviewed Varoufakis for CNN International ( Mick Krever, Varoufakis: 'We made mistakes' 07/20/2015):

Varoufakis said he had sympathy for his former boss [Tsipras].

"He was faced with a choice: Commit suicide or be executed."

"Alexis Tsipras decided that it [would] be best for the Greek people for this government to stay put and to implement a program which the very same government disagrees with."

"People like me thought that it would be more honorable, and in the long term more appropriate, for us to resign. This is why I resigned. But I recognize his arguments as being equally powerful as mine."
The video is here, Varoufakis: 'We made mistakes' 07/20/2015:

Why debt sustains corruption in Greece and vice versa

Christos Koulovatianos, John Tsoukalas Vox 20 July 2015

Olaf Boehnke (Greece and Germany's game of chicken European Council on Foreign Relations 07/17/2015) holds out optimism that Merkel may come to her senses:

Although many observers expected that Angela Merkel and Wolfgang Schäuble would have been feted for their victory upon their return to Berlin, the exact opposite has been the case. The tersest reaction came from Thomas Strobl, vice chairman of the Christian Democrats (CDU) and Schäuble’s son-in-law. Prior to the CDU’s steering committee meeting after the euro summit last Monday he said: "The Greek has now annoyed long enough." While Strobl has since been heavily criticised for this remark, this chauvinistic attitude does reflect strongly the sentiment of many people in Germany and in Strobl’s party in particular. ...

These elements - plus the broadening criticism of German hegemony in Europe- may well bring her to the point where she has to demonstrate political leadership in a way Mario Draghi did when he announced that the ECB will “do whatever it takes to preserve the euro”. Once all Eurozone member states have agreed to the new negotiations it would be wise for Merkel to demonstrate her political commitment to the Greek people with a speech in front of the Greek parliament or a public place in Greece in order to reinforce what she has been best at: getting conflicting parties back to the table and finding a compromise. In her speech today, she paid special attention to the importance of the French-German cooperation. If she is really interested in achieving a reliable solution for the current crisis, she and Francois Hollande must include Alexis Tsipras in finding a political agreement which gives him and the Greek people real, not forced, ownership of such a deal.
I don't think Merkel sees the world that way. She the leader of the economically most powerful country in the eurozone and she's done very well from her German point of view with her strategy of domination. One of the greatest risks for political and business leaders is there is an inevitable tendency to continue doing what has been successful in the past. Unfortunately for the eurozone and for the periphery countries especially, what has been successful for Merkel and her hardline neoliberal outlook is horribly destructive for the countries practicing her austerity policies, especially for Greece.

Saturday, July 25, 2015

Andrew Jackson as a 21st-century political symbol

"World history is not the ground of happiness. The periods of happiness are blank pages in it ..." - Hegel, Philosophy of History (German original: "Die Weltgeschichte ist nicht der Boden des Glücks. Die Perioden des Glücks sind leere Blätter in ihr ...")

There's a new round of discussion about the contemporary role of Andrew Jackson as a symbol, specifically for the Democratic Party.

I guess it was a good move to use "Old Hickory" in the name of this blog instead of Jackson's name explicitly!

It makes me recall that when I started this blog in 2003 with this same name, originally on AOL, I had a couple of things very much in mind. One was my disgust at neo-Confederate ideology. The State of Mississippi had a special referendum election in 2001 to vote on getting rid of the Confederate battle flag symbol on their state flag. It was the only issue on the ballot. And a solid majority, including a heavy majority of white voters, voted to keep the Confederate version of the state flag. It was one reminder among other of the virulence of segregationist thinking, bolstered as it has always been by neo-Confederate ideology and symbols.

As the Andrew Jackson logo on the right side of the blog that has been there for years says of Jackson, "He stood up against the secessionists and the economic royalists." What makes his image a potent one in my mind against neo-Confederate symbolism is that Jackson was a slaveowner and supporter of slavery who nevertheless chose democracy and national unity against the narrow interest of the Slave Power as embodied in John C. Calhoun and his supporters.

President Andrew Jackson n/d; accessed 07/25/2015:

He was also a wealthy man who in the conflict over the Bank of the United States chose democracy and the empowering of the "common man" over the narrow interest of his own class.

Which brings me to the other thing that was particularly on my mind in 2003. The Democratic Party, which honors Jackson as one of its founding spirits along with Thomas Jefferson, was in many ways flat on its back in 2003. The Party had collectively rolled over and played dead when Bush and Cheney and the corrupt Supreme Court stole the 2000 election and handed the Presidency to Dick Cheney. After that, they collectively rolled over for the authoritarian USA PATRIOT Act and allowed the criminal invasion of Iraq to proceed with minimal resistance despite the remarkable popular opposition and activism that opposed it.

Jackson symbolizes the very opposite tradition in the Democratic Party: democratic activism, mass mobilization, the fight against antidemocratic power and privilege. The Jacksonians even believed and publicly argued that Jackson had been cheated out of the Presidency in the election of 1824 by a "corrupt bargain" on the part of John Quincy Adams on behalf of the Money Power, or what Franklin Roosevelt would later call "the economic royalists."

Arthur Schlesinger, Jr. wrote in his now much-criticized The Age of Jackson (1945):

So superb a self-sufficiency could be effective only when matched by an equally superb self-control. Again contrary to the Jackson myth, there was small basis for the picture of uncontrolled irascibility. Jackson, who knew his reputation, never hesitated to exploit it. "He would sometimes extemporize a fit of passion in order to overwhelm an adversary, when certain of being in the right," said one observer, "but his self-command was always perfect." His towering rages were actually ways of avoiding futile argument. To committees which called on him to protest his financial policy, he would fly into vehement denunciations of the moneyed monopoly. When they left in disgust, he would coolly light his pipe and, chuckling "They thought I was mad," remark blandly on the importance of never compromising vital issues; one always lost friends and never appeased enemies.
This was the kind of spirit that the netroots were looking for in their Democratic leaders in 2003. It was this spirit that many saw in Howard Dean and his Presidential campaign, the kind many saw (perhaps somewhat overoptimistically) in Barack Obama, the kind we see now Elizabeth Warren and Bernie Sanders, the kind that even Hillary Clinton now feels it necessary to display. It's the kind of fighting spirit that we've seen in movements like Occupy Wall Street and Black Lives matter and in the present-day netroots movement itself.

As much as I value utopian political theory for the insight and inspiration it can give, I've always thought it was important to understand what is happening in real existing politics. And personal symbolism is important. However important principles and programs are, the people that democracies elect to office are human beings. People vote for individuals, however much they have partisan or principled considerations in mind. As we saw in recent days, Bernie Sanders' principled positions are not a replacement for how he interacts with real live voters, such as the Black Lives Matter protesters who challenged him at the Netroots Nation convention last week.

I don't defend Jackson's support of slavery. Nor his Indian policy. His Indian policy, particularly the Indian Removal Act which along with the fight against South Carolina nullification and the Bank of the United States was among the three most historic achievements of his Presidency. It isn't anachronism to say that. The policy was hotly disputed in Congress with clear arguments against it's morality.

The wrongness of the Indian Removal act is not mitigated by the fact that every other white American had bad ideas about Indians and Indian policy with exceptions like fur traders and Herman Melville. The latter had actually lived among aboriginals in the South Sea. Fur traders often integrated closely with Indian tribes with whom they worked.

And when it comes to national and democratic symbolism, Jackson as a 17-year-old actually fought in the Revolutionary War. It's not much of a stretch to consider him the last of the major Founders of the American Republic. That's not perfection. And it's not utopia. But it's not Aaron Burr or John Calhoun, either - who, ironically, were respectively Vice Presidents to Thomas Jefferson and Andrew Jackson.

General Jackson was also the hero of the Battle of New Orleans of early 1815. It's famous that the war with Britain had officially been concluded at the time of the battle, but neither side had yet gotten word. But if the British Army had won, the peace certainly would not have developed as it did. New Orleans even today is a critical port because of the traffic on the Mississippi River. It was already a critical port in 1814. Whoever controlled New Orleans could control the commerce on the Mississippi River. That was the main reason of Jefferson's Louisiana Purchase. It was a principle of Jefferson's foreign policy that whatever country controlled New Orleans - France, Britain were the most practical options besides the US - was by definition the principal opponent of the United States.

So the Battle of New Orleans wasn't just an early 19-century media event. It was substantively very important. Though the symbolic significance of Jackson's forces defeating those of the mightiest Empire on the planet was also not nothing. It rightly made Jackson a national hero.

The Nitty Gritty Dirt Band's interpretation of Johnny Horton's folk classic, "The Battle of New Orleans":

I opened this post with the famous Hegel quote because it captures an important part of my own understanding of history. When Hegel described seeing Napoleon in the streets of Jena as witnessing the World Spirit on a horse, he didn't mean that he regarded the French General as a god or a model man. He meant that Napoleon signified to him the most progressive force in history at that time.

In the previous post, I quoted California Gov. Jerry Brown saying in Rome:

I think the formation that I’ve undergone growing up in the Catholic faith, the Catholic religion, puts forth a world that’s orderly, that has purpose and that ultimately is a positive. And that’s very helpful when you look at a world that looks very much the opposite, in terms of the wars, the corruption and the breakdown. And so even though from an intellectual point of view it looks very dark, in another sense I have great faith and confidence that there is a way forward.
Whether one takes a Catholic view of history or a Hegelian one or some other kind, it proceeds through flawed individuals. Often deeply flawed ones.

But understanding how history proceeds, the history of democracy or any other aspects, making realistic assessment of those who advanced it, as Jackson did, and those who sought to impede it or take it in a retrograde direction, like John Calhoun.

I'm not willing to cede the progressive side of early American history to conservatives. The only white man of any note that I can think of in the early half of the 19th century who came close to matching prevalent 21st-century notions on race and gender and equal rights was John Brown. Who was (unlike Calhoun or Jefferson Davis) hanged for treason. Also, Brown was a "terrorist", and who wants to identify with one of those? Jackson was a wealthy slaveowner, who nevertheless when it came to choosing between his class and democracy with the Bank and the Nullification Crisis, chose the democratic side and fought for it effectively.

I'm going to try to look at the current media controversy over Jackson's legacy in upcoming posts.

Thursday, July 23, 2015

Jerry Brown on being a Catholic

Italian reporters may be having trouble how to process Jerry Brown's public statements as American reports do. (A problem that most California voters don't have.)

David Siders reports on Jerry responding cautiously to a question about his religious identity (Jerry Brown, ‘Are you Catholic?’ Sacramento Bee 07/22/2015):

“I think the formation that I’ve undergone growing up in the Catholic faith, the Catholic religion, puts forth a world that’s orderly, that has purpose and that ultimately is a positive,” Brown said. “And that’s very helpful when you look at a world that looks very much the opposite, in terms of the wars, the corruption and the breakdown. And so even though from an intellectual point of view it looks very dark, in another sense I have great faith and confidence that there is a way forward. And I would attribute that in some way to my Catholic upbringing and training.”

The Stonewall MS killing

One of the killings of an unarmed black man by a white policeman under suspicious circumstances that is now in the news occurred in Stonewall MS, in Clarke County, the county where I grew up.

I probably went to high school with some relative of the mayor there, Glenn Cook. Heck, he might even be a distant cousin or something.

But he doesn't come off so smooth in the interview reported by Zachary Oren Smith in Stonewall Mayor Reacts to Sanders Case, NAACP Wants Inquiry Jackson Free Press 07/23/2015.

This comment, for instance, doesn't show a lot of self-awareness:

Cook said, "There is safety and security for everyone in Stonewall," and that he believes his office is approachable. "Most the people in this town know me well enough to think they can approach me to talk about anyone."

He added, "I've not had one person come to my office to sit down with me and speak to me since the incident."
Well, Mister Glenn, if nobody comes to talk to you, then, uh, how do you conclude that everybody thinks you're totally approachable?

He also makes a don't-think-of-an-elephant gaffe: "'If I was an outsider and I just read a story from some of the local news agency and things that people have posted (online), I would think we were back in the '60s—that's not the case in Stonewall,' he told the Jackson Free Press by phone on Wednesday."

Which reminds people that know anything about this that "back in the '60s," Suthun officials basically said the same kind of things. Hey, the whites and the coloreds all git along jus' fine down heah, but you wouldn't know that from the way that the Yankee press talks about us.

Also, this is probably not the picher you want of your mayor out there if you're trying to defend your cops from suspicions of murdering an unarmed black man for no good reason:

Now, Mayor Cook may be a perfectly decent guy. I haven't followed this case closely and I don't know much about him. But, hey, that's a photo that shouts "smug good-ole-boy white guy."

A 1973 prediction from Fidel Castro

The Argentine paper Clarín recalls a cynical comment by Cuban leader Fidel Castro that turns out now to have been coincidentally prescient (Fidel Castro y una asombrosa predicción en 1973 23.07.2015:

"Estados Unidos vendrá a dialogar con nosotros cuando tenga un presidente negro y haya en el mundo un Papa latinoamericano".

("The United States will return to having a dialogue with us when they have a black President and there is an Latin American Pope in the world.")

Tuesday, July 21, 2015

Conservatism: a "robust" political philosophy?

"To be fair, conservatism, as a political philosophy, has a robust intellectual history – liberals are unwise to ignore that. But this isn’t the party of Edmund Burke or William Buckley or Barry Goldwater – those men had ideas."

That quote comes from Sean Illing in Really, it’s time to shut down the GOP: A deeply unserious party, hijacked by lunatics and Fox News, is driving us all into a ditch Salon 07/21/2015 that otherwise harshes on today's Republican Party in a sensible fashion. For instance, he has this observation about how in many ways the Party has become a prisoner of its own rhetoric:

These people [in particular, Donald Trump, Sarah Palin and Herman Cain] exist in the Republican Party for a reason: the GOP sold its soul to Fox News and the broader conservative mediascape years ago. Republicans are now constrained by these forces, which manufacture unhinged, absolutist narratives that dominate discourse in the party. Republicans, as a result, can’t afford to compromise or propose realistic policies – the zealots won’t let them. Worse still, any Republican who dares to step out of line gets pummeled on Fox News for weeks on end. In the face of such pressure, is it any wonder the GOP has become what it has? [my emphasis]
But here I want to focus on the idea that "conservatism, as a political philosophy, has a robust intellectual history" as embodied by Edmund Burke, Bill Buckley and Barry Goldwater.

Edmund Burke (1730–1797) was a flaming reactionary. His pragmatic recognition that the British effort to keep the American colonies was unrealistic makes his image usable as a talisman image for American of sufficient literacy and intellectual pretensions to identify him as a predecessor.

Ian Harris describes the fundamentally reactionary nature of Burke's thought in his article, Edmund Burke Stanford Encyclopedia of Philosophy (2010):

The intellectual counterpart of this prudent conduct, namely the refinement of our existing ideas, rather than replacing them, is what he had done in his revisions of the idea of sovereignty.

This style of thinking gave Burke a very lively sense of the corrosive power of new ideas. Even new questions could have unpleasant results. When the innovations of the British government unsettled the colonists, ‘then ... they questioned all the parts of your legislative power; and by the battery of such questions have shaken the solid structure of this Empire to its deepest foundations.’ The proper way to avoid such shakes to civil society was to ‘consult and follow your experience’ ..., for ‘experience’ according to Burke's philosophy of language was a condition of continuity of mind, and, on the basis of mind, of a sustainable practice. His was therefore a philosophically conditioned attitude to practice, and one that was very sensitive to the hiatus that speculation could cause in the latter. Burke's sensitivity can produce apodictic language in order to persuade people to make use of the ideas they have inherited, by urging ‘a total renunciation of every speculation of my own; and… [by recommending] a profound reverence for the wisdom of our ancestors’ ... Indeed, Burke can be found, sometimes, on rational grounds, deprecating all explicit appeal to speculation of whatever hue, if it had a disturbing effect: ‘reason not at all—oppose the ancient policy and practice of the empire, as a rampart against the speculations of innovators on both sides of the question’ (italics added [by Harris]) ... [my emphasis in bold]
Bill Buckley (1925–2008) was a defender of segregation and Joe McCarthy. Charlie Pierce refers to Buckley's National Review as "the longtime white-supremacist journal National Review." A tradition Buckley himself started and which continues to this day. Buckley was a talented rhetorician and debater. But the "robust intellectual" part of his work largely remained well concealed. William Hogeland (The Racism-Conservatism Link: 'National Review' Firestorm Over Racism Calls Up William F. Buckley's Troubling Legacy Alternet 04/23/2012) gives an example of his polemic/rhetorical talents discussing Buckley's supposed apology for taking segregationist positions:

But the aged Buckley was renouncing a position entirely different from the one he'd actually advanced in the 1950s.

Writing in 1957 in defense of jury nullification of federal voting laws, Buckley insisted that whites in the South were "entitled to take such measures as are necessary to prevail, politically and culturally, where they do not prevail numerically," because the white race was "for the time being, the advanced race." In 2004, asked whether he'd ever taken a position he now regretted, he said: "Yes. I once believed we could evolve our way up from Jim Crow. I was wrong: federal intervention was necessary."

Nicely done. Where in '57 he'd asserted a right even of a minority of whites to impose racial segregation by literally any means necessary, including breaking federal law, in '04 Buckley expressed regret for supposedly having believed only that segregation would wither away without federal intervention.

Stupid the man was not. He gets credited today with honesty about his past and with having, in his own way, "evolved up." Modern conservatives, more importantly, get to ignore the realities of their movement's origins. [my emphasis]
Barry Goldwater (1909-1998) is considered by today's Movement Conservatives as the Founding Father of their movement. He gained the 1964 Republican Presidential nomination as a warmonger and defender of segregation - but only on "states rights" grounds, of course! The two main issues in that campaign were the Vietnam War (Goldwater wanted to send in the troops and massively bomb Vietnam immediately) and civil rights for African-Americans (he was against them).

The line from Goldwater 1964 to the Iraq War, Dick Cheney's torture program, voter suppression laws, massive domestic spying, an overblown military budget, today's prison-industrial complex and anti-immigrant agitation is a pretty straight one. Yes, he repudiated the John Birch Society. But the Koch Brothers pretty much operate on Bircher ideas and they are scarcely pariahs in today's Republican Party.

It's likely that part of what made Goldwater grouchy about some of the right-wing factions whose policies he generally shared was that his parents were Jewish converts to Protestant Christianity. Barry himself was raised Christian. But he was undoubtedly aware of the level of anti-Semitism among characters like the Birchers. And he took some "libertarian" ideas more seriously than authoritarian Birchers do. He didn't much like Jerry Falwell and the Moral Majority. And he made that clear publicly. He also was in favor of allowing gays to serve in the military. This side of Goldwater was captured well in this 1993 news report (Goldwater advocates gays in military Arizona Republic/A********d P***s 01/11/1993):

Goldwater said in his article [an op-ed in the Washington Post] that after 50 years in politics and the military, he still marvels that people can get upset over nothing.

"Lifting the ban on gays in the military isn't exactly nothing, but it's pretty damned close," wrote the salty-tongued Republican.

He qualified his position slightly on the [Larry] King show.

He told King that gays would cause no problem in the Air Force but that "there might be some question" about service in the Army, where homosexual and heterosexual soldiers would have to share foxholes.

Goldwater is a conservative who supports abortion rights and has challenged the Christian fundamentalist wing of the Republican Party, as he did in the last election when he backed Democrat Karan English over a GOP candidate supported by the religious right. English won an Arizona seat in the U.S. House.

Goldwater said conservatives who supported the military ban were ignoring their movement's core principle, "that government should stay out of people's private lives."

He said that studies have proven homosexuals are not security risks and that the ban ultimately will be lifted anyway.

"I think it's high time to pull the curtains on this charade of a policy," he wrote. [my emphasis]
Note that his supposedly bold, nonintuitive stand on gays in the service in 1993 was qualified by a comment that he wasn't so sure about having them in the Army. And that his argument on that point reflects typical antigay arguments.

That report is also a reminder that his distrust of the Christian Right didn't just apply to Falwell and the Moral Majority. I'm guessing that the anti-Semitism that is pretty painfully obvious in those movements had a lot of do with it. Even if its wrapped up with varying degrees of sophistication in a "Christian Zionist," nominally philo-Semitic political-religious ideology. See also: Lloyd Grove, Barry Goldwater's Left Turn Washington Post 07/28/1994; the headline doesn't fit very well with the content.

But that 1994 headline is a small example of the kind of Beltway Village groupthink that has long since hardened into dogma, or maybe taken flight into delusion. And a key element of that groupthink is the notion that there are always sensible moderates out there, and that the Democratic and Republican parties are ideological mirror images of each other. So a grumpy burst of good sense from Barry Goldwater in 1994 got spun into a "left turn" on his part, when it was nothing of the sort.

Back around 1983, I heard George McGovern give a talk in which he talked about the need for responsible conservatism, which he defined as the perspective that "we should make haste slowly." He wasn't advocating that position himself! He was making the point that responsible debate can produce a better result than actions which haven't been sufficiently critically examined. One case where conservative cautions later seemed more prescient to liberals than they once did was the federal Independent Counsel statute, of which Cass Sunstein wrote in 2001 (Unchecked and Unbalanced The American Prospect 11/16/2001):

The institutional design of the Independent Counsel is designed to heighten, not to check, all of the institutional hazards of the dedicated prosecutor; the danger of too narrow a focus, of the loss of perspective, of preoccupation with the pursuit of one alleged suspect to the exclusion of other interests." Thus wrote Supreme Court Justice Antonin Scalia nearly a decade ago, echoing the warning of three attorneys general, two of them staunch Republicans. In his dissenting vote to hold the Independent Counsel Act unconstitutional, Scalia objected that the supposedly independent counsel is a novel and dangerous means of law enforcement: a prosecutor who is effectively accountable to no one and entirely focused on a single person.
On the other hand, my stomach gets a little queasy at associating myself in public view with Antonin Scalia. So I also listen to my (literal) gut instinct on these things, too.

A current instance where I find myself somewhat attracted to conservative arguments is Obama's agreement with Iran, which I support. This article from the generally insufferable Walter Russell Mead, Obama Lights Firestorm on Capitol Hill The American Interest 07/17/2015, cites some arguments from two Democrats, Sen. Ben Cardin and Congressman Steny Hoyer, both representing Maryland, about Congressional powers that resonated with me on first glance. But Republicans these days hardly regard those two guys as conservatives. And both parties in Congress have been so irresponsible in not adequately restraining Presidential war powers that I find it hard to take arguments they make from broad principle applied to specific issues completely seriously.

But such instances are few and far between. Because if you have to hold up segregationist-warmongers Bill Buckley and Barry Goldwater as examples of the "robust intellectual history" of conservatism, that's a sign of how hard genuinely sensible conservatives are to find in US politics these days.

Paul Krugman has been chronicling this process for years. In Cranking Up for 2016 New York Times 02/20/2015, he wrote:

So what does it say about the current state of the G.O.P. that discussion of economic policy is now monopolized by people who have been wrong about everything, have learned nothing from the experience, and can’t even get their numbers straight?

The answer, I’d suggest, runs deeper than economic doctrine. Across the board, the modern American right seems to have abandoned the idea that there is an objective reality out there, even if it’s not what your prejudices say should be happening. What are you going to believe, right-wing doctrine or your own lying eyes? These days, the doctrine wins.

Look at another issue, health reform. Before the Affordable Care Act went into effect, conservatives predicted disaster: health costs would soar, the deficit would explode, more people would lose insurance than gain it. They were wrong on all counts. But, in their rhetoric, even in the alleged facts (none of them true) people like Mr. Moore put in their articles, they simply ignore this reality. Reading them, you’d think that the dismal failure they wrongly predicted had actually happened.

Then there’s foreign policy. This week Jeb Bush tried to demonstrate his chops in that area, unveiling his team of expert advisers — who are, sure enough, the very people who insisted that the Iraqis would welcome us as liberators.

And don’t get me started on climate change.

Along with this denial of reality comes an absence of personal accountability. If anything, alleged experts seem to get points by showing that they’re willing to keep saying the same things no matter how embarrassingly wrong they’ve been in the past. [my emphasis]

Monday, July 20, 2015

About those schools built in Afghanistan ...

Buzzfeed has done an investigation finding that all the schools the Western forces built for children in Afghanistan wasn't quite the way the US Governor has presented it: Azmat Khan, Ghost Students, Ghost Teachers, Ghost Schools 07/08/2015

Over and over, the United States has touted education — for which it has spent more than $1 billion — as one of its premier successes in Afghanistan, a signature achievement that helped win over ordinary Afghans and dissuade a future generation of Taliban recruits. As the American mission faltered, U.S. officials repeatedly trumpeted impressive statistics — the number of schools built, girls enrolled, textbooks distributed, teachers trained, and dollars spent — to help justify the 13 years and more than 2,000 Americans killed since the United States invaded.

But a BuzzFeed News investigation — the first comprehensive journalistic reckoning, based on visits to schools across the country, internal U.S. and Afghan databases and documents, and more than 150 interviews — has found those claims to be massively exaggerated, riddled with ghost schools, teachers, and students that exist only on paper. The American effort to educate Afghanistan’s children was hollowed out by corruption and by short-term political and military goals that, time and again, took precedence over building a viable school system. And the U.S. government has known for years that it has been peddling hype.

Friday, July 17, 2015

Greek strategy reflections and recriminations

Gérard Roland describes the basic point of weakness in Greece's negotiating strategy that resulted in Monday's humiliating surrender by Alexis Tsirpas to Merkel's brutal austerity program (The humiliation of Greece and Tsipras’s fatal mistake The Berkeley Blog 07/15/2015):

What went wrong? Tsipras’s fatal mistake is that no preparations had been made for Grexit. The reason was that this is not an option that was ever desired by the Tsipras government. They thought that since Grexit would be catastrophic for everybody inside the Eurozone, it was not credible. The support in the referendum should show the support of Greek voters and help increase the bargaining position of Greece.

This lack of preparation is the weakness that was exploited by Schaüble. Once it was clear, that Germany and most of the partisans of austerity were ready to exclude Greece from the Euro, basically by getting the ECB to cut funding to Greek banks, it would have been a catastrophe of major proportions for the Greek economy. Truly, there was a large risk for the Euro, but by showing readiness to exclude Greece from the Eurozone, Tsipras literally had a gun to his head, and had no other choice but to capitulate.

The credible threat of Grexit is what did him in. If Greece had made serious preparations and was ready to weather a Grexit, things would have been completely different. The threat of exclusion would not seem that terrible to the Greeks, whereas the risk of Grexit to the Eurozone would seem much more serious. The threat of Grexit would then have seemed less credible. To me, this is the fatal mistake that Tsipras made. Overall, he was still able to push the bad agreement through the Greek Parliament. Germany now looks very bad to the outside world and Greeks look like victims, but are likely to go through a terrible time as their economy is further strangled. [my emphasis]
Somewhat paradoxically, if the Greek goal was to avoid "Grexit" from the euro, they had to prepare to be leave the eurozone and set up their own new currency, at least to the extent that the other euzozone governments could believe they were willing to do it.

Niels Kadritzke in Was nun Alexis Tsipras? takes a careful look at the outcome of the Greek negotiations and their immediate aftermath in Was nun Alexis Tsipras? Nachdenkseiten 17.07.2015. He deals with the question of whether Tsipras "betrayed" his program or the Greek people, and rejects that position. He notes correctly that Tsipras and Syriza were consistent in their goal of keeping Greece in the eurozone.

And he brings up the point that wasn't publicly clear a week ago but is now much more so, which is that the Merkel government's goal now appears to be to push Greece out of the eurozone. So Tsipras threatening to take that path would have played into that position.

This reminds me of an interesting historical parallel that I'm very hesitant to even mention. Because it has to do with possibly the most ill-used and damaging historical analogy ever used, the infamous "Munich analogy," the one that Republican warmongers use pretty much daily against whoever they want to bomb that day.

One fact about the Munich Agreement of 1938 is that Hitler was actually furious that Britain and France had agreed to let Germany annex the Bohemian and Moravian provinces of Czechoslovakia without coming to Czechoslovakia's defense. He wanted to take the territory by force without Anglo-French agreement.

Without worrying why he was taking that perspective or how well it might have served his objectives, that raises the obvious question, would it have been worse for Britain and France to not agree? After all, if that had been their decision, they would have been doing what Hitler expected and preferred! Isn't Hitler's outrage at their agreement to allow him to take Bohemia and Moravia a sign that Chamberlain and Deladier were taking the better position in doing so?

The answer is no, because whatever Hitler's was thinking, it was a dangerous disadvantage to Britain, France and their later wartime ally the Soviet Union for Hitler to seize those territories and to do it with the West's explicit agreement. It gave Germany access to the vast Skoda arms works which qualitatively increased their military potential. It convinced Soviet leaders that Britain and France were unwilling to resist German aggression and that it was in the Soviet interest to cut a deal with Hitler if they could to buy time for their own armament program. And while Britain and France weren't prepared for the kind of military action that could have stopped the German invasion of Czechoslovakia, an alliance with the USSR in 1938 would have at least given them a greater chance to do so.

I bring that up here no because I see any exact analogy, but because doing what the other side doesn't want isn't in itself a sign of a good or bad position in a negotiation. Merkel and Schäuble may well have preferred for Greece to leave the eurozone right now. But the fact that Tsipras avoided that immediate result doesn't in itself mean that was the optimal position for him to take.

I agree with Kadritzke that Tsipras' surrender, grim as it is, didn't constitute a political betrayal of his party or constituents.

But Kadritzke also seems to share Tsipras' apparent conviction that Grexit is effectively impossible or, at best, far worse than the gruesome alternative which they have now accepted at Germany's insistence and enormous pressure that constituted the opposite of "solidarity" on the Merkel government's part. He writes that in the case of Grexit:

... der würde in Wahrheit die Kapitulation vor der „Souveränität“ der realen Finanzmärkte bedeuten. Und die würden dem Land einen noch brutaleren Sparkurs diktieren als derjenige, den die meisten Griechen zurecht als Erpressung empfinden.

[... that would mean a capitulation before the "sovereignty" of the real finance markets. And they would dictate to the country an even more brutal austerity course than the one that most Greeks rightly perceive as blackmail.]
On this issue, I would ask the same question I previously quoted Paul Krugman as asking (History Lessons for Euro Debtors 07/15/2015):

If Greece still had its own currency, the case for devaluation would be completely overwhelming at this point. What this means, in turn, is that everything — the ongoing economic disaster in Greece, the bitter divisions within the euro area, the perplexity of even the best intentioned policymakers — flows from the supposedly insuperable technical difficulties of going off the euro.

Can this possibly make sense given the extremity of the situation?
Grexit would mean taking a path similar to that Argentina took in 2001-3. It would be tough in the short run. But the current program imposed on Greece looks like nothing but the German plan to push Greece out of the euro while doing an enormous amount of damage to their economy at the same time. And this program really gives them no hope of getting their economy out of a seriously depressed state.

In another post (Bernanke Isn’t Serious 07/15/2015), the Shrill One quotes from Greece and Europe: Is Europe holding up its end of the bargain? by former Fed Chairman Ben Bernanke at his Brookings blog, where Bernenke writes:

The risks for the European project posed by these economic developments are real, no matter what the reasons for them may be. In fact, the reasons are not so difficult to identify. The slow recovery from the crisis of the euro zone as a whole is the result, among other factors, of (1) political resistance that delayed by many years the implementation of sufficiently aggressive monetary policies by the European Central Bank; (2) excessively tight fiscal policies, especially in countries like Germany that have some amount of "fiscal space" and thus no immediate need to tighten their belts; and (3) delays in taking the necessary steps, analogous to the banking "stress tests" in the United States in the spring of 2009, to restore confidence in the banking system. I would not, by the way, put "structural rigidities" very high on this list. Structural reforms are important for long-run growth, but cost-saving measures are less relevant when many workers are already idle; moreover, structural problems have existed in Europe for a long time and so can't explain recent declines in performance.

What about the strength of the German economy (and a few others) relative to the rest of the euro zone, as illustrated by Figure 2? As I discussed in an earlier post, Germany has benefited from having a currency, the euro, with an international value that is significantly weaker than a hypothetical German-only currency would be. Germany's membership in the euro area has thus proved a major boost to German exports, relative to what they would be with an independent currency.

Nobody is suggesting that the well-known efficiency and quality of German production are anything other than good things, or that German firms should not strive to compete in export markets. What is a problem, however, is that Germany has effectively chosen to rely on foreign rather than domestic demand to ensure full employment at home, as shown in its extraordinarily large and persistent trade surplus, currently almost 7.5 percent of the country's GDP. [my emphasis]
Commenting on the first paragraph just quoted from Bernanke, Krugman asks:

Does all this sound sort of ... familiar? Kind of like what other bearded Anglo-Saxon economists have been saying? As I’ve tried to point out for a long time, in this policy debate the supposedly radical types are the ones doing standard, more or less textbook economics, while the respectable voices have subscribed to fantasies ungrounded in either history or theory.

You might think that having one of history’s most celebrated central bankers weigh in on the anti-austerity side of the issue would change perceptions about what’s serious as opposed to Serious. But don’t bet on it.
I quote that here because the idea of Grexit as an alternative to crackpot austerian economic policies isn't radical or kooky. Whether it's desirable or not is a difficult call that Tsipras in the past week made according to his consistent policy and positions.

But at this point, it's clear that any successful resistance in the immediate future against Germany's draconian austerian policies for the eurozone periphery will have to be willing to risk going back to their own currency. Tsipras tried bluffing. Merkel and Schäuble called his bluff.

The next country that tries it has to be willing to take the real risk of leaving. And prepare for it. Only then can they assume they will have even the possibility of getting other eurozone countries like France or Italy to pressure Germany for a reasonable, non-austerian solution within the eurozone.

And speaking of France and Italy, I'm taking a show-me attitude toward the supposed opposition they are said to be showing against Merkel.

Kim Willsher and Philip Oltermann report in A 'marriage' in crisis: Greek bailout row puts strain on Franco-German alliance Guardian 07/17/2015:

Disagreements over how to handle the Greek debt crisis have led to a major falling out between Paris and Berlin, the “couple” at the heart of the European project. ...

To the north, Germans are grumbling that they were stitched up to avoid Greece leaving the eurozone at all costs. To the south, a hard-hitting missive by the leader of the governing French Socialist party accused Berlin of forgetting the “atrocious crimes” committed in its name.

“Germany must pull itself together, and quickly,” Jean-Christophe Cambadélis wrote in an open letter addressed to “mein lieber Freund” – my dear friend.

In Berlin, officials accused Paris of operating behind other member states’ backs and deliberately playing a game of chicken with the German delegation to force through a deal.
Yeah, get back to me when there's more than superficial diplomatic kabuki to talk about.

Thursday, July 16, 2015

Jürgen Habermas on the new Bad German phase initiated by Angela Merkel #ThisIsACoup #merkelstreichelt

Jürgen Habermas is not pleased by German Chancellor Angela Merkel's handling of the Greek crisis (Philip Oltermann, Merkel 'gambling away' Germany's reputation over Greece, says Habermas Guardian 07/16/2015):

I fear that the German government, including its social democratic faction, have gambled away in one night all the political capital that a better Germany had accumulated in half a century,” he told the Guardian. Previous German governments, he said, had displayed “greater political sensitivity and a post-national mentality”.

Habermas, widely considered one of the most influential contemporary European intellectuals, said that by threatening Greece with an exit from the eurozone over the course of the negotiations, Germany had “unashamedly revealed itself as Europe’s chief disciplinarian and for the first time openly made a claim for German hegemony in Europe.” [my emphasis]
Obviously, in the latter he means the first time in the history of the current Federal Republic.

Habermas added: “Forcing the Greek government to agree to an economically questionable, predominantly symbolic privatisation fund cannot be understood as anything other an act of punishment against a leftwing government.”
Yes, it was.

Greek Prime Minister Alexis Tsipras obviously wound up accepting a humiliating defeat. But his months-long fight to negotiate a reasonable deal with Iron Chancellor II

Joanna Slater reports (Germany is remaking the euro zone in its own image Globe and Mail 07/16/2015):

Helmut Kohl, Germany’s former chancellor, had a favourite maxim about his vision for the future, inspired by the words of the famous writer Thomas Mann. The ultimate goal, Mr. Kohl said, was “a European Germany, not a German Europe.”

Now, as Greece implements the bitterly fought agreement reached Monday with its creditors, the deal underlines the new reality of the euro zone: Germany is remaking the currency bloc in its own image.

It’s a place where the focus is on spending cuts, implementing structural reforms and abiding by the rules. It’s also backed by an implicit warning – if a country veers off track as Greece has, it will pay dearly or face a calamitous ejection from the currency union. ...

Some observers despaired of the way Greece’s predicament has been presented in Germany. “If you are breastfeeding Germans newspaper headlines about lazy Greeks,” that has an impact on public opinion, noted Ulrike Guérot of the European School of Governance in Berlin. “We need to deconstruct these arguments,” she said. “We are the biggest benefiter of the whole European project.”

By losing sight of that fact, she said, Germany risks its historical role as the country that was willing to do and pay a bit more to move the project forward – a kind of benign hegemon. These days, “we are doing hegemony without the benign-ness.” [my emphasis]
Merkel's cruel real face is being highlighted by the #merkelstreichelt Twitter hashtag.

As The Independent reports (Lizzie Dearden, Angela Merkel makes Palestinian girl facing deportation from Germany cry on television 07/16/2015):

Angela Merkel has been heavily criticised after appearing to make a Palestinian refugee cry by telling her she could not stop her family's possible deportation.

The girl was among a group of school pupils gathered in the city of Rostock on Wednesday for an appearance by the German Chancellor. ...

“As long as I don't know how long I can stay here, I don’t know what my future will be,” Reem said, in fluent German.

“I really want to study in Germany - it is unfair to watch while other people can enjoy life and you can’t enjoy it with them.”

Having expected a routine question-and-answer session for the government’s Gut Leben in Deutschland (Living Well in Germany) programme, Ms Merkel appeared momentarily thrown by the change of direction.

“I understand that, however I have to… sometimes politics is hard,” Ms Merkel said.

“You’re a very nice person but you know that there are thousands and thousands of people in Palestinian refugee camps in Lebanon and if say 'you can all come,' and 'you can all come from Africa,' and 'you can all come,' we just can't manage that."
If Bill Clinton's trademark style was "I feel your pain," Angie's is more like, "I spit on your pain!"

Here's a video with English subtitles, Angela Merkel makes Palestinian girl facing deportation from Germany cry on television:

I'm surprised she didn't tell the little girl, "And I suppose you also expect me to spare your little dog, Toto, eh, my pretty? Bwaahahaha!"

Angie has lost her her cuddly "Mutti" image, it seems. Too bad, kid, we're gonna deport you. But "sometimes politics is hard." So stop your whining or I'll give you something to really cry about! Ask the Greeks what happens to people who mess with me, you little crybaby!

It's become obvious that Thucydides is one of Angie's favorite political theorists: “the strong do what they will, and the weak suffer what they must.” That includes you, whiny little girl!

Tsipras too:

Amanda Taub comments on this revealing performance by Merkel in Angela Merkel should be ashamed of her response to this sobbing Palestinian girl Vox 07/16/2015:

If it feels unjust to see one of the most powerful people in the world tell a crying child that her future dreams have to be destroyed because "politics is hard sometimes," that's because it is unjust. Germany's attitude toward refugees is wrong, and it's hurting innocent people. And Merkel knows that — she's just not used to being confronted with evidence of it on live TV.

In her response, Merkel was trying to imply that if Germany treats this girl and her family leniently, it will somehow be obligated to accept the entire world’s refugees. But that’s disingenuous. There is no mechanism by which that would happen. There is no rule that says that if Germany grants asylum to a family in Rostock then it has to accept every Palestinian in a Lebanese camp, or everyone from "Africa." There is no slippery slope here because there isn’t a slope at all. Right now, Germany has a legal obligation to protect refugees who are inside its borders, and no legal obligation to protect those who are outside them. Granting this girl and her family refugee status, visas, or even just temporary relief from deportation wouldn’t change that in the slightest.

What Merkel really means is that there are currently millions of people in the world who could have valid asylum claims, and she's worried they'll all come to Germany if it seems even slightly welcoming. So Germany deports people like this young Palestinian and her family to set an example that's just cruel enough to serve as a deterrent.

Krugman on why Greece shouldn't consider "Grexit" unthinklable

Paul Krugman writes again on the macroeconomics of Greece and the relevant considerations (History Lessons for Euro Debtors 07/15/2015):

Now what? If Greece still had its own currency, the case for devaluation would be completely overwhelming at this point. What this means, in turn, is that everything — the ongoing economic disaster in Greece, the bitter divisions within the euro area, the perplexity of even the best intentioned policymakers — flows from the supposedly insuperable technical difficulties of going off the euro.

Can this possibly make sense given the extremity of the situation?

Stanford Prison Experiment, now a movie

Here's an interesting, brief interview on the famous/infamous Stanford Prison Experiment: Cathy Cockrell, Prof recalls famous prison study, now a movie UC-Berkeley News 07/08/2015.

Here's a trailer for the new film based on it, The Stanford Prison Experiment Official Trailer (JoBlo Review Quote) Ezra Miller Thriller Movie HD YouTube date06/12/2015:

Wednesday, July 15, 2015

Angela "Thucydides" Merkel vs the rational Greeks

Situations like Germany's brutal humbling of Greece and its Syriza government this week are where my sympathy for the "realist" foreign policy position starts to kick in, even though I always kind of hate myself for it.

The more flexible realists like Stephan Walt recognize that national leaders make choices and encourage them to make ones that are preferably rational and far-sighted. But the fact is that when a country has the ability to throw their weight around to their own short-term advantage like Germany does in the current eurozone, the temptation to do it is very big.

For all his hackery and petty-mindedness and corruption, Helmut Kohl actually understood that the conditions for the European Union to function well according to its original purpose included German leaders resisting the temptation to go all Bismarck on their partners. Merkel is more Thucydides-minded that “the strong do what they will, and the weak suffer what they must.”

Also, she really, really believes in her Herbert Hoover/Heinrich Brüning economics.

This article (Backlash brews in Germany over Berlin's role in Greece debt talks Al Jazeera/AFP 07/15/2015) by itself would leave a better impression of the major media outlets quoted than they deserve (Spiegel Online, Süddeutsche Zeitung, the FAZ/Frankfurter Allgemeine Zeitung). Most of the columns and news stories I've seen in all three pretty faithfully reflected Angie's preferred position. Spiegel Online had so many stories based on anonymous sources giving press-release-type quotes backing Angie's approach that I was beginning to wonder whether they were using Judith Miller as a ghost-writer.

The humiliation continued for Greece on Wednesday, as Alexis Tsipras and his government essentially self-immolated their own program on orders from Merkel and the Troika. Renee Maltezou and Angeliki Koutantou report in Greek parliament approves bailout measures as Syriza fragments Reuters 07/15/2015

The Greek parliament passed sweeping austerity measures demanded by lenders to open talks on a new multibillion-euro bailout package to keep Greece in the euro, but dozens of hardliners in the ruling Syriza party deserted Prime Minister Alexis Tsipras.

The package was approved with 229 votes in the 300-seat chamber. There were 64 votes against it and six abstentions. But Tsipras required the support of pro-European opposition parties to push the measure through, leaving a question over the future of his government.

Tsipras said there was no alternative to the package, which he acknowledged would cause hardship, but he stood by the decision. "I am the last person to shirk this responsibility," he told parliament.
Yanis Varoufakis voted against the surrender agreement:

The measures were branded "social genocide" by the firebrand speaker of parliament Zoe Constantopoulou and there were violent clashes between protestors and police outside parliament as the debate went on before the vote.

Among the 38 Syriza rebels was former Finance Minister Yanis Varoufakis, who was sacked by Tsipras last week and who denounced the bailout deal as "a new Versailles Treaty" - the agreement that demanded unaffordable reparations from Germany after its defeat in World War One.
I feel more sad than disappointed in Tsipras over this. Reuters quotes him saying, "I acknowledge the fiscal measures are harsh, that they won't benefit the Greek economy, but I'm forced to accept them." (my emphasis)

Merkel's government was harsh beyond any reasonable expectation. She could use some good "realist" advice on her foreign policy as it affects the eurozone. Because her dogmatic commitment to austericide measures for Greece and the rest of the eurozone periphery are far overriding even any selfish but sensible pragmatism.

As a postmortem on the negotiations, for a more successful possible outcome, Tsipras had to be prepared to call Merkel's bluff and proceed to set up a separate currency. He wasn't. He was convinced that "Grexit" would be worse than a continued depression.

The current Greek Finance Minister Euclid Tsakalotos in his 2013 book with Christos Laskos, Crucible of Resistance: Greece, the Eurozone and the World Economic Crisis, described the kind of political pressure Merkel and the Troika were putting on Syriza even three years ago when Syriza began surging in the election results:

The response from elites throughout the world, from Angela Merkel to Christine Lagarde of the IMF, was telling. A victory for SYRIZA would spell the end of Greece's participation in the euro, massive capital flight, bank runs, mass poverty and possibly the opening of the heavens and a deluge of frogs as well. Domestic elites were closely attuned to the same themes, and promoted a campaign of fear not seen since the [Greek] civil war [of 1946-1949].
Laskos and Tsakalotos there give an account of the debates within Syriza, which itself was an amalgamation of various left groupings, that shaped the party's strategic position on "Grexit":

One section of the Greek Left converged on a strategy of debt default and exiting the euro, together with restructuring the economy through devaluation, nationalization of the banks and the renationalization of public utilities, industrial policies, etc. ... The exit strategy has two main elements. The first relies on a desconstruction of the argument that the EU provides a privileged terrain for left-win strategies. The second relies on showing how debt default and euro exit provide the indispensable starting point for such strategies. The second relies on showing how debt default and euro exit provide the indispensable starting point for such strategies. It is the very cost of debt default, apparently, that will provide an inner dynamic, making (in quick succession) monetary policy independence, capital controls, nationalizations and industrial policies seem indispensable for national survival.
This was not the strategic approach on which Syriza settled. Instead they articulated a program of staying within the eurozone and politically compelling a solution within it.

The grounds for such a rejection [of the euro-exit strategy] were both tactical and strategic. Greece had every interest in internationalizing the problem of debt. The governments of austerity presented a simple dilemma to the Greek electorate: either accept the demands of our creditors (while hoping that negotiations can mitigate some of the worst 'excesses' of the adjustment programmes) and remain within the Eurozone, or face 'Grexit' and the extreme social costs that accompany any disorderly default. The euro exit strategy accepted the terms of this dilemma. The alternative was to challenge these terms: by pointing out that something far more systemic was at stake than a mere debt crisis; and that the debt aspects of the crisis constituted a Eurozone-wide problem best addressed at the supranational level. Such a response could appeal to the forces of labour in the South, in the first instance, but also to those in the North as well.
Those assumptions weren't wrong. Or, at least they were not unreasonable.

But the support that Greece got this year from progressive opposition groups in Europe and social-democratic governments in France and Italy were not enough to deter Germany from imposing its punitive program. And I'll believe the social-democratic governments that expressed mild sympathy for Greece's dilemma when they put up even an quarter of the resistance to Merkel's austerity policies that Tsipras and Varoufakis put up this year. Austria's Social Democratic Chancellor Werner Faymann criticized Merkel's handling of the negotiations that concluded in Greece's humiliating surrender on Monday. (Faymann: Deutsche Rolle in Griechenkrise war nicht positiv Standard 15.07.2015) But his government backed Merkel anyway.

But as Varoufakis has now told us and recent days' events have made painfully obvious, the German game seems to be to force Greece out of the euro, and do a lot of retaliatory damage to them in the process. This is a truly reckless and extreme course. But that certainly looks like the road Merkel and her Finance Minister Wolfgang Schäuble are on.

So even if Tsipras had been willing to call her bluff and prepare for an imminent Grexit, there's a good chance it wouldn't have worked. Merkel and Schäuble may well have been happy to push them out a bit faster. But for the Greek negotiating strategy to have had a chance of working under those conditions, they would have had to be prepared to proceed to a separate currency. And they weren't.

Monday, July 13, 2015

Naming Merkelnomics #ThisIsACoup

Krugman has a new name for Angela Merkel's Herbert Hoover/Heinrich Brüning policies that are now wholeheartedly supported by the eurozone's conservative and social-democratic policies, Roach Motel Economics 07/13/2015: "Europe has created a system that treats surplus and deficit countries asymmetrically, even more than the classical gold standard, and leads to a severe deflationary bias."

And here he describes in economists' terms what is a very real problem in the eurozone:

This is true both for fiscal issues and for balance of payments issues. Debtors are forced into draconian austerity, while creditors face no pressure to reflate; economic crisis, which should be met with expansionary policy, instead leads to contraction because of this asymmetry. Meanwhile, countries that find themselves overvalued are forced to deflate in an effort to regain competitiveness, while undervalued counties face no pressure to help out with a higher inflation rate — so at times of major misalignment, when moderate inflation can help, the overall effect is declining inflation and maybe even deflation.

Arthur Goldhammer addresses the political implication of this latest turn in Endgame in Europe The American Prospect 07/13/2015:

Germany’s implacable finance minister, Wolfgang Schäuble, saw weakness in his opponent and went for the jugular. He insisted on “guarantees” that Greece would keep its word, including sequestration of Greek assets in a fund under his control. No such guarantees had been demanded previously, but now Chancellor Angela Merkel, who had previously seemed less exigent than Schäuble, declared that Greece had forfeited the “trust” of its European partners. In the end she proved to be a good German but not a good European.

France and Italy envisioned the euro originally as a way of restraining a reunified Germany. But instead of limiting German power, the euro has multiplied it. Currency union has deprived member states of budgetary autonomy. The European Union was conceived after World War II to moderate nationalist tensions and animosities, but the German insistence on austerity has exacerbated them instead. Resistance to this loss of sovereignty has triggered nationalist and populist reactions across the continent, and the remarkable intransigence that Germany displayed this weekend will do nothing to quell fears of its renewed assertiveness. The gloves have come off. Even within Germany there has been shock at the absence of compassion. Sigmar Gabriel, the leader of the social-democratic opposition party SPD, fully embraced the line of his coalition partners Schäuble and Merkel, triggering a reaction by his own party’s left wing that the Frankfurter Allgemeine Zeitung described as a “shitstorm against ‘dear Sigmar.’” [my emphasis in bold]
Goldhammer notes of the last few days, "France and Italy at long last found the courage to put up mild resistance."

But the leaders of both countries have made such noises before. So far, it hasn't come to any "resistance" really worth the name.

Goldhammer's piece links to this article: Christian Salmon, 'We underestimated their power': Greek government insider lifts the lid on five months of 'humiliation' and 'blackmail' Mediapart 07/08/2015.

The New York Times' Roger Cohen is also writing about the political implications of the latest deal and what it revealed about the ugly nature of Merkel's "roach motel economics." (The German Question Redux 07/13/2015) But he has a lazy version that relies on dumb ethnic stereotypes that Merkel and her party have encouraged:

... the euro was a poisoned chalice. Conceived to bind Germany to Europe, it instead bound far-weaker European countries to Germany, in what for some, notably Greece, proved an unsustainable straitjacket. It turbo-charged German economic dominance as Berlin’s export machine went to work. It wed countries of far laxer and more flexible Mediterranean culture to German diktats of discipline, predictability and austerity. It produced growing pressure to surrender sovereignty — for a currency union without political union is problematic — and this yielding was inevitably to German power. [my emphasis]