Cultural references may seem frivolous in the face of a financial crisis, but the Eurozone’s Greek crisis is at least as much cultural as it is economic in nature. It’s partly an anthropology problem: Europe’s negotiators are under the spell of a German-driven economic cult whose adherents seem willing to disregard empirical data in order to protect its norms and folkways.
From all appearances, Germany’s leaders have leavened their misplaced faith in austerity with some quasi-Puritanical beliefs. For example: that debt and poverty are sins, regardless of cause, and that sin must lead to pain.
The United States has its own austerity cult. We’ve drawn parallels between the German government and the GOP before, but the resemblance grows stronger with every passing week. For these cultists, as for the characters in our nation’s newest hit movie, pain seems to have become an end unto itself.
Negotiations broke down Monday after the Europeans presented Greece with an ultimatum it must have known would be rejected. Paul Krugman, who has been blogging heavily on Greece, noted that the Eurozone’s latest offer was “amazing, and not in a good way.”
It was not presented in a calm way, either. The New York Times reports that German finance minister Wolfgang Schäuble accused the new Greek government of behaving “pretty irresponsibly,” adding that its new leader was “insulting those who have helped Greece in the past few years.”
Comments like Schäuble’s – “irresponsible,” “insulting” – are emotional, not economic. Nor do his demands seem rational. Greece’s economy has been poisoned by austerity, and now it’s being asked to drink more poison. Germany’s demands are based on theories so fact-resistant that economist Dean Baker has dubbed them “creationist economics.”
As Krugman points out, “Greece has, through incredible sacrifice, managed to achieve a primary budget surplus — a surplus excluding interest payments — despite a depression-level slump.” It has sacrificed much more, in fact, than any other austerity-pressed European nation.
Krugman ran the numbers and concluded, startlingly, that ”Austerity … has devastated Greece just about as much as defeat in total war devastated imperial Germany” after World War I.
Germany’s postwar devastation led to political and economic chaos. And we all know how that turned out. With the frightening rise of its neo-fascist Golden Dawn party, what rational leader would prescribe the same for Greece?
Republican House of Pain
It seems somehow appropriate that this week’s Euro-showdown came just after American audiences gave “Fifty Shades of Gray” a record-breaking opening weekend. There are those in the United States who share the Germans’ economic kink – they’re called Republicans – and the hostility underlying their austerity fetish is revealed from time to time in moments of unintended candor.
Americans will recall the genuine anger in Mitt Romney’s voice on that now-infamous secret recording, how the tones of bitterness welled up when he spoke of the “47 percent” who he mistakenly claimed did not pay taxes. “They believe the government has a responsibility to care for them,” sneered Romney, “that they are entitled – to health care, to food, to housing, you name it. That’s an entitlement.”
Another recording recently surfaced of Republican Joni Ernst, now a senator from Iowa, insisting that our government needs additional “severe cuts” and adding that
“… what we have fostered, is really a generation of people who rely on the government to provide absolutely everything for them. It’s going to take a lot of education to get people out of that. It’s going to be very painful and we know that.”
Nothing purifies the soul, it seems, like the suffering of others.
They austerity crowd has a flair for hypocrisy, too. Here at home, Romney and Ernst both benefited from government programs: Romney’s Bain Capital gamed the tax code, while Ernst’s family received more than $460,000 in farm subsidies. Other hypocritical austerity acolytes include the aging wunderkind Rep. Paul Ryan, who collected Social Security benefits as a teenager and now seeks to cut them.
That hypocrisy was on display in 2009, when CNBC’s Rick Santelli egged on some apish traders on the floor of the Chicago Board of Trade. That led to an impromptu demonstration against aid for homeowners ripped off by Wall Street, in scams which have since led to multibillion-dollar settlements. “Losers!” shouted these pampered denizens of the already-rescued financial system.
Thus was born the right-wing Tea Party, the extreme pro-austerity movement that today holds the Republican Party in its thrall.
Germany’s leaders have shown that they can be as hypocritical as American bankers, especially when it comes to extending the kind of helping hand to others which they’ve already enjoyed themselves. Germany benefited from a generous program of debt forgiveness in a 1953 write-off that was proportionally larger than anything being requested for Greece. That leniency was granted despite the fact that Germany then, like Greece today, had serious tax-collection problems.
One of the countries that forgave Germany’s debt was Greece.
The U.S. and its allies knew then what Germany and its allies don’t appear to remember now: that sustained economic suppression holds the danger of fascism.
It’s true that in prior years Greece’s center-right government borrowed a great deal of money – money that banks were more than happy to lend. (It’s also true that Goldman Sachs earned a great deal of money helping that government conceal its indebtedness.) But, despite Schäuble’s comments about “insulting those who helped Greece,” the Germans may be more interested in helping themselves. German banks were the largest foreign holders of Greek government bonds.
That means that, in one sense, Germany is asking the struggling Greek people to pay for bailing out its own reckless banks.
Fifty Shades of Austerity
For those of us who have criticized “centrist” Democrats for their own austerity flirtations in the past, it was good to see President Obama express some support for Greece’s position. “You cannot keep on squeezing countries that are in the midst of depression,” said Obama. “At some point there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits.”
The economic evidence of the last 75 years bears this out, but the Germans don’t seem to understand that. Neither do Republicans, whose reckless pursuit of Social Security disability cuts is a harbinger of further madness to come.
It’s hard to persuade austerity cultists with reason, since their position is based on culture and emotion.
Whether they’re in Europe or the United States, these fiscal “Fifty Shaders” share a couple of kinks with this week’s movie audiences. They seem to enjoy pain – at least when it’s being inflicted on someone else. And they like to imagine that, even with a reluctant participant, it could lead to some kind of salvation.
In real life it never does. It only brings more pain.