Tag Archives: EU

Is Greece the Front Line in the War Against Neoliberalism?

The EU is a powerful vehicle for neoliberalism. When democracy in Greece pushes back, we see the length the EU will go to punish and control Greece.

Neoliberalism is inherently anti-democratic. Greece deserves our support. And we need to continue to oppose neoliberalism and the soft fascism in Canada [like C-51] that the Conservative and Liberal coalition have been pushing for decades.

Viewed from either side of the political spectrum, the EU looks like a disaster right now:

  • The conservatives are proven correct about the way the EU takes away national sovereignty: The Greeks voted in a referendum to reject the bailout … but were forced to accept it anyway.
  • And the leftists are proven correct about the way the banks control everything, and everyone else gets screwed: The Greek economy has been brought to its knees by debt, provided first by private investment banks like Goldman Sachs and then by Europe’s ruling German-French elite in the IMF and the EU. The entire bailout is structured to benefit the lending banks the most, not the people of Greece.

Suddenly, the tinfoil hat conspiracy theorists look like they were right all along!

This is the environment into which British Prime Minister David Cameron is calling for a national in/out referendum on the EU in the UK next year.

He couldn’t have picked a worse time.

Source: Europe’s leaders are openly worrying about ‘violence’ and ‘revolution’ if Greece goes wrong | Business Insider

Blaming the People

Whenever social and economic crises develop, those in power always try to blame somebody else. For example, who caused the recession in the U.S. in 2008? Simple, it was the selfish poor who had the gall to think that they could afford to own their own homes. (And don’t pay any attention to the man behind the curtain, aka Wall Street).

It’s the same kind of lie told about Greece today. Supposedly, the problem is that Greeks are lazy and spoiled by an elaborate and unaffordable welfare system. (The tone is sometimes close to racist.) The solution, therefore, is to impose “austerity” to force the Greeks to be hard-working like, say, good Germans.

The trouble is that this story is complete crap (or as we would say in Athens, “skatá”). Here is a very brief look at the reality.

First, the truth is the complete opposite of what the economic elite want us to believe: Greeks are, in reality, the hardest working people in Europe. Writing in The New Stateman, Alex Andreou pointed out that OECD figures showed that, in 2008:

Greeks worked on average 2120 hours a year. That is 690 hours more than the average German and 467 more than the average Brit. Only Koreans work longer hours…

In 2005, the average age of exit from the labour force in Greece was 61.7; higher than Germany,France or Italy and higher than the EU27 average. Since then Greece has had to raise the minimum age of retirement twice.

In addition, annual paid leave in Greece is only 23 days, which is lower than the UK’s minimum 28 and Germany’s, at 30 days.

Overall, social expenditure as a percentage of G.D.P. in Greece is lower than it is in Germany.

This is not to deny that the economic and political elites in Greece are as corrupt as they are in other countries: think (again) of Wall Street, the current British scandals, (e.g. the banks, corporate media, and political parties), not to mention the Harper regime here in Canada.

The problem in Europe is that financial elites and their puppets in government are trying to shift the focus away from THEIR mistakes, while at the same time trying to justify their savage attacks on the Greek people.

A central problem was their creation of the euro as the common currency, which laid the groundwork for the current crisis. As Nobel Prize-winning economist Paul Krugman explains,

The origins of this disaster lie…in Brussels, Frankfurt and Berlin, where officials created a deeply — perhaps fatally — flawed monetary system, then compounded the problems of that system by substituting moralizing for analysis…And then the bubble burst, at which point the fundamental flaws in the whole euro system became all too apparent.

The trigger that burst the “eurobubble” was the criminal activities of many of the bankers and speculators on Wall Street that did so much damage to the U.S. (and global) economy. These various elites, Krugman asserts,

made the situation even worse by insisting, in the teeth of the evidence, that all the currency’s troubles were caused by irresponsible behavior on the part of those Southern Europeans, and that everything would work out if only people were willing to suffer some more.

And suffer they are, along with Italians, Irish, and the Spaniards, (whose youth unemployment is even worse than in Greece). Poverty is growing, businesses are failing, health care is crumbling, and suicides–relatively rare in the past–are increasing.

Like the “structural adjustment” policies forced on poor countries by the International Monetary Fund (IMF), “austerity” is designed to squeeze as much money as possible from the population in order to pay the bankers, hedge fund managers, speculators, and other gamblers who made a bad bet when they lent money to Greek banks and the government. The prospect of higher profits did not bother them because they knew that if their bets went sour, the “Troika” (the EU, the European Central Bank, and the IMF) would force the Greeks to pay them for their losses. Either way, the greedy would win. Again.

In addition, the Troika is following the IMF legacy of forcing governments to sell-off valuable public assets to (mostly foreign) corporations.

“Calls by Greece’s ruling coalition government to speed up the sale of state-owned assets — including state railway systems, water infrastructure, and power utilities — compelled Syriza, the left coalition party, to say the move was tantamount to putting a ‘for sale sign’ on the country and would not be tolerated by the Greek people.” http://www.commondreams.org/headline/2012/07/08

There are a number of ways to resolve these problems that are both fair and effective. Not paying the speculators for their bad bets (defaulting) is one part of the solution. Another is pumping money back into the Greek economy in order to put people to work, support small business, reduce poverty, and provide basic public services.

Reducing the level of corruption in the Greek elites, including tax evasion, is also critical.

Such policies would not only be fair to Greece, but it could help prevent the similar disasters from spreading throughout Europe, and indeed, the rest of the world.

First, however, we have to see past the self-serving lies of the moneyed elites and their “friends” in government and the media.

Then we must show solidarity with the people in Greece and around the world who are resisting this blatant class warfare. One effective way to do this is to follow the advice of João Pedro Stédile, one of the leaders of Brazil’s MST (Landless Workers Movement): “Get rid of your neo-liberal governments.”

The sooner the better.

Greece at a Crossroads

Now that the Greek government has survived a confidence vote in Parliament, the stage is set in Greece for further confrontations ahead of next week’s decision on the new “austerity” plan demanded by the “troika” – the International Monetary Fund (IMF), the European Central Bank (ECB), and the European Union (EU).

While the origins of the crisis in Greece are many, there are a number of fundamental elements. Continue reading Greece at a Crossroads

Make (Fair Trade) Chocolate, Not War

Day three of the five-day trek through five of Global Exchange‘s 2011 campaign goals orbits the dialogue around converting free trade to fair trade after exploring how to reduce corporate control of our lives and embracing clean energy as we abandon our carbon addiction over the last two days.

Transition from free trade to Fair Trade: Despite almost ten years of commitments from Hershey’s to take responsibility for their cocoa supply chains and improve conditions for workers, significant problems persist. Hershey’s lags behind its competitors when it comes to taking responsibility for the communities from which it sources cocoa, so we’re calling on them to “Raise the Bar” and go Fair Trade. To get the word out, we’ll be spreading the message of Fair Trade to thousands of families across the country through Reverse Trick or Treating and other actions throughout the year.

As Canadian civil society groups are in Europe to confront the rapacious agenda of the Canada-European Union Free Trade Agreement this week [the Comprehensive Economic and Trade Agreement, or CETA], it is important to focus on how free trade as a paradigm is all about reducing democratic impediments to unlimited corporate growth and control. I don’t like that at all.

I don’t think corporations should decide on how to marketize bulk water or exploit Canadian tarsands. Water is essential to life and cannot be commodified. The tarsands development will sends us hurtling backwards as time is running out on averting climate breakdown. These policy choices belong to human beings. For the last quarter century, the free trade agenda has been all about ensuring human politicians abrogate our human right to decide policy for the sake of corporate decision making.

This must stop.

Neoliberal capitalism is a reboot of the origins of laissez-faire market capitalism from Adam Smith. Capitalism has only been a part of our society since 1776 when The Wealth of Nations hit the presses. Before that we had economics, markets, domestic and international trade, but it was largely governed by priorities that didn’t put corporations in the centre, with significant exceptions like the British East India Company and the Hudson’s Bay Company.

We can have trade without laissez-faire, deregulated corporate libertarianism. These days one of the most compelling movements to make trade fair is the Make Trade Fair movement, naturally, led by Oxfam. One of many fair trade movements in the world, Make Trade Fair is all about certifying that people involved in economic activity are treated with dignity and paid fairly. Often this means a whopping ten cent higher cost to a cup of boutique coffee. And by boutique, I mean ALL coffee. Small change for rich, caffeine-addicted consumers means a significant lifestyle improvement for impoverished foreign pickers.

And despite the fact that Dairy Milk is about as boring a chocolate bar that I can find anywhere, especially compared to the more expensive fair trade bars with more exotic tastes and ingredients, Cadbury has received certification that the cocoa in Dairy Milk to be fair trade. I’m buying Dairy Milks now, albeit sporadically. But before that, I’ve had a 15 year boycott of Big Chocolate.

So Global Exchange is confronting Hershey, that American icon, to live up to moral expectations.

We can do our share at Halloween and especially at Valentine’s Day next month to let our socially-conscious people know about the Dark Side of Chocolate and how buying fair trade makes a difference.

In the end, if we’ll pay a little bit more for fair trade luxury items like coffee and chocolate, that mentality should seep into all our economic transactions. No more sweatshops, only ethically sourced goods. That means doing a bit of research into how to do business in a way that respects living wages and even stopping conflict chocolate…yes, conflict chocolate, like conflict diamonds but with more caffeine.

There are more opportunities every month for us to spend our dollars ethically. If we care to do it, we need to put some effort into better consumer sourcing. And along the way, we need to fight back the free trade wave because in the end, we’re all just widgets in the economic warfare of free trade neoliberal capitalism. To be real people, we need to put our money where our ethics are.

This is the third reason why I support Global Exchange. And so should you.

Of Fenians and Financiers: James Connolly and the Irish Meltdown

A spectre is haunting Ireland—the spectre of James Connolly.

Connolly was shot to death by a British firing squad for his role in Ireland’s 1916 rising for home rule. Celebrated as a hero of Irish independence by Irish political parties of both left and right, his socialism is all too conveniently overlooked. It is vital, however, for the Irish struggle is one that speaks to the challenges of independence, sovereignty and democratic freedom, both then and now, for people of all countries. What value is formal political independence if it is not backed up by economic control; if the real decisions of public policy are made in boardrooms and backrooms rather than main streets and parliaments? For Connolly:

If you remove the English army tomorrow and hoist the green flag over Dublin Castle, unless you set about the organisation of the socialist Republic your efforts would be in vain. England would still rule you. She would rule you through her capitalists, through her landlords, through her financiers, through the whole army of commercial and individual institutions she has planted in this country and watered with the tears of our mothers and the blood of our martyrs. (Socialism and Nationalism, p. 25)

A who’s who of global finance descended upon Dublin in November to ‘hoist their flags’, from the International Monetary Fund (IMF) and the European Central Bank (ECB), to the Rothschild investment bank, Merrill, Barclays, JP Morgan and Goldman Sachs. These power brokers arrived to prevent ‘contagion’ from the financial crisis in the small country of 4.5 million people by lending the Irish state billions of Euros to recapitalize insolvent banks and shore up the country’s finances.

Unfortunately for the Irish, these actors came armed with the same ideological and policy tools that caused the crisis: a commitment to neoliberal growth models, open markets and the primacy of financial interests over those of labour, sovereignty or independence. Moreover, alternative ideas and paths are lacking from elites in Ireland’s two major parties, Fianna Fáil and Fine Gael, as both are devotees of free-market fundamentalism. Indeed, it was their desire, proclaimed loudly through the 1990s and 2000s, to be ‘closer to Boston than Berlin’ in regulation and finance.

Debt: To Infinity, and Beyond

The reasons for Ireland’s economic collapse were well covered by the global press in recent weeks. These include: an unsustainable growth model built on extremely low corporate taxes (12.5%) and multinational investment, a property bubble fueled by cheap international credit, and politicians far too cozy with domestic banks and developers to regulate sufficiently.

What is rarely highlighted in the press is the fact that Irish public spending was the casualty—not the cause—of the crisis. When Lehman Brothers collapsed in 2008 and credit markets seized up, Ireland’s property bubble burst. As a result, a significant portion of bank assets became worthless and the country’s construction and property sectors came to a standstill. The Irish government recapitalized banks with government bonds (totaling more than 176% of GDP in 2009) in return for worthless property assets.

Dublin announced the deepest spending cuts in the history of the Republic to meet the conditions of the November 28 €85 billion IMF and European Central Bank (ECB) loan. The state plans to raise income and sales taxes by €5 billion and cut spending by €10 billion by: reducing welfare payments by €3 billion, eliminating 25,000 public sector jobs and raising sales taxes by 2% (to 23%) by 2014.

According to economists Simon Johnson and Peter Boone “each Irish family of four will be liable for €200,000 in public debt by 2015.” In all, €20.7 billion from this public pension fund was funneled to the banks over the last year and a half. Perhaps most significantly the November 24 budget plan outlined no change in the corporate tax rate of 12.5% (one of the lowest corporate tax rates in Europe) “under any circumstances”.

There were alternatives. The government could have required creditors to bear a share of the costs by allowing defaults and some bank failures. They could also have required the companies who have benefitted for years from the corporate tax policy to pay an equal share. Google, for example, reportedly saved $3.1 billion in taxes over the last three years by setting up in Ireland. More recently, calls to withdraw from the European Monetary Union (EMU) have emerged in order to follow Iceland’s lead of currency devaluation (an option denied Ireland). They chose to draw from the public purse instead.

While the IMF asserts that its work pushing austerity in Ireland is ‘technical not political’ the Irish public disagrees, and so do I. What could be more political than the socialization of bank debts and transfers of public wealth into private hands?

Popular Backlash

As the costs of propping up corrupt officials, developers and international bankers becomes increasingly unpalatable, politics in the Republic is shifting left; according to a December 2 poll, Sinn Fein—‘we ourselves’ in Irish— was two points higher than ruling party Fianna Fáil. They won a historically unprecedented by-election seat in Donegal November 25 and their support in the south has doubled in the past month, from 8% to 16%. Political heavyweight Gerry Adams is giving up his seat in Westminster to run in the Republic’s early 2011 election. These gains have opened up the possibility of a coalition with Labour in the New Year. This represents a colossal swing in post-independence Irish politics dominated by 60-years of Fianna Fáil and Fine Gael.

Political opposition to the status quo also transcends electoral politics. On November 27, 2010 close to one hundred thousand people (the equivalent of 785,000 in Canada) marched through the streets of Dublin. The banners and placards quoted James Connolly and other heroes of Irish independence. These protests have been growing in size and frequency over the past year.

These political developments may be short lived. Free-market party Fine Gael is also gaining politically as more conservative voters swap one establishment party for another. Furthermore, nearly one in three Irish youth are predicted to leave the country in coming years, to make ends meet in countries like Canada and Australia, thus eroding some momentum for change. Finally the Congress of Irish Trade Unions (CITU)—the organizer of the largest and most recent rally—is seen as tainted by years of “social partnership” with ruling parties. Taken together, these factors may undermine the development of a cohesive and coherent political countermovement.

The Coming Storm

What has transpired to date is just the beginning. Despite the guarantees and billions of dollars of austerity measures disproportionately targeting the poor and weak in the Irish population, the financial markets remain unconvinced of Dublin’s ability balance the books. Standard & Poor’s downgraded Irish sovereign debt by two grades on November 24. The government is poised to topple, and the banks are still far from solvent. Credit default swap markets are now betting that Ireland will default on its debt within five years.

The markets are right in their assessment. With an interest rate of 5.8% on the ECB-IMF bailout package, interest payments alone on state debt will be more than 20% of tax revenues in 2014.

Put simply, austerity measures are not working. The “green shoots” in Irish GDP for the first quarter of 2010 were entirely due to multinational exports. In Ireland, wages are dropping, prices are dropping (except in health and education), and demand is dropping. This is disastrous for the Irish economy since, as John Maynard Keynes pointed out in the 1930s, business cycles are not self-correcting. Currently, there is no climate for investment, for a real economy based on jobs, taxes and spending to take root.

At the household level, a mortgage crisis is poised to send another wave of shocks through Ireland. To date, people have been borrowing from friends and family to make payments. The state extended the mortgage relief in 2010 by 6 months (to 12 months) to stave off a rash of repossessions. Continued mortgage lending by banks has artificially held up the price floor on the housing market. These factors are all set to change as money (and time) runs out. As economist Morgan Kelly points out, the impending mortgage crisis in Ireland may further strengthen politicization:

If one family defaults on its mortgage, they are pariahs: if 200,000 default they are a powerful political constituency…The gathering mortgage crisis puts Ireland on the cusp of a social conflict on the scale of the Land War.

The struggle today is just as much about independence and democracy in Ireland as it was a century ago. Connolly urged his people to beware the trappings of political independence while ceding the economic control of the country. His warning is haunting the Irish people today. Sovereignty means very little without power to change course, to make a choice about what costs are reasonable, are just and are justified.

The strength of today’s Irish opposition, in terms of its longevity and depth, remains to be seen, but the stage is set for yet another contest over the competing visions of what, and who, Ireland is for.