Parallels Americans should draw from Greece | Economics on Blog#42

Paul Krugman’s post in reaction to the Greek referendum results and reader, Doug Broome’s comment are the inspiration for this post.


The referendum was about which choosing which path Greece would not take, not about what to do about the deep economic issues facing that nation.  The referendum was also about Democracy and the social contract between government and its people, as well as the role of the family of nations at a time of near complete failure. Professor Paul Krugman, in Austerity Arithmetic, shows the limited benefits and long term consequences current austerity proposals would each cause, using the charts and math of conservative economists.  Krugman’s conclusion, the math’s conclusion really, is the economic and moral explanation of that both at most and at best.

It’s the austerians who are inventing new economic doctrines on the fly to justify their policies, which appear to imply not temporary sacrifice but permanent failure.

Here, in America, we should be drawing parallels between Greece and the Troika (Germany, European Central Bank, and the IMF), and the Great Recession and progressive and liberal Democrats, the Fed, and Republicans. If Greece and our Great Recession are mirrors of each other, then Germany and our Republicans are that to each other. Republicans, like the Germans, have not only favored austerity as the way out of a worldwide recession, but tried to force it upon unwilling customers. While we are not in the same league as Greece, as far as the shape of its economy, debt ratio, or the things we can do to alleviate our problems, we could have made them far worse than they turned out to be, had we listened to the same advice forced on the Greeks over the last few years. That advice, austerity, is what put them in an even worse position than they were in to begin with.

Here, in the US, while Republicans were unable to take control of both houses of Congress in 2010 and 2012, they were successful, through obstruction, in forcing some austerity measures starting in 2010. As of Election 2014, both houses of Congress are in the control of Republicans. With two exceptions, no bipartisan bills have passed. Those exceptions are two highly controversial bills: fast-tracking the TPP and renewing the NSA domestic surveillance apparatus; both being conservative and neoliberal pet issues.

Since 2010, whenever the issue of growing the economy has come up, we’ve been given the same trickle down argument: give corporate America even more tax breaks and incentives and everything will sort itself out. Stop giving people entitlements they’ve paid their taxes for, over a lifetime, just in case they need it. Republicans were in favor of cutting food stamps as it was being reported that millions of children and adults are hungry. They were in favor of ending long-term unemployment benefits as the unemployment rate was still near 7% – 13% if you count the U6 populations.

Eventually, in December 2012, Democrats caved quietly and long-term unemployment was ended and food stamps were reduced. We still have millions of hungry children who depend on public schools for many of their meals. Schools around the country have had to figure out ways to continue feeding these children when school is not in session. Republicans foiled all attempts at passing a jobs bill and even resorted to the trickery of naming austerity budget bills “jobs bills” without writing in a jobs measure. Republicans flat out refused to fix our nation’s infrastructure even though, in many places, it is falling apart.

Republicans even attempted to end the student loan interest changes instituted after the start of the Great Recession, even as data showed that we are headed for a student debt crisis. Nothing has been done to alleviate it. President Obama proposed a hike in the minimum wage to $10.10. Congressional Republicans denied him, and the nation, a raise. Meanwhile, in the states, some raised local wages to $12-15 per hour, but not soon enough to provide relief, and not widely enough to reach all those in need. On the banking front, both Republicans and neoliberal Democrats are in favor of relaxing banking regulations. Have we learned nothing from the Great Recession? Apparently not.

So, here we are, almost two years away from a general election in which we will pick a new president, and not much is being done in Congress to improve the lot of Americans who are still hurting. Affordable housing is a huge problem, and one of the outcomes of the housing debt crisis. Because so many more people now rent, rather than buy, rental housing is in short supply. Rental prices have shot up, while paychecks have stagnated or worse, shrunk.

Conservatives are staunch in their insistence that profits trickle up from the middle class and neoliberals, perfidious sorts they can be, spent about five minutes rebelling against a trade agreement that will put the final nail in the working and middle classes’ coffins, only to turn around and quietly help Republicans grease the skids for the TPP’s passage.

We’ve spent the past couple of years talking about inequality, thanks to Thomas Piketty and his groundbreaking book and research, but we’ve done nothing to fix it. So, on the day Greece finally gives Germany and the EU and Mario Draghi the middle finger, Piketty gives this interview to a German paper and says about Germany’s war debt:

Thomas Piketty: “Germany has never repaid.”

This interview has been translated from the original German.

Since his successful book, “Capital in the Twenty-First Century,” the Frenchman Thomas Piketty has been considered one of the most influential economists in the world. His argument for the redistribution of income and wealth launched a worldwide discussion. In a interview with Georg Blume of DIE ZEIT, he gives his clear opinions on the European debt debate.

DIE ZEIT: Should we Germans be happy that even the French government is aligned with the German dogma of austerity?

Thomas Piketty: Absolutely not. This is neither a reason for France, nor Germany, and especially not for Europe, to be happy. I am much more afraid that the conservatives, especially in Germany, are about to destroy Europe and the European idea, all because of their shocking ignorance of history.

ZEIT: But we Germans have already reckoned with our own history.

Piketty: But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

“Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”

Read the rest of this article on Thomas Piketty: “Germany has never repaid.” — Medium

So, here we are at an impasse, for now, in Europe, waiting to see the austerians’ next move, and in the US, we fill our time listening to and watching a field of would-be presidents while the hourglass counts down the next two years to the general election.

But must we just wait for the sand to stop trickling through the narrow glass tube? Is there nothing we can do to push those who refuse to budge? Are there no preparations we can all make to ensure the same election results aren’t repeated? Well… Here is the main obstacle voters face:

The Foxification of our mainstream media. I criticized the New York Times’ coverage of Bernie Sanders in a blog post. The Times is hardly the only paper we should criticize, but as the nation’s paper of record, it is the one we should criticize the loudest. The same can be said of the networks and cable TV.

Will the media get any better as the primaries really start? How will the effect of money in politics affect things this time around? How many of the new lies that we are sure to be bombarded with will get through and become a part of our narrative? How much more of our national time will be wasted on issues of no import, at the expense of the lives and livelihoods of millions of people? Who will our watchdogs be this time? Bill Moyers retired. The New York Times’ David Carr passed away earlier this year.

During the first two to three years after the start of the Great Recession, our public intellectuals, Professors Krugman, Reich, Stiglitz, DeLong, and many others filled a void  by applying intense pressure on policymakers and lawmakers. Without that pressure, we would not have progressed as we have, as insufficient as that progress is. Our Democratic legislators, at the Federal level for sure, have not fulfilled their duty in tempering a neoliberally-inclined administration. They also have largely kept out the progressive contingent in Congress; one that should have had a far more prominent place at the top. Without a resumption of the intense pressure on high-ranking Democrats, Republicans, and the media, the influence of money in politics will be felt even more than before.

Again, I return to the issue of fairness in the media’s coverage of the elections and its candidates? It made a tremendous difference in 2014, especially, and will be vital this time around when we already know that the amount of money involved has grown exponentially.

Consumers of hard news and analysis will be more on their own this time around than they were in 2014. It will be of special importance for everyone to find their own trustworthy sources. Some of my recommendations include:

For critiques of the media, we have Professor Jay Rosen of NYU, whose blog and social media accounts I highly recommend.

Among the few public intellectuals who, for the last seven years, has been actively serving the public is Professor Robert Reich who, like Paul Krugman, has been invaluable in keeping the public informed and educated. I highly recommend subscribing to his blog and following him on social media.

Meanwhile, back at the Democratic ranch, the race is on. Bernie Sanders is catching up to Hillary Clinton in spite of the cold shoulder he has been given by the mainstream press. His events are exceedingly well-attended, to the point where his campaign has had to switch to much larger venues. Hillary Clinton continues to receive a lot of press, both positive and negative. Positive in the sense that her policy speeches have been reported on extensively and her positions explained without questioning their basis in her long record as a public figure. Negative in the sense that the email scandal isn’t going away.

Both candidates have given speeches in which they outline their economic and social vision. The substance of Hillary Clinton’s economic speech was widely reported on.  Bernie Sanders’, on the other hand, was not. Of note is the fact that both Clinton and Sanders are working off of Professor Joseph Stiglitz’ proposal, but each is weaving it into their own platform at very different depths.

I, for one, am committed to keep putting out Bernie Sanders news roundups for as long as the press is remiss in covering him seriously. When it comes to staying informed, we are pretty much on our own, as far as I am concerned.

Additional notes and resources:

Since less has been said about Bernie’s take, here is a teaser and a link to click to follow:

They Say A Democratic Socialist Can’t Make it

Today, many were surprised to read in their news that Bernie Sanders not only is exceeding expectations insofar as public interest, but that he has managed to raise a total of $15 million in two months, all in donations averaging just north of $33.

“Let me just say a few words to my friends in the Republican Party about extremism. When you deny the right of workers to come together in collective bargaining that’s extremism. When you tell a woman that she can not control her own body, that’s extremism. When you think a woman is a child and can’t purchase a contraceptive, that is extremism. When you give tax breaks to billionaires and refuse to raise the minimum wage, that’s extremism.”- Bernie Sanders’ response to republican party painting him as ‘extremist’

Read the rest of this article on They say a Democratic Socialist can’t make it | BernieSanders news on Blog42 | Blog 42

[Note: I am including the video of Sanders’ speech in Madison, Wisconsin, in front of a crowd of 10,000 people. The rousing speech includes every aspect of Bernie Sanders’ platform. A highly-recommended listen]

Bernie Sanders on CNN’s State of the Union with Jake Tapper:


2 thoughts on “Parallels Americans should draw from Greece | Economics on Blog#42”

  1. Rima, you should be replacing Maureen Dowd in the Times. I so look forward to your comments. Thank you!

    1. Thank you so much, Kathleen! I am honored!

      I would never want to put someone out of their job… I’d be thrilled to be asked just once or to have one submission accepted and published at the NYT. 🙂

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