Greece needs a Plan C: for the commons and communality

By Jerome Roos On July 4, 2015

Post image for Greece needs a Plan C: for the commons and communalityWhatever the outcome of the referendum, tough times are ahead. To survive, Greek society will need to reinvigorate the commons and communal solidarity.

Image: A solidarity kitchen in Greece. The poster in the back reads “Free Food for All” (by Marko Djurika).

As the Greek debt crisis enters its dramatic apotheosis — with an unprecedented default on the IMF last Tuesday, hundreds of thousands of anti-austerity protesters taking to the streets on Friday, and a historic referendum scheduled for Sunday — concerns are growing over the state of the Greek economy.

The decision by the European creditors and the European Central Bank to basically cut off Greece’s banking system from continued emergency support has forced the government to close all private banks and impose far-reaching capital controls. As a result, Greek companies can no longer pay foreign suppliers and are already starting to run short on food, pharmaceuticals and other key imports. Some pensioners are struggling to obtain their much-needed cash.

Sunday’s referendum, for all its flaws and limitations, marks a triumph for democracy. Still, it won’t bring an immediate end to the turmoil. Whatever the outcome, tough times are ahead. After nearly six years of brutal austerity, the Greek economy is devastated while the “welfare state” remains anemic and dysfunctional. Unemployment and misery are rife. Needless to say, none of this will change overnight. Indeed, as the creditors intensify their vicious campaign of financial asphyxiation, things are likely to get significantly worse.

A rupture with endless austerity, debt servitude and the straitjacket of the single currency would certainly restore a degree of autonomy and improve Greece’s economic prospects in the long run. But it would also come at a very high immediate cost. Both the government and Greek society would need to be highly organized and well-prepared to weather the stormy transition it would entail.

It should therefore be emphasized that the referendum is not a panacea. A friend of a friend described it as a choice between “poverty with servitude” and “poverty with freedom.” Moreover, this choice has to be made under the intense pressure of the creditors’ financial blackmail and the media’s campaign of fear andoutright lies. It is hard to imagine more adverse circumstances for the NO camp.

The problems are further compounded by the lack of clarity about the consequences of either choice. What will happen in case YES wins? Will the government resign? Will we see a return to an unelected technocracy? And what in case of a NO vote? Will Tsipras really continue negotiating in good faith with the creditors? Will the creditors even trust him to reach an agreement and carry out further reforms? Or will they force Greece out of the euro? These are all monumental questions — none of which have been properly answered.

All we know is this: over the past couple of years, the debate within Syriza on how to resolve the crisis has essentially revolved around two poles: the government’s original plan A — to end austerity within the eurozone — and the more radical alternative originally proposed by the party’s left faction, whose Plan B envisions a unilateral default and Grexit as a way out of the misery. We also know that the latter plan has gained more and more support from Syriza cadres (even those close to Tsipras) as the negotiations with creditors stalled.

The two plans always appeared to be diametrically opposed to one another. In truth, the strong dichotomy between them obscures a shared premise. Ultimately, both Plan A and Plan B revolve around the belief that, if only the government can succeed in executing its chosen top-down program, recovery will be swift and things will quickly go back to the way they were before.

This is a dangerous illusion. With or without Grexit, for the majority of Greeks (as for the majority of Europeans and Americans) there will be no going back to the halcyon days of credit-fueled consumerism. Both Plan A and Plan B — however successful either may be — will still be accompanied by future hardship and deprivation. Plan A would result in endless austerity, forever, while Plan B would produce an extremely painful short-term shock to the economy.

In the medium-term, debt cancellation and currency devaluation would likely have a positive effect on economic recovery and social well-being. Still, neither Greece’s dysfunctional state apparatus nor its uncompetitive economy will be able to fully restore the status quo ante, or even meet the needs and desires of the millions of workers, pensioners and unemployed youth who have been dispossessed and immiserated over the course of the crisis. Besides facing a structural crisis of its own, Greek capitalism will always be inserted into the European and world economy under highly disadvantageous terms.

Clearly, if the government and society were well-prepared, Plan B would be superior to Plan A. But merely advocating a rupture is far from enough. In fact, it would be particularly irresponsible if done without the proper preparations — and right now it doesn’t really look like Syriza is properly prepared. Where, then, should we be looking for further options and alternatives?

Undoubtedly, grassroots movements and solidarity initiatives will have a critical role to play as both the crisis and the struggle intensify. Without a fresh upsurge in self-organized popular mobilization in the streets, workplaces and communities, the prospects of positive change will remain grim.

In this respect, it is remarkable how rapidly the radical horizon has shrunk in recent years. During the mass mobilizations of 2010-’12, especially theMovement of the Squares in 2011, the political imagination was still brimming over with original ideas, practices and organizational forms — many of them centered on an anti-capitalist conception of the commons, defined by Silvia Federici and George Caffentzis as:

… autonomous spaces from which to reclaim control over our life and the conditions of our reproduction, and to provide resources on the basis of sharing and equal access; but also bases from which to counter the processes of enclosure and increasingly disentangle our lives from the market and the state.

While we have since seen a remarkable proliferation of such commons — think of solidarity kitchens, social clinics, self-managed workplaces, mutual aid networks, alternative currencies, and so on — the urgency of the negotiations and the preoccupation with the “high politics” of Grexit and debt relief has largely overshadowed the deeper questions raised in these grassroots initiatives: What about the day after? What kind of country do we really want to build together? Can capitalism still fulfill our needs and desires?

These are the questions that would be addressed by an anti-capitalist Plan C: a reinvigorated project of the commons and communal solidarity. In contrast to both Plan A and Plan B, Plan C would be a bottom-up project organized by local communities that would situate itself directly on the terrain of everyday life. Its main contributions would be threefold. First, through solidarity networks and communal support systems, it would enhance popular resilience by securing the means of social reproduction under conditions of extreme precarity.

Second, by creating new and strengthening existing organs of popular power, the commons would collectively act as bases for continued grassroots resistance to further austerity and dispossession. History has shown that, without powerful grassroots movements exerting pressure from below, even left governments are easily led astray by the siren call of domestic and international capital. To prevent this, the still relatively small and dispersed movement of commoners will have to become an organized force of political opposition.

Third, a project of the commons has revolutionary potential insofar as its protagonists manage to reclaim the means of production and reproduction; democratize workplaces, communities and existing political institutions; and contribute to a fundamental transformation of social relations from below. All of this is clearly still a far way off, but Plan C is precisely about cultivating this sense of perspective and direction — taking the struggle far beyond the stale dichotomies of state and market, euro and drachma.

Needless to say, Sunday’s referendum will mark a historic moment for Greece and for Europe. Only a proud and dignified NO can begin to liberate Greek society from the endless suffocation, blackmail and humiliation at the hands of the country’s creditors. But whatever the outcome of the plebiscite may be, the left should not limit its political imagination to the terms of a new bailout agreement or the denomination of the national currency.

Deal or no deal, euro or no euro, one thing is clear: a long fight still lies ahead. As the creditors’ assault intensifies, only a reinvigoration of the struggle from below can save beleaguered Greece — and turn it, once again, into a proud beacon of democracy and solidarity for the rest of the world.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. He tweets about the Greek crisis at @JeromeRoos.

A slightly different version of this article (in Greek) appeared in this month’s issue of Unfollow Magazine. Credit for the original idea and inspiration behind the piece goes to Bue Rübner Hansen in Barcelona.

 

http://roarmag.org/2015/07/greece-plan-c-commons-solidarity/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+roarmag+%28ROAR+Magazine%29

The U.S. faces a major superpower conundrum

american-flag-and-eagle

America’s Got the #1 Military in the World — and It’s Increasingly Useless

The rise and fall of great powers and their imperial domains has been a central fact of history for centuries. It’s been a sensible, repeatedly validated framework for thinking about the fate of the planet.  So it’s hardly surprising, when faced with a country once regularly labeled the “sole superpower,” “the last superpower,” or even the global “hyperpower” and now, curiously, called nothing whatsoever, that the “decline” question should come up. Is the U.S. or isn’t it? Might it or might it not now be on the downhill side of imperial greatness?

Take a slow train — that is, any train — anywhere in America, as I did recently in the northeast, and then take a high-speed train anywhere else on Earth, as I also did recently, and it’s not hard to imagine the U.S. in decline. The greatest power in history, the “unipolar power,” can’t build a single mile of high-speed rail? Really? And its Congress is now mired in an argument about whether funds can even be raised to keep America’s highways more or less pothole-free.

Sometimes, I imagine myself talking to my long-dead parents because I know how such things would have astonished two people who lived through the Great Depression, World War II, and a can-do post-war era in which the staggering wealth and power of this country were indisputable.  What if I could tell them how the crucial infrastructure of such a still-wealthy nation — bridges, pipelines, roads, and the like — is now grossly underfunded, in an increasing state of disrepair, and beginning to crumble? That would definitely shock them.

And what would they think upon learning that, with the Soviet Union a quarter-century in the trash bin of history, the U.S., alone in triumph, has been incapable of applying its overwhelming military and economic power effectively? I’m sure they would be dumbstruck to discover that, since the moment the Soviet Union imploded, the U.S. has been at war continuously with another country (three conflicts and endless strife); that I was talking about, of all places, Iraq; and that the mission there was never faintly accomplished.  How improbable is that? And what would they think if I mentioned that the other great conflicts of the post-Cold-War era were with Afghanistan (two wars with a decade off in-between) and the relatively small groups of non-state actors we now call terrorists? And how would they react on discovering that the results were: failure in Iraq, failure in Afghanistan, and the proliferation of terror groups across much of the Greater Middle East (including the establishment of an actual terror caliphate) and increasing parts of Africa?

They would, I think, conclude that the U.S. was over the hill and set on the sort of decline that, sooner or later, has been the fate of every great power. And what if I told them that, in this new century, not a single action of the military that U.S. presidents now call “the finest fighting force the world has ever known” has, in the end, been anything but a dismal failure? Or that presidents, presidential candidates, and politicians in Washington are required to insist on something no one would have had to say in their day: that the United States is both an “exceptional” and an “indispensible” nation? Or that they would also have to endlessly thankour troops (as would the citizenry) for…well…never success, but just being there and getting maimed, physically or mentally, or dying while we went about our lives? Or that those soldiers must always be referred to as “heroes.”

In their day, when the obligation to serve in a citizens’ army was a given, none of this would have made much sense, while the endless defensive insistence on American greatness would have stood out like a sore thumb. Today, its repetitive presence marks the moment of doubt. Are we really so “exceptional”? Is this country truly “indispensible” to the rest of the planet and if so, in what way exactly? Are those troops genuinely our heroes and if so, just what was it they did that we’re so darn proud of?

Return my amazed parents to their graves, put all of this together, and you have the beginnings of a description of a uniquely great power in decline. It’s a classic vision, but one with a problem.

A God-Like Power to Destroy

Who today recalls the ads from my 1950s childhood for, if I remember correctly, drawing lessons, which always had a tagline that went something like: What’s wrong with this picture? (You were supposed to notice the five-legged cows floating through the clouds.) So what’s wrong with this picture of the obvious signs of decline: the greatest power in history, with hundreds of garrisons scattered across the planet, can’t seem to apply its power effectively no matter where it sends its military or bring countries like Iran or a weakened post-Soviet Russia to heel by a full range of threats, sanctions, and the like, or suppress a modestly armed terror-movement-cum-state in the Middle East?

For one thing, look around and tell me that the United States doesn’t still seem like a unipolar power. I mean, where exactly are its rivals? Since the fifteenth or sixteenth centuries, when the first wooden ships mounted with cannons broke out of their European backwater and began to gobble up the globe, there have always been rival great powers — three, four, five, or more. And what of today? The other three candidates of the moment would assumedly be the European Union (EU), Russia, and China.

Economically, the EU is indeed a powerhouse, but in any other way it’s a second-rate conglomeration of states that still slavishly follow the U.S. and an entity threatening to come apart at the seams. Russia looms ever larger in Washington these days, but remains a rickety power in search of greatness in its former imperial borderlands.  It’s a country almost as dependent on its energy industry as Saudi Arabia and nothing like a potential future superpower. As for China, it’s obviously the rising power of the moment and now officially has the number one economy on Planet Earth.  Still, it remains in many ways a poor country whose leaders fear any kind of future economic implosion (which could happen). Like the Russians, like any aspiring great power, it wants to make its weight felt in its neighborhood — at the moment the East and South China Seas. And like Vladimir Putin’s Russia, the Chinese leadership is indeedupgrading its military. But the urge in both cases is to emerge as a regional power to contend with, not a superpower or a genuine rival of the U.S.

Whatever may be happening to American power, there really are no potential rivals to shoulder the blame. Yet, uniquely unrivaled, the U.S. has proven curiously incapable of translating its unipolar power and a military that, on paper, trumps every other one on the planet into its desires. This was not the normal experience of past reigning great powers. Or put another way, whether or not the U.S. is in decline, the rise-and-fall narrative seems, half-a-millennium later, to have reached some kind of largely uncommented upon and unexamined dead end.

In looking for an explanation, consider a related narrative involving military power. Why, in this new century, does the U.S. seem so incapable of achieving victory or transforming crucial regions into places that can at least be controlled?  Military power is by definition destructive, but in the past such force often cleared the ground for the building of local, regional, or even global structures, however grim or oppressive they might have been. If force always was meant to break things, it sometimes achieved other ends as well. Now, it seems as if breaking is all it can do, or how to explain the fact that, in this century, the planet’s sole superpower has specialized — see Iraq, Yemen, Libya, Afghanistan, and elsewhere — in fracturing, not building nations.

Empires may have risen and fallen in those 500 years, but weaponry only rose. Over those centuries in which so many rivals engaged each other, carved out their imperial domains, fought their wars, and sooner or later fell, the destructive power of the weaponry they were wielding only ratcheted up exponentially: from the crossbow to the musket, the cannon, the Colt revolver, the repeating rifle, the Gatling gun, the machine gun, the dreadnaught, modern artillery, the tank, poison gas, the zeppelin, the plane, the bomb, the aircraft carrier, the missile, and at the end of the line, the “victory weapon” of World War II, the nuclear bomb that would turn the rulers of the greatest powers, and later even lesser powers, into the equivalent of gods.

For the first time, representatives of humanity had in their hands the power to destroy anything on the planet in a fashion once imagined possible only by some deity or set of deities. It was now possible to create our own end times. And yet here was the odd thing: the weaponry that brought the power of the gods down to Earth somehow offered no practical power at all to national leaders.  In the post-Hiroshima-Nagasaki world, those nuclear weapons would prove unusable.  Once they were loosed on the planet, there would be no more rises, no more falls. (Today, we know that even a limited nuclear exchange among lesser powers could, thanks to the nuclear-winter effect, devastate the planet.)

Weapons Development in an Era of Limited War

In a sense, World War II could be considered the ultimate moment for both the narratives of empire and the weapon. It would be the last “great” war in which major powers could bring all the weaponry available to them to bear in search of ultimate victory and the ultimate shaping of the globe. It resulted in unprecedented destruction across vast swathes of the planet, the killing of tens of millions, the turning of great cities into rubble and of countless people into refugees, the creation of an industrial structure for genocide, and finally the building of those weapons of ultimate destruction and of the first missiles that would someday be their crucial delivery systems.  And out of that war came the final rivals of the modern age — and then there were two — the “superpowers.”

That very word, superpower, had much of the end of the story embedded in it. Think of it as a marker for a new age, for the fact that the world of the “great powers” had been left for something almost inexpressible. Everyone sensed it. We were now in the realm of “great” squared or force raised in some exponential fashion, of “super” (as in, say, “superhuman”) power. What made those powers truly super was obvious enough: the nuclear arsenals of the United States and the Soviet Union — their potential ability, that is, to destroy in a fashion that had no precedent and from which there might be no coming back.  It wasn’t a happenstance that the scientists creating the H-bomb sometimes referred to it in awestruck terms as a “super bomb,” or simply “the super.”

The unimaginable had happened. It turned out that there was such a thing as too much power. What in World War II came to be called “total war,” the full application of the power of a great state to the destruction of others, was no longer conceivable. The Cold War gained its name for a reason. A hot war between the U.S. and the USSR could not be fought, nor could another global war, a reality driven home by the Cuban missile crisis.  Their power could only be expressed “in the shadows” or in localized conflicts on the “peripheries.”  Power now found itself unexpectedly bound hand and foot.

This would soon be reflected in the terminology of American warfare. In the wake of the frustrating stalemate that was Korea (1950-1953), a war in which the U.S. found itself unable to use its greatest weapon, Washington took a new language into Vietnam. The conflict there was to be a “limited war.” And that meant one thing: Nuclear power would be taken off the table.

For the first time, it seemed, the world was facing some kind of power glut. It’s at least reasonable to assume that, in the years after the Cold War standoff ended, that reality somehow seeped from the nuclear arena into the rest of warfare.  In the process, great power war would be limited in new ways, while somehow being reduced only to its destructive aspect and nothing more. It suddenly seemed to hold no other possibilities within it — or so the evidence of the sole superpower in these years suggests.

War and conflict are hardly at an end in the twenty-first century, but something has removed war’s normal efficacy. Weapons development has hardly ceased either, but the newest highest-tech weapons of our age are proving strangely ineffective as well. In this context, the urge in our time to produce “precision weaponry” — no longer the carpet-bombing of the B-52, but the “surgical” strike capacity of a joint direct attack munition, or JDAM — should be thought of as the arrival of “limited war” in the world of weapons development.

The drone, one of those precision weapons, is a striking example. Despite itspenchant for producing “collateral damage,” it is not a World War II-style weapon of indiscriminate slaughter. It has, in fact, been used relatively effectively to play whack-a-mole with the leadership of terrorist groups, killing off one leader or lieutenant after another.  And yet all of the movements it has been directed against have only proliferated, gaining strength (and brutality) in these same years. It has, in other words, proven an effective weapon of bloodlust and revenge, but not of policy.  If war is, in fact, politics by other means (as Carl von Clausewitz claimed), revenge is not. No one should then be surprised that the drone has produced not an effective war on terror, but a war that seems to promote terror.

One other factor should be added in here: that global power glut has grown exponentially in another fashion as well. In these years, the destructive power of the gods has descended on humanity a second time as well — via the seemingly most peaceable of activities, the burning of fossil fuels. Climate change now promises a slow-motion version of nuclear Armageddon, increasing both the pressure on and the fragmentation of societies, while introducing a new form of destruction to our lives.

Can I make sense of all this? Hardly. I’m just doing my best to report on the obvious: that military power no longer seems to act as it once did on Planet Earth.  Under distinctly apocalyptic pressures, something seems to be breaking down, something seems to be fragmenting, and with that the familiar stories, familiar frameworks, for thinking about how our world works are losing their efficacy.

Decline may be in the American future, but on a planet pushed to extremes, don’t count on it taking place within the usual tale of the rise and fall of great powers or even superpowers. Something else is happening on Planet Earth. Be prepared.

Noam Chomsky: Austerity Is Just Class War

The esteemed scholar offers his views crisis over Greece’s debt problems.

As Greece defaults and faces a referendum this Sunday on a new bailout package, watch Noam Chomsky on Europe’s “savage response” to the pushback against austerity demands. He spoke to Democracy Now! in March.

http://www.democracynow.org/embed/blog/2015/7/1/chomsky_greece_s_syriza_spain_s

Click here to watch Monday’s segment, “As Greece Heads for Default, Voters Prepare to Vote in Pivotal Referendum on More Austerity.”

Below is an interview with Chomsky, followed by a transcript:

AMY GOODMAN: I wanted to ask you about Syriza in Greece, a movement that started as a grassroots movement. Now they have taken power, Prime Minister Alexis Tsipras. And then you have Spain right now. We recently spoke to Pablo Iglesias, the secretary general of the group called Podemos, that was founded, what—an anti-austerity party that has rapidly gained popularity. A month after establishing itself last year, they won five seats in the European Parliament, and some polls show they could take the next election, which would mean that Pablo Iglesias, the 36-year-old political science professor and longtime activist, could possibly become the prime minister of Europe’s fifth-largest economy. He came here to New York for just about 72 hours, and I asked him to talk about what austerity measures have meant in Spain.

PABLO IGLESIAS: Austerity means that people is expulsed of their homes. Austerity means that the social services don’t work anymore. Austerity means that public schools have not the elements, the means to develop their activity. Austerity means that the countries have not sovereignty anymore, and we became a colony of the financial powers and a colony of Germany. Austerity probably means the end of democracy. I think if we don’t have democratic control of economy, we don’t have democracy. It’s impossible to separate economy and democracy, in my opinion.

AMY GOODMAN: That was Pablo Iglesias, the head of this new anti-austerity group in Spain called Podemos, which means in English “We can.” The significance of these movements?

NOAM CHOMSKY: It’s very significant. But notice the reaction. The reaction to Syriza was extremely savage. They made a little bit of progress in their negotiations, but not much. The Germans came down very hard on them.

AMY GOODMAN: You mean in dealing with the debt.

NOAM CHOMSKY: In the dealing with them, and sort of forced them to back off from almost all their proposals. What’s going on with the austerity is really class war. As an economic program, austerity, under recession, makes no sense. It just makes the situation worse. So the Greek debt, relative to GDP, has actually gone up during the period of—which is—well, the policies that are supposed to overcome the debt. In the case of Spain, the debt was not a public debt, it was private debt. It was the actions of the banks. And that means also the German banks. Remember, when a bank makes a dangerous, a risky borrowing, somebody is making a risky lending. And the policies that are designed by the troika, you know, are basically paying off the banks, the perpetrators, much like here. The population is suffering. But one of the things that’s happening is that the—you know, the social democratic policies, so-called welfare state, is being eroded. That’s class war. It’s not an economic policy that makes any sense as to end a serious recession. And there is a reaction to it—Greece, Spain and some in Ireland, growing elsewhere, France. But it’s a very dangerous situation, could lead to a right-wing response, very right-wing. The alternative to Syriza might be Golden Dawn, neo-Nazi party.

Amy Goodman is the host of Democracy Now! and the co-author of The Silenced Majority.

http://www.alternet.org/economy/noam-chomsky-austerity-just-class-war?akid=13264.265072.Sa2xi5&rd=1&src=newsletter1038752&t=9

It was the creditors who pushed Greece over the edge

By Jerome Roos On July 1, 2015

Post image for It was the creditors who pushed Greece over the edgeIf they had truly cared, the creditors could have easily prevented a default. Sadly, they found it more important to punish Greece and set an example.

Image: sticking posters for the NO campaign ahead of Sunday’s referendum.

On Tuesday, Greece became the first developed country to default on the IMF — and the pro-creditor camp is already propagating the convenient self-serving myth that the country’s “radical” and “irresponsible” government is somehow to blame for this. Nothing could be further from the truth.

To begin with, we should note that defaults come in many forms and guises — and not all of them are the debtor’s fault. In my own research on the political economy of sovereign debt, I identify at least four types of default: (1) negotiated reschedulings; (2) voluntary restructurings; (3) unilateral moratoriums; and (4) outright debt repudiations.

What is interesting about sovereign debt in general (and about international lending in particular) is the almost wholesale absence of repudiation. By and large, countries try extremely hard to repay their debts in full and on time — even when they cannot. In the worst case scenarios, they may be able to negotiate a rescheduling or restructuring of the debt with their lenders. In exceptional cases, countries can declare a moratorium on repayments. While this was very common prior to World War II, it is extremely rare today.

In this respect, the first thing to note is that Greece clearly did not repudiate its debts outright: despite the preliminary conclusions of the Greek parliamentary debt audit committee, which found much of the country’s debt to be odious, illegitimate and illegal, the Syriza/ANEL government still formally recognizes the legally binding character of the debt contracts. Its IMF default therefore looks more like an undeclared moratorium: Greece could still settle its arrears with the Fund at a later stage if it somehow managed to secure new credit.

The second thing to note is that Greece clearly cannot repay its debts in full: even the IMF recognizes that it needs serious debt relief to make its debts sustainable. Still, the country’s left-led government committed itself to remaining current on its obligations even under the most difficult circumstances imaginable. Over the past five months, Syriza basically did the impossible: it continued to repay foreign creditors even though it didn’t receive a dime in foreign financing.

So how did it find the money for these practically unsustainable debt payments? Well, it generated them domestically from taxes and budget cuts — along with ade facto default on government suppliers. Long before Greece defaulted on the IMF, it defaulted on its own people and on the private sector firms that do business with the government, just so it could keep servicing its external debts.

In fact, for all the talk of Greek “profligacy” and Syriza’s free-spending ways, the left-led government would have run the largest primary surpluses in the EU by far. In fact, Syriza’s budget would have been the most austere on the continent:

Source: Economist (2015)

Now, the reason Greece has hit a wall and defaulted on the IMF is very simple: despite running primary surpluses, it basically ran out of cash reserves — and the fact that it ran out was clearly not its own fault.

For one, Greece’s repayment schedule for 2015 was simply unrealistic; the summer especially is full of huge payments. Moreover, the creditors showed absolutely no willingness to reschedule or restructure Greece’s debt profile. The creditors’ stubborn refusal to make any concessions in the negotiations also contributed to continued uncertainty, affecting growth and tax collection. This combination of factors made an involuntary moratorium on the IMF inevitable.

But it gets worse. If the creditors had truly cared about preventing a Greek default, they could have done so at the flick of a switch. The Eurogroup and IMF still owed Greece the last 7.2 billion euro tranche of its previously agreed bailout package, while the ECB owed it nearly 2 billion euros in withheld profits on Greek bonds, which it was supposed to return to the government. If the lenders really didn’t want Greece to default, they could have simply transferred this money from one part of the Troika to another — problem solved!

But it should be clear by now that the standoff between Greece and its creditors is no longer about the money: it’s about power and control. The creditors were adamant not to encourage Syriza’s resistance, for this might embolden anti-austerity forces elsewhere — most notably in Spain, where Podemos might well win the next elections. They wanted to set an example.

The only possible way Greece could have obtained further financing to repay the IMF this week would have been to sign up to the self-defeating “take-it-or-leave-it” offer made by the creditors last Friday. This would have been suicidal both for Syriza and for Greece. It was obvious from the start that Tsipras would be unwilling and unable to submit to the same austerity measures that had produced such disastrous economic consequences under previous governments, and against which he had been campaigning so aggressively for all those years.

And so the bottomline is that Greece was pushed over the edge by its own creditors. Its left-led government is clearly still willing to pay — just not at all costs, like previous governments. In fact, Syriza rightly demands a fairer distribution in the burden sharing, a sustainable long-term payment trajectory, and a sovereign say in the way it chooses to meet its obligations — by taxing shipowners, bankers and media magnates, for example, rather than cutting the wages and benefits of workers, pensioners and the unemployed.

If this is considered “radical” and “irresponsible” in Europe today, it’s only because the center has shifted light-years to the right. Unfortunately, that is precisely what has happened. If anyone bears responsibility for the Greek default on the IMF, it is the extremists in the creditor camp who would rather suffocate their borrowers than ensure continued repayment.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter at @JeromeRoos.

 

http://roarmag.org/2015/07/greece-debt-default-imf/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+roarmag+%28ROAR+Magazine%29

US income inequality continued to soar in 2014

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By Andre Damon
2 July 2015

Income inequality in the United States continued to grow in 2014, according to updated figures released last week by University of California, Berkeley economist Emmanuel Saez.

According to Saez’s report, the top one percent of income earners increased their share of total income from 20.1 percent in 2013 to 21.2 in 2014 percent.

The income shares of the highest-earning 10 percent, 1 percent, and 0.1 percent of income earners all grew in 2014. The top ten percent of earners received 49.9 percent of income in 2014, more than any other year besides 2012.

Saez noted that the top 1 percent of earners received 58 percent of income gains during the so-called economic “recovery” between 2009 and 2014. The incomes of the bottom 99 percent grew by just 4.3 percent during that period.

The figures for 2014 mark the first year that real incomes for the bottom 99 percent of earners increased by any significant amount since the 2008 financial crisis. Incomes for the bottom 99 percent grew at a rate of 3.8 percent last year.

Saez wrote that “the incomes of most American families are still far from having recovered from the losses of the Great Recession.” He added that by 2014, the bottom 99 percent of income earners had recovered less than 40 percent of the annual income they had lost during the 2007-2009 recession.

The modest growth in incomes for the bottom 99 percent was dwarfed by the increase in the incomes of the super-rich. The incomes for the top 1 percent of earners grew at a rate of 10.8 percent last year, more than three times faster than the average for the bottom 99 percent.

While the growth of social inequality has dramatically accelerated following the 2008 crash, this is a continuation of a decades-long process. The report notes, “Top 1 percent incomes grew by 80.0% from 1993 to 2014. This implies that top 1 percent incomes captured almost 60% of the overall economic growth of real incomes per family over the period 1993-2014.”

Saez warns that the growth of inequality is not likely to slow down, noting, “Based on the US historical record, falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back. Such policy changes took place after the Great Depression during the New Deal and permanently reduced income concentration until the 1970s.”

He notes, “The policy changes that took place coming out of the Great Recession… are modest relative to the policy changes that took place coming out of the Great Depression. Therefore, it seems unlikely that US income concentration will fall much in the coming years, absent more drastic policy changes.”

In fact, the US government’s response to the 2008 crash has been dedicated to inflating the wealth of the super-rich while driving down incomes for the vast majority of the population. The White House has protected Wall Street executives from legal prosecution, while the Federal Reserve has handed out trillions of dollars in cheap money through “quantitative easing” programs, leading share values to triple on major US exchanges.

Saez notes that a significant contributor to the growth of income inequality has been the growth of the salaries for top earners, particularly top executives. He observes, “The income composition pattern at the very top has changed considerably over the century. The share of wage and salary income has increased sharply from the 1920s to the present, and especially since the 1970s. Therefore, a significant fraction of the surge in top incomes since 1970 is due to an explosion of top wages and salaries.” He adds that, by some estimates, “the share of total wages and salaries earned by the top 1 percent wage income earners has jumped from 5.1 percent in 1970 to 12.4 percent in 2007.”

There are signs that this process is accelerating. The same day that Saez published his report, the Wall Street Journal published a separate survey of executive pay, which found that CEOs at major corporations it surveyed had their pay increase by 13.5 percent in 2014, hitting $13.6 million.

The soaring wealth of the financial elite, driven by surging stock prices and executive pay, is driving demand for luxury goods and housing in major financial centers. Manhattan real estate prices have reached an all time high, with the average home price hitting $1.87 million, according to reports cited by the New York Times Wednesday. The Times noted that real estate developers are scrambling to create enormous multi-million-dollar high-rise apartments, which are being snapped up by members of the financial elite.

Meanwhile, the housing situation for the great majority of the population has only worsened since 2008. Last week a study by Harvard University’s Joint Center For Housing Studies found that the share of the US population that owned a home hit the lowest level in two decades, with the homeownership rate for those aged 35-44 plunging to the lowest level since the 1960s. The report attributed the fall in home ownership to falling incomes for typical US households, noting that median household income in the US remained 8 percent below its level in 2007.

On Thursday, US President Barack Obama plans to unveil what he has called a major new policy initiative in a speech in La Crosse, Wisconsin. The proposal entails new federal rules that would make an additional 3 percent of the US population eligible for overtime pay. If adopted, the change would add a mere $1.3 billion to worker’s wages annually. This is a tiny fraction of the trillions of dollars that have been transferred to the financial elite since the 2008 financial crisis.

To put things in perspective; Obama’s program would transfer less income to working people each year than Facebook CEO Mark Zuckerberg made in a single day last year.

 

http://www.wsws.org/en/articles/2015/07/02/saez-j02.html

“Steve Jobs,” portrait of the artist as tech guru: What we lose when we worship at the altar of commerce

When we abandon the arts, this is what’s left 

"Steve Jobs," portrait of the artist as tech guru: What we lose when we worship at the altar of commerce
Michael Fassbender in “Steve Jobs” (Credit: Universal Pictures)

The trailer for the new Steve Jobs biopic has just been released, and it looks like the movie could be formidable, maybe one of the films of the year. Despite changes in cast and director, the matching of director Danny Boyle with actor Michael Fassbender (along with screenwriter Aaron Sorkin) could summon serious dramatic firepower.

The movie seems to make explicit something that’s been swirling for a while now: That engineers, software jockeys, and product designers are the capital-A Artists of our age. They are what painters and sculptors were to the Renaissance, what composers and poets were to the 19th century, what novelists and, later, auteur film directors, were to the 20th.

The likening of tech savants to artists goes back at least as far as Richard Florida’s books about the creative class, but it picked up energy with the 2011 death of Jobs, who was hailed as a job creator by Republican politicians and mystic genius by many others. You see this same impulse in the opening of Jonah Lehrer’s now-discredited book “Imagine,” which compared the inventor of the Swiffer (which “continues to dominate the post-mop market”) with William James and Bob Dylan.

The metaphor becomes quite clear in “Steve Jobs,” which is based on Walter Isaacson’s bestselling biography. In the trailer, Fassbender’s Jobs announces that he is not a musician – he is the conductor. “Musicians play their instruments,” he says. “I play the orchestra.” Stirring orchestral music – with stabbing violins – plays through the trailer. “Artists lead,” the Jobs character rants to a meeting at a particularly fraught time, and “hacks ask for a show of hands.”

But how many Americans – including those who can tell you the difference between every generation of iPhone – can name a single living conductor? What about a real visual artist? (That is, someone besides Lady Gaga.) As a recent CNN article asks, what about a famous living poet? (“No, not Maya Angelou. She died last year.”)

So how did we get here, where technology designers claiming the mantle of the Artist have replaced – in both the media and in the public’s esteem — the actual working, living, breathing artist?

The reason is not just the weird technological fetishism that has gripped American culture since the ‘80s. It also comes from how we as a society have spent our resources, and it goes way back.

While Americans, on the whole, didn’t worship culture with the same dedication as Europeans, the whole West saw the arts as something central, even a replacement for religion: After Nietzsche told us God was dead, theaters and concerts halls that looked like churches sprouted up not just in Britain and the continent, but in the wealthier and more settled cities in the States as well. Conductors like Toscanini became cultural heroes. Nations and plutocrats alike spent money to spread the gospel.

Cold War funding supported culture even more directly – Eisenhower sent Louis Armstrong overseas – and television stations and magazines considered the dissemination of the arts part of what they did. Maria Callas, Thelonious Monk, and Leonard Bernstein showed up not just in small-circulation specialty publications but on the cover of Time magazine.

For all the difference between their politics, generations, and backgrounds, the president who followed Eisenhower did not abandon the religion of culture: Kennedy had Robert Frost read at his inauguration. JFK spoke often, publicly and privately, about the importance of culture, writing that “There is a connection, hard to explain logically but easy to feel, between achievement in public life and progress in the arts.” Lyndon Johnson followed him by founding the National Endowment for the Arts. Nixon made war on a lot of the previous administration’s achievements, but not this.

Even more important, public schools offered music and arts education that gave at least some students a sense that this stuff mattered and was a basic part of being an educated, informed citizen.

How did all of this edifice collapse, so that music, poetry, theater, painting and everything else would be just another part of mix of commerce and “content”? That’s hard to make sense of, but let’s just say that the culture wars of the Bush I years, the demonization of artists and other subversives as a “cultural elite,” and the attacks on the canon by the academic left didn’t help. Nor did the conquest of neoliberalism, waged by Reagan and Thatcher and their respective brain trusts, which told us that markets are supreme and more important than musty old ideas like society or culture. And the globalization that came after gave narrow-minded utilitarians reason to slice and dice arts education. It’s still happening.

In the simplest sense: When you use state funding to help develop computer technology and what would become the Internet, and cut support for arts and culture, what do you think is gonna happen?

So what’s wrong with making Steve Jobs and others who came up with cool gadgets and efficient apps for getting pizza to people in San Francisco into the artists of our age? Doesn’t culture change over the decades and centuries?

Well, sort of, but here’s the key difference. The whole idea of poetry or a symphony or a novel is to get past daily life. It’s not just about cool or efficiency or even entertainment but an aspect of – to mangle the title of Geoff Dyer’s excellent essay collection – what was previously known as the human condition. We used to see culture as something that could be deeper than a really fast computer or a cordless mouse.

The literary essayist Richard Rodriguez has said that we live in “the age of the engineer.” If so, something really has died inside us. The Jobs movie looks great, but if this guys is our John Lennon or Nina Simone or Bernstein or Beethoven, we really are cooked.

Scott Timberg is a staff writer for Salon, focusing on culture. A longtime arts reporter in Los Angeles who has contributed to the New York Times, he runs the blog Culture Crash.He’s the author of the new book, “Culture Crash: The Killing of the Creative Class.”

The IMF defaulted on Greece a long time ago

By Jerome Roos On June 30, 2015

Post image for The IMF defaulted on Greece a long time agoEven its own officials recognize that the IMF played a leading role in Greece’s economic collapse. It is time for the Fund to own up and pay its dues.

Image: Protesters in Athens rally against austerity and for a ‘NO’ vote in next Sunday’s referendum (Monday, June 29).

Tuesday marked the deadline for Greece to transfer a 1.6 billion euro debt repayment to the IMF. The country’s Finance Minister Yanis Varoufakis had already announced that his government could not — and would not — pay. And so, at 6pm Washington-time, 1am locally, Greece officially defaulted on the IMF.

The default is an unprecedented event in the history of finance: never before has a developed country fallen into arrears on a loan from the Fund. Unsurprisingly, the international press is already conjuring up unflattering comparisons with notorious failed states like Zimbabwe and Somalia, which are among the few countries to have gone down the same path of utter financial ignominy. With all due respect for Zimbabwe and Somalia, the implication of this media narrative is clear: Greece is about to become a hopeless basket case.

In truth, superficial parallels like these are dangerously misleading. Not only do they compare apples and oranges; they also end up obscuring the IMF’s own role in the decimation of the Greek economy, which basically made an eventual Greek default inevitable. By uncritically reproducing narratives of Greece’s “failure” to repay the Fund, many in the international media are directly overlooking the fierce internal criticism that top IMF officials have expressed about their ownresponsibility for the utter disaster of the Troika’s bailout programs.

Yes, it’s true: never before has a developed country failed to repay the IMF on time. But, then again, never before has a developed country experienced such a catastrophic economic collapse in peacetime — and never before have official creditors been so criminally complicit in producing the collapse (although the brutal structural adjustment programs in Latin America, Africa and East-Asia were in many ways even more inhumane).

Greece has by now lost a quarter of its total economic output since the start of the crisis. Unemployment is still higher than it was in the United States during the Great Depression. Public health and other public services have completely imploded. Almost 1 million Greeks are without health insurance; 11.000 people are estimated to have committed suicide as a result of economic hardship. The depth of this crisis is absolutely unprecedented, and the creditors themselves (including the IMF) owe a great deal of the responsibility.

Interestingly, the IMF itself has long since recognized this. Just consider what the Fund wrote in its ex-post evaluation of the first Greek bailout of 2010. The program, the IMF blatantly states, “only served to delay debt restructuring and allowed many private creditors to escape … leaving taxpayers and the official sector on the hook” (p. 28). Moreover, the Fund admits that “earlier debt restructuring could have eased the burden of adjustment on Greece and contributed to a less dramatic contraction in output” (p. 33).

In the same report, the IMF also conceded that “the burden of adjustment was not shared evenly across society” (p. 24); that “ownership of the program was limited” (p. 24); that “the program was based on a number of ambitious assumptions” (p. 26); that “the risks were explicitly flagged” (p.27); and that “ex-ante debt restructuring was not attempted” (p. 27).

“An upfront debt restructuring would have been better for Greece,” the Fund concludes, “although this was not acceptable to the euro partners. A delayed debt restructuring … provided a window for private creditors to reduce exposures and shift debt into official hands.” Or to put that in ordinary language: the IMF basically admits that it should have canceled a large chunk of Greece’s debt at the very start, but decided not to do so because the Europeans needed them to help save their private banks. There you have it, from the horse’s mouth.

Miranda Xafa, a former member on the IMF executive board, has reached the same conclusion. Noting that the reason for delaying a much-needed debt restructuring was simply to allow private banks to reduce their exposure to Greece, she penned a highly critical paper in which she confirms that “The exposure of core euro area banks, especially French and German banks, was a key reason why a debt restructuring was not attempted sooner.”

By early 2011 it was already clear that the first bailout would not be enough to keep Greece afloat. Unsurprisingly, given the ferocity of the austerity measures demanded by the IMF and the European creditors, the Greek economy was contracting much faster than the wildly optimistic IMF prognoses had foreseen (see the graph below). In a widely disseminated mea culpa, IMF chief economist Olivier Blanchard later acknowledged that the Fund’s unrealistic (and ultimately false) prognoses hinged on a set of assumptions that massively underestimated the contractionary effects of the Troika’s austerity measures.

This was no mere methodological error. According to Susan Schadler, former deputy director of the IMF’s European Department, the Fund’s notoriously inadequate multipliers were the direct outcome of a set of “fundamental political pressures” that compelled IMF staff to paint a much rosier picture of the Greek bailout program than reality merited.

The Fund’s scheme was obvious for everyone to see. As Martin Wolf of theFinancial Timesnoted: “instead of making the debt sustainable, the programme merely let many private creditors escape unscathed. All this tells us depressing things about the politicisation of the IMF and the inability of the eurozone to act in the best interests of its weaker members.”

It was not all about the money, however. After 2012, the European banks had basically divested themselves of Greek debt and a Greek default no longer appeared to be a systemic risk. Still, the debt provided the Europeans with a powerful instrument to exert long-term fiscal control over Greece. Schadler:

Several interviewees suggested that apart from domestic political considerations, one reason the Europeans did not want to commit openly to absorbing the costs of the crisis and establishing an endgame [i.e., granting Greece debt relief] was that they felt it necessary to perpetuate uncertainty as a method of holding the feet of the Greek government to the fire.

Last Saturday, hours after Tsipras announced the Greek referendum, former IMF chief Dominique Strauss-Kahn decided to weigh in on the matter too. In ashort paper entitled “Learning from one’s mistakes”, Strauss-Kahn (who was in charge of the Fund at the time of the first Greek bailout, until he resigned following a sex scandal involving rape allegations) said he was willing to “take responsibility” for his part in forcing an “asymmetrical” and overly “counter-cyclical” adjustment upon Greece.

The evidence for the IMF’s criminal complicity in the collapse of the Greek economy is simply overwhelming. Yes, the officials at the Fund bear direct responsibility for the years of untold suffering they have inflicted upon millions, including the tens of thousands who died because they could not obtain adequate medical treatment or who, driven to despair by the lack of economic prospects, took their own lives. In any civilized country, those responsible for such vast suffering and loss of life would have been sentenced to prison years ago.

In its review of the 2010 bailout, the IMF itself admitted that “in retrospect, the program served as a holding operation” to allow private creditors and domestic elites to escape the crisis without having to share in the burden of adjustment. This can only lead us to one possible conclusion: Greece may have defaulted on the IMF tonight, but the IMF itself defaulted on the Greeks a long, long time ago. It is high time for the creditors to pay their dues and return the immense moral and material debt they owe to the people of Greece.

It is time to cancel the debt.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter @JeromeRoos.

 

http://roarmag.org/2015/06/greece-imf-default-bailout/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+roarmag+%28ROAR+Magazine%29