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March 01, 2012

Lincoln Allison on what really scares him about Greece - and why our political masters are even dafter than one might possibly imagine

Posted by Lincoln Allison

Lincoln Allison - Emeritus Reader in Politics at the University of Warwick - explains why what is happening in Greece should frighten us even more than most commentators think.

In fifty years of attending various sorts of seminars I only heard one death threat issued. It was a Greek graduate student, trembling with anger, who offered to kill anyone he heard using the name Macedonia in his presence. He was a fairly unreasonable fellow, but even reasonable Greeks can be quite odd on this subject and, though extreme, his reaction was typical: in an international university you could guarantee that the Greeks were the most nationalistic in attitude, way ahead of even the Norwegians and easily wound up on a number of issues including Cyprus, Turkey and any doubts cast on the whole cradle-of-civilisation thing in favour of (say) Georgia or Egypt. The bride's father in My Big Fat Greek Wedding, who believes that everything of value in human life has come out of Greece, is a caricature, but a caricature of reality.

I do not wish to condemn nationalism per se, nor Greek nationalism in particular. It is good that people are different and should seek to preserve their differences. The aspiration to live in an independent state encompassing and expressing nationality has good consequences as well as dangerous ones. Greeks have fought hard for their independence, by arms in earlier periods and in EU negotiations more recently - on the issue of foreign ownership of Greek land, for example.

So why, oh why, would they want to be in the single currency? If you believe in national independence one of the fundaments must be your own currency, surely? You might just about convince yourself that membership of the EU had more benefits than costs, provided you maintained a constant vigilance and a veto, but how could you ever imagine that national independence could survive if your currency was controlled by somebody else? At the other end of Europe those other hyper-nationalists in Norway baulked at EU membership and the currency issue has never been on the agenda.

It is undeniable - as German officials and politicians point out on a daily basis - that currency union requires fiscal union in order to work. And that fiscal union is (not leads to but is) a big chunk of political union.

You would think that this was all an exercise in the absolutely bleeding obvious, to quote Basil Fawlty. But apparently not: the Greeks joined the Euro with overwhelming enthusiasm, allegedly fudging their figures to get in (it doesn't matter to this argument whether they did or they didn't).

Support wavered when it proved inflationary and then recovered, but as recently as 2011 there were two thirds in favour. Yet when the Germans propose a (foreign) Budget Commissioner to oversee their public finances - which, admittedly, must look a lot like a gauleiter if you are the recipient - they are shocked and indignant. The only possible explanation for such lack of logic is that many people in Greece feel a sense of identity with Europe - they own it, feel that Europe is a kind of extension of Greece - in ways we can barely conceive in a country whose historical and literary bad guys have always been European. Thus you can be a Greek nationalist and a fervent European. It must be very hurtful when Greeks come to realise that this identification is not reciprocated, that at least some other Europeans regard them as dodgy semi-orientals.

Economies in the Eurozone were supposed to converge. Fair enough: if you set off from (say) Sierck-les-bains in Lorraine you can drive through parts of five EU countries in an hour. They are France, Luxembourg, Belgium, Germany and the Netherlands, though you could probably change the order of visit. In the age of the motor car and in the absence of border controls there is bound to be convergence in this sort of area because people can move to work, shop, live etc. Everything from the price of cheese to interest rates and land prices will tend to come together.

But Greece is way over a thousand miles away and has no borders with any other EU state. And the cultural difference is even greater. According to Transparency International, aggregating research on corruption, most of the Eurozone countries are in the top twenty of cleanest countries. But Greece is 80th, equal with Peru and Thailand and below its unmentionable neighbours, Turkey and Macedonia. So when economists from northern climes say things like, "You must raise 2% more in taxes and reduce public expenditure by 7%", they might as well be knitting sweaters out of wet spaghetti for all this has to do with anything practical.

Anecdotes suggest that if you haven't paid your taxes in Greece a man comes round to your house and says something like, "Tax law is very complicated and open to interpretation . . . By the way, that's a very nice gold bracelet you're wearing . . ." Anecdote may be a good deal more to the point than any fantastical economic arithmetic.

Political science may also be much more useful: there are many good studies of political culture, corruption and implementation which would get much closer to explaining the problem than any economic theory would. They tell the simple truth that whatever arithmetic the Greek government agrees with the Troika it hasn't a hope of delivering, even if it's still there in three months' time. Greece is neither an independent country nor a not-independent country; there is a measure of anarchy now built into its very status and existence, which is only all right in good times.

One of the many idiocies claimed as an orthodoxy is that establishing (or re-establishing) a change of currency - which would seem to be the only sensible solution - is necessarily much worse, even, than what is currently happening in Greece. Yet new currencies have been established in dozens of countries in the last twenty years, most of which have better prospects (and more independence) than Greece. I have witnessed the process twice in Georgia. So it didn't work the first time; they did it again and it did work. Most of the other post-Soviet states managed it the first time.

Somewhere deep in one's mind is the hope that Mummy and Daddy or God or "they" know what they're doing. But what is really frightening now is the evidence that political elites, both Greek and European, haven't got a clue, haven't even got the most elementary grasp of logic or reality - at least, not that they would publicly admit to - and are wholly incapable of acknowledging past errors. They are dafter than one might possibly imagine. Why don't they have done with it and invade Russia as their predecessors did?

Lincoln Allison retired from an academic career at the University of Warwick in 2004 - and again in 2008 - to become a freelance writer and broadcaster. He remains Emeritus Reader in Politics at the University of Warwick and Visiting Professor in sport and leisure at the University of Brighton. His latest book is My Father's Bookcase: A Version of the History of Ideas, also available as a Kindle download from amazon.co.uk and from amazon.com.


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I think there are two reasons for the Political Elites NOT wanting to release Greece from the Euro (and also release the Euro from the disaster in the making in Greece). The first is that they are worried that if Greece leaves, the return of the Drachma may actually work, may lead to a recovery. This is an anathema to the Euro-elites, who love to insist that the euro is the only conceivable way forward, and has great benefits. They keep insisting that Greece would have been in a worse position if they were NOT in the euro - although they give no justification of this other than mumbling that a Greece with the Drachma would be forced to devalue (the shear fact that Greece cannot devalue is surely one reason why the euro is so bad for Greece at this point). If Greece did better leaving, it may encourage other Mediterranean countries to follow suit, and add to calls in Germany for the return of the Deutschmark. It could, conceivably, lead to the end of the EU. Personally I think the latter is a bit extreme, buy paranoia does tend to this.
The other reason is financial self interest. Firstly German, French and Italian banks want Greece to stay in the euro, and be bailed out by their respective governments. The individual governments are happy for this because they fear another run on the banks and bank bailout! But also the Germans in particular want to maintain the integrity of the euro because it favours Germany. The EU allows no tariff protection, and with currencies fixed at a level which makes most non-German goods uncompetitive, the Germany economy can boom whilst the rest of the eurozone is in the doldrums. The German Government certainly doesn't want that to change.
On top of that, there is perhaps a third reason (linked to the first) and that is the self interest of the Eurocrats. Up until now the "European project" has NEVER wound back any of its advances. At most they've only delayed them, or been forced to implement them by stealth. For Greece to leave the euro would be the first significant retreat in any of the supranational structures the "Europeans" have established, and a precedent for other "wind backs". This could be seen as a power shift away from the unelected officials of the EU and back to the individual national governments, who could threaten to withdraw from various EU institutions or agreements, citing the Greek exit from the euro as precedent.
I think the "elites" fail to realise that keeping Greece could itself destroy the euro, not so much because of itself, but because of the flow on effects.

Posted by: PT at March 7, 2012 02:00 AM
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