Greek Drama

My father in law was from Drama. Somehow it’s fitting that the Greeks gave us the best word to describe their situation. Dramatic indeed. Sometime, no doubt, a great many books will be written about this particular piece of drama. The news has been filled for so long with stories about the Greek economy being on the brink. Which brink, or the brink of what, is never quite clear. But that’s what drama is made of: the lack of clarity.

This week’s climactic episode is merely one of many. It is not the end. It is easy in these circumstances too slip into a fully Churchillian turn of phrase: “It is not the end. It not the even the beginning of the end. But it is, perhaps, the end of the beginning”. Something like that. Fitting anyway. For this saga has many more corners to turn I suspect. Most of which will be dangerous, much more so than those turned so far.

The problem is simply this: as long as the Greek economy continues to shrink the way it is currently, no amount of aid will suffice to stave off catastrophe. The economy’s ability to support debt is shrinking faster than the amount of debt to be supported. So the crisis is shoved off for another turn. It isn’t ended.

Austerity is causing an endless downward spiral where the debt always ends up being a larger problem than it was despite heroic efforts and sacrifice by the Greek citizenry.

The problems have become intractable without a level of political bravery that we will not see. The Greek government has failed to carry out its commitments. It has failed to rid its economy of the web of special interests that are strangling it. It has failed to cut through the maze of red tape and corruption that protects certain groups at the expense of others. Meanwhile it is relying on those self same others to suffer vicious austerity. At some point the political will to face down special interests and to break the grip they have on the economy is the only safe path to long term recovery and prosperity for all Greeks. So far Greek politicians have succumbed to the allure of patronage rather than overthrown its stranglehold. Until they do they will be forced to press down even harder and to undermine the futures of all Greeks, not just those who have benefitted from the old regime.

It is this failure of political will that has undermined confidence elsewhere. No one truly believes that the Greek government will deliver on its promises. It is as if some parts of the Greek establishment don’t mind living in a third world country somehow attached, caboose like, to the end of Europe.

The Greek population deserves better – as long as it is willing to punish those who have power yet avoid using it.

Meanwhile the crisis has thrown up yet more fodder for those who decry standard economic thinking. The painfully antiseptic language economists use to avoid talking about people within economies is simply horrific. It’s as if by talking about real people they somehow taint themselves. So they speak of ‘economic agents’. Who, pray tell, are the ‘economic agents’ of Greece if not the citizens and businesses of Greece? So why don’t we speak of people? It is laughable and a shame that economists resist humanity so resolutely.

I mention this because I read today, in the Financial Times, news of a top secret ‘sustainability analysis’ that was circulated amongst the negotiating parties prior to the latest agreement being thrashed out. It makes for grim reading and completely contradicts the notion that the crisis is contained. It is simply punted down the street. The negotiators are, basically, hoping something turns up to obviate the need for the next round of angst.

In the midst of the analysis is the following: “The Greek authorities may not be able to deliver structural reforms and policy adjustments at the pace envisioned in the baseline [scenario] … greater wage flexibility may in practice be resisted by economic agents … ”

Economic agents. The resistance.

If only economies had people in them. Those pesky economic agents are clearly mucking up the smooth application of draconian wage cuts and other nifty economic plans. Surely people, rational people, would understand that a life of penury would validate the theories upon which austerity hinges. People and businesses would brim over with boundless confidence because they would see through the grim times and realize, even were it far off, that a return to happiness that is assured – absolutely assured – by slashing the economy’s wrists today. Economic agents don’t have that happy ability.

Or maybe its because economists understand the hateful nature of their prescriptions. So they want to make believe that economies are not inhabited by people but by unfeeling machines. You can’t hurt a machine. And it doesn’t act all uppity when you deprive it of a livelihood in the name of austerity.

Either way, its a very sick social science that is afraid to talk about its primary subject matter as the people they are. It isn’t surprising really. Not given the child like psychology and total denial of humanity that resides at the core of orthodox economic theory. Most times no one cares. But now, as people’s lives are destroyed it matters a great deal.

I hope that one day economics rediscovers humanity. There are glimmers of hope. But the Greek crisis suggests that those in power, those with true influence, are very far removed from that rediscovery.

Else they would realize how destructive austerity based policies are to lives.