The Greek Proposal on the Heels of the Referendum on Austerity: A Case of Avoidable Betrayal

Only days after appealing to the will of the people, Greece’s prime minister put forward a proposal to the state’s creditors that contradicts the people’s rejection of further austerity. To be sure, the referendum was nonbinding, and the need for compromise was well justified by the seizing up of the state’s banking system and economy after the “No” vote. Furthermore, one of the virtues of representative as distinct from direct democracy is that officeholders can pursue policies contrary to the immediate will of the people but in line with their best interest. Alexis Tsipras faced immanent economic catastrophe, and so he can reasonably be credited with acting in his constituents’ best interest. Nevertheless, the sting of betrayal (and the larger theoretical point of governmental sovereignty being subordinate to popular sovereignty) warrants attention in this case.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Ebola in Liberia: The Government’s Fault?

With the Ebola virus “spreading like wildfire” in Liberia, “devouring everything in its path,” Brownie Samukai, the state’s defense minister, went on to tell the U.N. Security Council on September 9, 2014 that “Liberia is facing a serious threat to its national existence.”[1] With more than half of the epidemic’s deaths in that state—1,224 out of at least 2,2296 in West Africa as of September 6, 2014—and new cases “increasing exponentially,” the World Health Organization (WHO) declared that “the demands of the Ebola outbreak have completely outstripped the government’s and partners’ capacity  to respond.”[2] Meanwhile, the International Monetary Fund (IMF) reported that the illness had severely handicapped the mining, agriculture, and service sectors of the state’s economy.[3] Quite understandably, pleas for the government to do more peeled like frightened bells across the state. “The patients are hungry, they are starving. No food, no water,” a terrified woman told journalists. “The government needs to do more. Let Ellen Johnson Sirleaf do more!”[4] Even if valid, such blame is hypocritical to the extent that the people themselves had been refusing to do what is necessary to stop such a virus from spreading.

The entire essay is at “Ebola in Liberia”

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1. Abby Ohlheiser, “Ebola Is ‘Devouring Everything in Its Path.’ Could It Lead to Liberia’s Collapse?” The Washington Post, September 11, 2014.

2. WTO, “Ebola Situation in Liberia: Non-Conventional Interventions Needed,” September 8, 2014; Elahe Izadi, “Ebola Death Toll Rises to 2,296 as Liberia Struggles to Keep Up,” The Washington Post, September 9, 2014.

3. Anna Yukhananov, “IMF Says Ebola Hits Economic Growth in West Africa,” Reuters, September 11, 2014.

4. Abby Ohlheiser, “Ebola.”

Is the E.U. Relying Too Much on the IMF?

According to the New York Times, the IMF had more influence in the European debt crisis than did many E.U. states. Put another way, Christine Lagarde, head of the organization, became “a quasi head of state.” Without the advice and money from the IMF, the euro might have collapsed. If one could believe the rhetoric, the E.U. itself might have broken up. But the threat to the Union lies not in the euro, but, rather, on the emphasis on the state governments and in particular their respective officials. Indeed, the crucial role of the IMF during the debt crisis may have been in looking out for the interests of the E.U. in contradistinction to the various interests of the state governments. “In the absence of a strong federal government in Europe,” according to the Times, the IMF has helped “impose order on quarreling [state] leaders.” Put another way, if the balance of power in the federal system did not reside with the states at the expense of the federal government, the Europeans would not have had to rely on the IMF so much. For example, Lagarde played an important role, according to the Times, in “overcoming German reluctance to accept proposals intended to strengthen the euro zone, like a centralized bank supervisor.” Because the proposals involved shifting additional governmental sovereignty from the state governments to the federal level, the heads of the state governments faced a conflict of interest in assessing whether to support a federal regulator even though it would be in the interest of the whole.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.                                               

The E.U. Bailout Fund: The IMF of Europe?

One of the benefits of being in a federation—as distinct from an international organization—is that states in fiscal trouble can benefit from redistribution through a federal center. In other words, federalism provides a safety buffer that is lacking at the international level. E.U. finance ministers agreed on March 30, 2012 to create a permanent bailout fund for states that have adopted the euro. The New York Times reports that questions persisted “about whether the fund, even at about $1 trillion, will be sufficient to deal with crises” in large states like Spain and Italy, which are comparable to Illinois and California in the U.S.[1] Mudding the water, the Times incorrectly refers to the bailout fund as the E.U.’s IMF: “(T)he “bailout mechanism . . .  is meant to be a European equivalent of the I.M.F.”[2] However, the term “bailout fund” itself comes from the TARP, which was not the U.S.’s IMF.

The complete essay is at Essays on Two Federal Empires, available in print and as an ebook at Amazon.

1. James Kanter, “Europe Agrees to Bailout Fund for Euro of Over $1 Trillion,” The New York Times, March 30, 2012. 

2. Ibid.