Terms of Office in a Representative Democracy: Greek Austerity

In September 2012, the E.U. state of Greece was in the process of working out a 11.5 euro austerity plan that would involve forced retirements in public sector and pension cuts so the E.U. would approve another installment of the bailout to the state. One resident remarked at the time, “Mark my words. In the coming months, there will be a revolution, and this government will fall.”[1] This sounds a bit like “buyer’s remorse” concerning the election the previous June  in which the anti-bailout/austerity party barely lost. What about all the Greeks who voted for Samaras, the pro-bailout/austerity leader? It cannot be assumed that they, too, had buyer's remorse even as the additional cuts went into effect. Even if the electorate shifted in the direction of anti-austerity as the forced retirements and pension cuts occurred, the ingrediants of representative democracy includes terms of office to protect the elected officials by giving time for their policies to work. Representative democracy does not reduce to the momentary passion of the masses. According to Plato, mob rule is the bad form of democracy. 

The full essay is at "Terms of Office in Democracy."

1. Liz Alderman, “Greek Government and Public at Odds Over New Cuts,” The New York Times, September 6, 2012. 

On the Role of Socialism in American Political Polarization

In a stunning upset in the 2012 Republican U.S. Senate primary in Indiana, Indiana's Treasurer, Richard Mourdock, beat incumbant veteran Richard Lugar by 22 percent (61-39%). Even though Lugar's 36 years of experience in the Senate had seasoned him into a statesman in foreign policy, the Tea-Party-backed Mourdock was able to portray the aged senator as out of touch and too willing to compromise with Democrats. Mourdock had no intention of extending any hand across the aisle. Is such polarization worth the loss of experience in international relations? Moreover, what role ave worries of socialism perpetuated the polarization?

See: "On the Role of Socialism on Polarization."

Greek Austerity: Pressure on the Environment

“While patrolling on a recent cold night, environmentalist Grigoris Gourdomichalis caught a young man illegally chopping down a tree on public land in the mountains above Athens. When confronted, the man broke down in tears, saying he was unemployed and needed the wood to warm the home he shares with his wife and four small children, because he could no longer afford heating oil. ‘It was a tough choice, but I decided just to let him go’ with the wood, said Mr. Gourdomichalis, head of the locally financed Environmental Association of Municipalities of Athens, which works to protect forests around Egaleo, a western suburb of the capital.”[1] Tens of thousands of trees had disappeared from parks and forests in Greece during the first half of the winter of 2013 alone as unemployed Greeks had to contend with the loss of the home heating-oil subsidy as part of the austerity program demanded by the state’s creditors. As impoverished residents too broke to pay for electricity or fuel turned to fireplaces and wood stoves for heat, smog was just one of the manifestations—the potential loss of forests being another. On Christmas Day, for example, pollution over Maroussi was more than two times the E.U.’s standard. Furthermore, many schools, especially in the north part of Greece, had to face hard choices for lack of money to heat classrooms.

Greek forests were succumbing  in 2012 to the Greeks' need to heat their homes as austerity hit.   source: Getty Images

Essentially, austerity was bringing many people back to pre-modern living, perhaps including a resurgence in vegetable gardens during the preceding summer. At least in respect to the wood, the problem was that the population was too big—and too concentrated in Athens—for the primitive ways to return, given the environment's capacity. 

The full essay is at "Greek Austerity and the Environment."

1. Nektaria Stamouli and Stelios Bouras, “Greeks Raid Forests in Search of Wood to Heat Homes,” The New York Times, January 11, 2013.
2. Skip Worden, God's Gold, available at Amazon. 

Democracy and the Courts: Alternative Checks on Austerity in Greece

In May 2011, “Athens agreed to impose a new $9 billion round of tax increases and spending cuts and speed up nearly $75 billion in promised privatizations.” In early June, a new round of tightening was being planned by the Greek government. It was feared that those cuts would deepen the recession and thus further shrink the tax base, making it even harder for the government to cut its deficit. Meanwhile, Reuters reported, “Greeks are showing signs of reaching the limits of their endurance as budget cuts imposed under Greece's first bailout a year ago have helped to push unemployment close to 16 percent.” The news service cited police reports of more than 80,000 people packing the main Syntagma square outside parliament on June 6^th—the 12^th consecutive day of protesting there.

                                              Reuters

The full essay is at "Democracy and the Courts: On Austerity."

Pressuring Employees to Act as Lobbyists on the U.S. Debt: Ethical?

How far a boss can ethically become involved in an employee’s political role as a citizen is a question perhaps more important than whether a business should make demands regarding what an employee does in the privacy of his or her own home (e.g., smoking or drinking products that are legal). It would obviously be objected, for example, were a supervisor to insist on accompanying a subordinate into the voting booth to verify the vote. What about pressuring an employee to lobby as a private citizen in the company’s interest without being paid for that work? Is it even work when it is “voluntarily” done on “off-time”? Finally, would it make a difference if the issue held systemic importance—meaning if it were vital to the country itself or at least the economic system—and the particular stance being advocated by the boss had value in solving the systemic problem (i.e., not just in the company’s interest)?

                 Federal U.S. deficits as a percentage of GDP from 1792 (2012-2016 projected). Notice that the projections take the deficits down from 2008-2010 levels. Notice also 1960-2010 as differing significantly from the "episodic" pattern in the 1792-1930 period. Why?

The full essay is at "Pressuring Employees."

Sources:

Damian Paletta and Kristina Peterson, “CEOs Flock to Capital to Avert ‘Cliff,” The Wall Street Journal, November 28, 2012.

Christina Wilkie, “’Fix The Debt’ CEOs Underfund Employee Retirement, Demand Cuts For Elderly,” The Huffington Post, November 27, 2012.

Ethan Rome, “Goldman Sachs CEO Lloyd Blankfein Wants Seniors to Get Less,” The Huffington Post, November 27, 2012.

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.

Conflicts of Interest in Europe’s Greek-Austerity Impasse

At the conclusion of the European Council session in March 2015, all 19 of the state governors in attendance still wanted the state of Greece to remain with the euro. As for whether Greece should continue its austerity program and reform its economy as per the ongoing agreement on continued bailout funds, the tally was 18 to 1. Although both federal and state officials in the E.U. overwhelming believed that the austerity program had been behind the growth in the Greek economy in 2014, the Greek finance minister and most Keynesian economists disagreed, pointing to the fact that the state had lost a quarter of its GDP under the austerity. Besides this honest difference of opinion on the effectiveness of the strategy, conflicts-of-interest compromise the “club of 18” and thus its position.

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

Syriza Party Governing in Greece: Austerity and the E.U.

Clarion calls of confrontation roiled through the E.U. after the state election in Greece on January 25, 2015. Would the E.U., heavily dominated by its largest state, and the European Central Bank (ECB) accept a larger public deficit (i.e., more government spending to alleviate the austerity) and continue the cheap loans, or would Alexis Tsipras, the new Greek prime minister, have to choose between continued austerity and default? 

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

Budget Austerity in the E.U.: Turning the Russian Invasion of Ukraine into an Advantage

With economic growth in the E.U. flat-lining in mid-2014 after a modest recovery, pressure mounted to relax the federal "austerity" constraints on the state budgets. According to The New York Times at the time, "(p)olitical and financial instability related to Russia's confrontation with Ukraine and the effects of escalating economic sanctions between [the E.U.] and Russia have further clouded the economic outlook."[1] Mired in the austerity vs. fiscal stimulus dichotomy, E.U. leaders may have been missing an opportunity here.

The entire essay is at “Budget Austerity in the E.U.”

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[1] Liz Alderman and Alison Smale, "Divisions Grow as a Downturn Rocks Europe," August 29, 2014.

Does Austerity Work?

Does raising taxes and cutting government spending reduce a government’s deficits and thus debt? Confine consideration to more tax revenue and less spent and the theoretical answer is yes; it being a simple matter of mathematics. Include the impacts of raising taxes and cutting spending and the answer become far less straightforward. More paid in tax means less disposable income, which means less consumption and thus less produced (i.e., GNP). A government spending less also means less consumption in the economy, and therefore even less to be produced to meet demand. In short, austerity is recessionary. Whether the ratios of deficit and debt to GDP increase depends on how much the numerators drop relative to the decrease in GDP. We can look at the E.U. for some empirical evidence.

 If austerity kills dignity, then pressure on governments to relax spending cuts can be expected.   source: rt.com

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

Should Icelanders Push for E.U. Statehood Anyway?

In late April 2013, a slight majority of Icelanders who voted in the parliamentary election went for a return to the center-right Independence and Progressive parties even though they had been responsible for the banking crisis that bankrupted Iceland. The two parties promised to forgive or renegotiate the Icelanders’ personal debt and end the four years of austerity by lowering taxes, ending capital controls and stimulating foreign investment, according to the New York Times. The center-left governing parties, including the Social Democrats, had cut spending and raised taxes, making the carrots being offered by the center-right parties all that more alluring. Although not the main issue of the election, the prospects for Iceland becoming a state in the European Union lessened significantly with the ousting of the center-left government. Unlike that government, the center-right parties voiced skepticism and advocated a referendum before any the government would take any further steps. In the wake of the election, it might be helpful to reflect on whether Iceland should become a state. After going over some economic and political factors, I want to highlight subtler factors whose influence is typically understated in newspaper headlines.

The complete essay is at Essays on Two Federal Empires.

From this perspective, it can be said that Britain are Ireland are part of Europe, but what about Iceland? Source: luventicus

Should Germany Prop Up the E.U.'s Southern States?

In April 2013, Deutsche Welle reported that the German central bank had “analyzed possible effect a domestic growth package could have on southern European economies. ‘By and large, it would have no impact,’ claimed Clemens Fuest, president of the Mannheim-based Center for European Economic Research. ‘We won't be able to fight recession in southern Europe with domestic growth incentives.’ He added that southern European states do not just have a demand problem. ‘Prices there have got out of hand,’ he said. ‘Wages and labor costs have spiraled out of control, and must be brought down again. If you were to implement a growth scheme, you'd only slow down the necessary adjustments.’”

The full essay is at Essays on the E.U. Political Economy: Federalism and the Debt Crisis, available at Amazon.

Greek Austerity Win at E.U.’s Loss?

According to one director of a public-debt consulting firm in the E.U., “In the realm of investor perceptions, Spain has crossed the Rubicon from solvency to insolvency.” A day after Europeans in the state of Greece had given a narrow victory to parties in favor of maintaining the austerity program there, investors’ concern regarding the viability of the euro pushed the yield on Spanish 10-year bonds as high as 7.2 percent—a level that Spain’s economy minister, Luis de Guindos, claimed is unsustainable in the long term.

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

Merkel’s Fiscal Box in the E.U. Debt Crisis

Germany was ruling out any substantive shift in its approach to Europe's debt crisis despite a rising chorus of opposition to Berlin's austerity policies that reached a crescendo in the elections in Greece and France on May 6, 2012. On the following day, Merkel “rejected the notion that Europe was on the brink of a major policy shift after Socialist Francois Hollande defeated her fellow conservative Nicolas Sarkozy and Greek voters punished ruling parties who slashed spending to secure a foreign bailout. . . . Merkel herself made clear that, while there was scope to discuss tactics, the overall strategy EU leaders committed to by agreeing a compact on fiscal consolidation was ‘not negotiable.’”[1] That seems a bit presumptuous, considering that the “fiscal pact” had yet to be ratified in enough of the states to go into effect.

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

1. Noah Barkin and Stephen Brown, “Germany Austerity Policies: Berlin Unmoved by Votes in France, Germany,” The Huffington Post, May 7, 2012.