A Rigid Refusal to Renegotiate: Blaming the Greeks

As Greek party leaders struggled to put together a government in May 2012 after a splintering election, a major (and contentious) issue was whether to demand a renegotiation of the bailout agreement. Alexis Tsipras, leader of the Coalition of the Radical Left known as Syriza (which made large gains in the election), was declaring the agreement null and void given the mandate implied by the gains made on the far right and left (both being opposed to the austerity program). Tsipras believed he “had changed the debate to the point that the formerly dominant parties that had signed the loan agreement were . . .  indicating they might agree to demand it be renegotiated.”[1] His statements were enough to prompt a firm Nein! from Angela Merkel in Berlin and a related “tightening of the screws” from the committee of the European Financial Stability Facility.

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

1. Rachel Donadio and Niki Kitsantonis, “ContinuingLeadership Deadlock in Greece as Its Lenders Watch and Wait,” The New York Times, May 9, 2012.

Anti-Austerity in Greek Government

The Socialists and then the New Democracy Party told Greeks that sacrifices were necessary to avert default on the state’s debt. This position came at a high political cost on May 6, 2012, when both parties lost seats in the state’s legislative election. “The established parties collapsed — they had too much pressure from Berlin and Brussels and the I.M.F.,” said Nikos Xydakis, an newspaper editor and a political commentator, referring to Greece’s foreign lenders.[1] In other words, the leaders of the two mainstream Greek parties sold out their compatriots, having caved in to ultimatums from Merkel operating at the E.U. level. “In a meeting with President Karolos Papoulias, the leader of the leftist party, Alexis Tsipras, ridiculed the leaders of the two main parties whose coalition lost its majority in the parliamentary elections.”[2] Tsipras added that his party would not be forming a government with either party. The New Democracy Party had been unable to form a government in the wake of the election, so it was then Tsipras’ turn to try.

  

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

1. Rachel Donadio and Niki Kitsantonis, “Greek Leftists Rule Out Coalition with Incumbents,” The New York Times, May 8, 2012.
2. Ibid.

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.

Fuld’s Arrogance at Lehman: Systemic Risk

Documents released in May 2012 regarding Dick Fuld at Lehman Brothers prove that he was aware of the high risk involved in holding so much real estate (and related security derivatives). This means definitively that “the ‘forces-out-of- our-control’ argument we hear from Wall Street leaders is [self-serving] bunk. It is the ill-advised behavior of one banker after another, day in and day out, that leads to the sort of devastating financial crisis we are only now emerging from.”[1]

The full essay is in Essays on the Financial Crisis, available in print and as an ebook at Amazon.

1. William Cohan, “Lehman Docs Show Wall Street Arrogance Led to Financial Collapse,” The Huffington Post, May 7, 2012.

Europeans Vote against Austerity

On May 6, 2012, elections took place in six E.U. states. The most significant in terms of the debt crisis were those of France and Greece. In France, Francois Hollande narrowly beat Nicolas Sarkozy. Sarkozy “is the latest of a string of European incumbents, from both the left and the right, to lose in a larger popular revolt against budget-cutting and tax increased during a time of recession and high unemployment.”[1] Hollande said “he intends to give ‘a new direction to Europe,’ demanding that a European Union [amendment] limiting debt be expanded to include measures to produce economic growth.”[2] After midnight, Hollande spoke against austerity to a crowd gathered at the Bastille. To be sure, an anti-Sarkozy-arrogance vote doubtlessly benefitted Hollande. This makes it difficult to treat this (or any other) election as a mandate policywise. Even so, the center of gravity on austerity at the E.U. level had shifted, given the important role of state officials there.


The full essay is at "Europeans Vote against Austerity."

1. Steve Erlanger and Nicola Clark, “Hollande Ousts Sarkozy in French Presidential Election,” The New York Times, May 6, 2012. 
2. Ibid.
3. Rachel Donadio and Nici Kitsantonis, “Greek Voters Punish 2 Main Parties for Economic Collapse,” The New York Times, May 6, 2012. 
4. Ibid.

Holding the Unfit Accountable vs. Murdoch’s Entitlement to Power

“A damning report [in late April 2012] on the hacking scandal at Rupert Murdoch’s British newspapers concluding that Mr. Murdoch is “not a fit person” to run a huge international company has convulsed Britain’s political and media worlds and threatened a core asset of Mr. Murdoch’s American-based News Corporation.”[1] The report also “found that three senior Murdoch executives misled Parliament in testimony” and “alleges that the company sought to cover up widespread phone hacking.”[2]

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. John F. Burns and Ravi Somaiya, “Panel in Hacking Case Finds Murdoch Unfit as News Titan,” The New York Times, May 1, 2012

2. Ibid.

Subsidiarity: Federalism Over Catholic Social Ethics?

In the E.U., the principle of subsidiarity functions in theory like the Tenth Amendment does in the U.S.—again in theory. In both cases, public authority on a given domain or policy-area is preferentially to be exercised at the state rather than federal level. The principle, while not federalism per se, can be an element of it. Taking subsidiarity to be “really federalism” turns the latter into an alliance—giving the states potentially so much power that the government of the federation or union itself cannot act as a check on the state governments.

The complete essay is at Essays on Two Federal Empires.

Wealth: Benefitting and Distorting Society

“One of the great political and economic challenges of our time is figuring out the balance between wealth that benefits society and wealth that distorts.”[1] In terms of benefitting society, invested (as distinct from donated) wealth can benefit consumers by enabling better and cheaper products. Economists estimate that for every dollar invested in productive enterprise, there is $5 of benefit to consumers.  Interestingly, this does not apply to money that is donated (rather than invested) to feed the poor (i.e., consumption rather than production).

1.Adam Davidson, “The Purpose ofSpectacular Wealth, According to a Spectacularly Wealthy Guy,” The New York Times, May 1, 2012. 

Quitting Money: Crazy in Christian Terms?

In 12 years, Daniel Suelo has not made a penny; neither has he spent one. In 2000, he left his remaining $30 in a phone booth (remember those?) and never looked back. He went on to live on public lands, foraging for food and accepting alms from others.  Mark Sundeen, who wrote The Man Who Quit Money about his friend, told an interviewer, “I assumed he had gone crazy or had some kind of mental breakdown. But that is not the case.”[1] The key to unpacking Suelo’s life-choice is to view it as a spiritual journey.

The full essay is at "Quitting Money."

1. “He ‘Quit Money’ and Is Still Living a Happy Life,” MSNBC, May 2, 2012. 

Wal-Mart: Political Contributions as Bribery

In September 2005, “a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country. . . . Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: ‘There is reasonable suspicion to believe that Mexican and USA laws have been violated.’”[1]

The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.

1. David Barstow, “Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle,” The New York Times, April 21, 2012.

The Internet Escapes China's Grasp

The “surprising escape” of Chen Guangcheng, a blind legal activist, from house arrest to the presumed custody of U.S. diplomats was “buoying China's embattled dissident community” even as the government lashed out, “detaining those who helped him and squelching mention of his name on the Internet.”[1] Two points bear further scrutiny.

The full essay is at "The Internet Escapes China's Grasp."

1. Alexa Olesen, “Chen Guangcheng Escape: China Activists Inspired by Blind Dissident Lawyer,” The Huffington Post, April 29, 2012. 

Obama Caved to the Agribusiness Lobby

Faced with political pressure from Republicans and farming groups, the White House decided in April 2012 not to go ahead with rules that would have prevented children from “operating heavy machinery, handling tobacco crops, working in grain silos or performing other jobs considered potentially dangerous.”[1] The Labor Department issued a statement indicating it was withdrawing the rules due to concern from the public over how they could affect family farms. “The Obama administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations,” the department announced.[2] I contend that this rationale was a ruse intended to cover up the true source of the political pressure. Family farms were actually exempted from the proposed rules.

The full essay is at "Obama Caved to the Agribusiness Lobby."

1. Dave Jamieson, “Child Labor Farm Rules Scrapped by White House under Political Pressure,” The Huffington Post, April 27, 2012.

2. Ibid.

The E.U.: The Growth Union

In relying only on austerity and cheap bailout loans, the German-led strategy has proffered a false sense of European integration in the E.U. Even as expanding the bailout funds to roughly 800 billion euros and strengthening the E.U.’s means of enforcing limits on state deficits and debt are along the line of continued incremental shifts of governmental sovereignty from the state governments to that of the E.U., the related austerity (and recession) sparked a populist backlash in several states. At the state level (and this level has a major role at the E.U. level—unlike in the U.S.), the state-rights (i.e., anti-E.U.) parties have been the beneficiaries even if they could not gain outright majorities. The National Front in the state of France is an obvious example, as it captured 18% of the vote in the run up to the general election in 2012.  Other things equal, such a spike translates into brakes on further European integration in the medium term.

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

Hollywood Bribes China

The Foreign Corrupt Practices Act, known as F.C.P.A., “forbids American companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.”[1] The practical difficulty facing American companies doing business around the world is that in some cultures bribes are so ubiquitous they are simply a part of doing business.  For American companies to refuse to participate in what is generally expected can be a competitive disadvantage, particularly if substitutes exist and the practice is widespread.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. Edward Wyatt, Michael Cieply, and Brooks Barnes, “S.E.C. Asks if Hollywood Paid Bribes in China,” The New York Times, April 25, 2012.

Oil and Gas Companies: Citizens Buying Government

“Corporate campaign contributions have historically been split among incumbents of both political parties, with a decided advantage for whichever controls Congress and the White House.”[1] From 2008 to 2012, however, “companies in some major industries that [saw] a threat from federal regulations—most notably the energy sector—[appeared] to have deepened bonds with the Republican Party, with which they share increasingly indistinguishable goals.”[2] One implication is that the party would block regulations to protect the regulated even at the expense of the public safety.

The full essay is at "Oil and Gas Companies."

1. Dan Froomkin, “Corporate Campaign Contributions Show Some Industries Giving Up Appearance of Bipartisanship,” The Huffington Post, April 26, 2012. 

2. Ibid.