It’s been a week now since the guns fell silent between Greece and its creditors and a 4 month armistice was agreed – so what are we to make of the outcome? Yes it’s true that Tsipiris, Varoufakis and Co. were not able to deliver on one of their two main election pillars – debt forgiveness – but does that necessarily make it the complete capitulation that some have said? Would an honourable defeat be a more accurate appraisal? Or could it be that the agreement was simply a crucial exercise in buying time and space?
These are certainly valid questions but unfortunately valid questions don’t always elicit easy answers. For the position we take on this temporary agreement is in many ways determined by how we viewed the bargaining power of Syriza relative to the European establishment from the outset. In other words; hows we perceived that power differential helps determine what range of outcomes we would have considered possible.
So for example if you thought that in the negotiations Syriza held the trump card and all that was required was calling the Eurogroup’s bluff and threatening the nuclear option (Grexit) then you would see the agreement as a relative failure largely attributable to a leadership that lost its nerve. Thus all that was required was different players made of tougher stuff.
If on the other hand you believed that Syriza was negotiating from a much weaker position given that they were seemingly less prepared (and more scared) of Grexit than their interlocutors, then you could rationalise the agreement as best that could have been bargained for whilst providing the necessary breathing room to prepare a potential Grexit strategy.
Read Post →
This article originally appeared in Socialist Economic Bulletin on Friday, the 27th of February
The fraught negotiations between the new Greek government and representatives of the EU institutions are likely to be prolonged. They have centred to date on Syriza’s efforts to find room to alleviate some of the worst effects of austerity and address what is called the ‘humanitarian crisis’.
This is entirely justifiable given the depth of the fall in living standards with widespread malnutrition in Greece, a health crisis, hundreds of thousands of homes cut off from electricity supply and other ills.
Policies aimed at income redistribution can help in this key area, so it is entirely correct to attempt to increase tax revenue from the rich in order to ameliorate the effects of poverty on the poor. But any sustainable improvement in living standards must be based on increasing the productive capacity of the economy which requires investment. Any transfer of income will be a one-off effect if income does not grow. Yet the austerity measures imposed by the Troika (EU Commission, European Central Bank and IMF) and the existing burden of debt interest payments prevent the government from investing and provide a further disincentive for the private sector to invest of its own volition.
Domestic sources of investment
There are two key sources of funds that could be tapped for investment; domestic and international.
Domestically the Greek business class claims the highest share of national income in the whole of the OECD. In 2013 (in nominal terms) the Gross Operating Surplus of Greek firms was €102.2bn from a GDP total of €182.4bn. This profit share in GDP of 56% is way in excess of the customary levels in the OECD. By comparison the German profit share in the same year was 39.3%.
A high profit share is not itself directly harmful to growth and prosperity. If firms were investing profits the productive capacity would be rising rapidly and new high-quality and high-paid jobs could easily be created. But the opposite is the case in Greece, which also has the lowest rate of investment as a proportion of GDP in the whole of the OECD. Again in nominal terms investment (Gross Fixed Capital Formation) in Greece in 2013 was just €20.5bn or 11.3% of GDP. By comparison the German proportion of investment was 19.8%.
This is not to hold up the German economic model to be emulated. Like all the Western economies (including Britain) the rate of investment in the German economy has slowed dramatically over several decades, which is the cause of the ‘secular stagnation’ of the Western economies over the same period.
Even so, the disparity in the profit rate and the investment rate is exceptional in Greece. The proportion of uninvested profits in Germany is equivalent to 19.5% of GDP (profits equal to 39.3% of GDP minus an investment level equivalent to 19.8%). This level of uninvested profits is very high by historical standards. But the proportion of uninvested profits in Greece is 44.7% (profits of 56% of GDP minus investment of 11.3%). The nominal level of profits and investment is shown in Fig. 1 below.
Read Post →
The government is misleading Europe about the reality of austerity and the debt crisis in Ireland so as to avoid admitting that they took the wrong approach with austerity and their failure to get a meaningful debt deal. The truth is austerity is based on flawed economics and it hasn’t worked in either Ireland, Greece or for Europe and Ireland’s debt is unsustainable.
Austerity has devastated Irish society. For most people recovery is just a word being spoken by politicians and the media. The Central Bank and ESRI have highlighted that the much lauded growth figures do not reflect the true health of the Irish domestic economy because they are artificially inflated by multinational and financial activities that do not take place here.
Austerity has resulted in 1.4 million people, almost 31% of the population, suffering from deprivation – which is up from 14% in 2008 and 37% of children suffer deprivation (up from 18% in 2008). The legacy crises are multiple – from mortgage arrears, rent, homelessness, childcare, hospitals, and community services. Unemployment figures are largely reduced because of emigration and the use of unpaid jobs schemes. Domestic demand remains static and working class communities, small towns and rural areas are devastated. Austerity has not worked for the low income and working people of Ireland. At a European level the Euro area is mired in stagnant growth of 0.8%, mass unemployment of 11%, and a debt-to GDP ratio that that has risen from 72% in 2009 to 92% today.
The calculations of economists Reinhart and Rogoff that austerity was required to reduce government debt levels below 90% in order to return to growth was also found to be incorrect. The IMF has also admitted that it underestimated the negative impact of austerity’s higher taxes and spending cuts on economic growth and unemployment.
Read Post →
Issue PN 120 of the People’s News Out Now (PDF)
Page1. Report reveals escalating poverty across EU – the mirage of Social Europe Caritas Europa, has just published a report: Poverty and Inequalities on the Rise –Just social systems needed as the solution!
P1. Ukraine, the EU and Russia
P3. The poor Germans! An unbelievable total of twelve million people in Germany are classed as poor, according to a study by a German welfare association.
P4. Greece baiting seems to have become the favorite sport of the political and media elite
P6. TTIP points to the demise of the public health service. A key part of the TTIP is ‘harmonisation’ between EU and US regulation, especially for regulation in the process of being formulated.
P8. Government prepared for the collapse of euro zone
P8. A lackluster defence of public services
P9. Plain packaging. There’s a big difference between the threatened tobacco plain packaging legal case and what a similar case might look like under TTIP!
P10. Another EU con job
P12. Giscard: ‘Greece should leave the euro.’ Valéry Giscard d’Estaing, author of the EU Constitution/Lisbon Treaty, has said that abandoning the single currency would be the best way for Greece to solve its debt crisis.
P12. Ireland continues to suffer from Common Fisheries Policy
P13. TTIP; education and for-profit colleges. Proposals to make education a ‘traded’ commodity could cost the Irish taxpayer millions, by allowing investors in ‘for-profit’ colleges to sue the government for loss of profit as a result of state investment in public education.
Read Post →
Satharn 7 Márta, 2 i.n.
Ceiliúradh Lá Idirnáisiúnta na mBan
Women in the water resistance
Cainteoirí: Ann Farrelly (Sord), Cat Inglis (Baile Átha Cliath Thoir Thuaidh), Jessica Hughes (Fionnghlas), Carole Watson Purcell (Tamhlacht). Cathaoirleach: Betty Purcell.
? Teach Shéamais Uí Chonaíle (43 Sráid Essex Thoir)
Saturday 7 March, 2 p.m.
International Women’s Day celebration
Women in the water resistance
Speakers: Ann Farrelly (Swords), Cat Inglis (Dublin North-East), Jessica Hughes (Finglas), Carole Watson Purcell (Tallaght). Chairperson: Betty Purcell.
? James Connolly House (43 East Essex Street)
Read Post →
Wikipedia scores zilch when it comes to introducing the term fine art photography:
Fine art photography is photography created in accordance with the vision of the artist as photographer. Fine art photography stands in contrast to representational photography, such as photojournalism, which provides a documentary visual account of specific subjects and events, literally re-presenting objective reality rather than the subjective intent of the photographer; and commercial photography, the primary focus of which is to advertise products or services.
This begins by implying that non-fine art photography cannot the act of a creative photographer or — another possibility given the partisan logic of the premise — all photography created by an artist belongs to the fine art stable. The error is then compounded by a categorical contrast between the esteemed subject of fine art photography and two other types of photography: the representational sort, such as photojournalism, and the commercial kind. We can take the hint and regard these last two as inferior: one is merely a visual record of what exists and the other merely vulgar advertising.
Two books published by Hatje Cantz embody what is really at stake here. World Wide Order is a collection of photographs by Julian Röder, divided thematically but united by a concern with the incestuous union of power and economics that we know as capitalism. The first section is entitled The Summits, a series that started when Röder was a participant in the protests at Genoa in 2001 and which evolved as he recorded moments from the opposition to the G8 summits in Brussels, Evian, Gleneagles, Heiligendamn, Thessaloniki and Hokkaido. Impressive as the 2003 anti-war protests were, bringing millions of civilians onto the streets around the world, they were essentially passive and cannot be compared with the spirit of protesters that Röder captures with his camera. He records civil disobedience as it should be — organized, focused, prepared to defend itself, courageous – epitomised by a shot taken at Gleneagles in 2005 that calls to mind an infamous moment photographed during the Battle of Orgreave. As the G8 organizers retreated to rural locations in order to outwit opposition, conflict moved from urban barricades to country lanes and fields. Gentrify this if you can.
Read Post →