EVERYTHING MUST GO

Posted in Rants on June 27th, 2011 by Ed

Remember back in May and June of 2010 when, amidst violent protests that produced some corpses, the Greek government agreed to impose a number of austerity measures of the kind favored by the IMF? Sure, the deep cuts in social services, pensions, and public sector salaries/benefits hurt quite a bit. However, the painful adjustment was worth it – a little over one year later the Greek economy is clawing its way back to health.

Wait. Let me check something.

No, actually Greece is more screwed than ever.

Don't worry, though. The IMF is charging over the hill like a knight and shining armor to save Greece (again!) with more helpful fiscal policy reforms. This time the magic elixir – It'll fix everything, really! – is a mass privatization program. Nothing says "building a strong economy for the future" like a fire sale of public assets. Maybe if we're lucky we'll get the chance to buy an airport or two on eBay.

The IMF (and its proxies in the European Commission) isn't exactly a new actor on the global financial stage. It sure is interesting, though, to see its "Structural Adjustment Program" – basically a shock doctrine of the usual neoliberal jerk-off material – put to work on an industrialized, first-world nation. Their routine of coming to countries in their darkest hour offering a financial rescue package in exchange for Koch-ifying their government and letting global investors strip mine the nation's assets is not new. It has been happening to small, underdeveloped countries for decades. It works wonders. Just ask Haiti.

These international organizations intervening in domestic financial crises aren't evil, as some detractors claim. It's simply a matter of understanding their purpose. Their sole concern in every instance is to make sure the banks and financial institutions get repaid. That's it. It's not about rescuing Greece's economy or protecting future generations from debt. It's about preventing the country from defaulting on its debt at all costs. And the only alternative to accepting the poisoned chalice of loans from the IMF/EU/Germany/etc. for a country in Greece's current situation is to default.

I'm not exactly Johnny the Economist, but I understand the consequences of default on a national scale to be quite dire (if Argentina's example is generalizable). Nonetheless part of me wishes that Greece would look calmly and rationally at the history of countries that have accepted this kind of "structural adjustment" in return for a bailout loan before deciding whether to proceed with such radical changes. Is default a better option? Maybe, maybe not. I doubt that it is. The point is that no one bothers to ask the question. The conversation never takes place. All proposals to alleviate the crisis proceed from the ironclad assumption that the banks' money must be protected at all costs. The kingpins in the global financial community warn sternly of the consequences of default, and certainly there would be many for Greeks of all social and financial classes. That said, the consequences of the Fire Sale privatization and austerity plan are considerable as well, especially given that as Greece's own experience last summer argues, such plans don't actually work.

It isn't about what "works", though. It's about seizing opportunities to institutionalize conservative dogma, eliminate welfare states, and pursue the kind of failed low tax strategies that produce such a windfall for the top 1% and do so little to promote long term economic growth. So check back next summer when we find ourselves in the same situation yet again; after the Greeks have auctioned off the airports and highways and power/water supplies and anything else of value, then what?