Sunday, January 13, 2013

Can The Left save Greece?

A blog by the name of New Left Project published an article titled “Can the Left save Greece?”, as well as an interview with Yiannis Milios who is a Professor of Economics at the Polytechnic University of Athens. Prof. Milios heads a group of economists including Yiannis Dragasakis, Giorgos Stathakis and Efklidis Tsakalotos, who collectively shape SYRIZA’s economic policy (according to the article).

The article impresses because it is quite balanced. Put differently, it is not demagogic, which is what one might expect articles from such a source to be. It is the interview with Prof. Milios which I find particularly interesting, at least interesting enough to comment on Prof. Milios’ statements.

“They (EU countries) are mostly governed by neoliberal parties, while their socialist parties are actually neoliberal as well. There is obviously intensification in class struggle, not just in Greece but also in Italy, Spain and Portugal, which slowly de-legitimizes the neoliberal spin on the crisis. Therefore, it’s the class struggles themselves that change the circumstances and create this new situation in which the Left perspective steadily gains ground” – I have trouble seeing it that way. Certainly France is not governed by a neoliberal party and there are many, many Conservatives in Germany who criticize Merkel for having moved even left of the center. The whole idea of a ‘neoliberal spin’ is far-fetched to me. I think what we have seen in Continental Europe for much of the post-WWII period is the unfolding of Keynes-policies. Except that Keynes, I believe, recommended deficit spending only during parts of the economic cycle with a balance over the entire economic cycle, whereas most Continental European countries have had uninterrupted (or only briefly interrupted) deficit spending for decades now. And what made matters worse: the spending was, to an excessive degree, ‘true spending’ (on consumption) instead of investment in the future. Yes, I agree that there seems to be a new perspective for The Left but that is more the result of ineffective leadership of cozy political establishments than the consequence of a failed market system.

“The Left has a very clear position: only through reshaping the social and production models can European societies get through this crisis” – I wish members of the established and cozy political elites would make statements like that! This is assuming that Prof. Milios means what I think he means, namely: a common market (particularly when a large part of it has a common currency) cannot be sustained when investment, production, employment, etc. move into one direction and loans flow into the other direction to finance consumption there.

“The model of a social co-operative economy, operating in a more democratic context, is the one that can take our societies out of this crisis” – the so-called ‘Genossenschaften’ represent an important part of the economies in the German-speaking countries.  The concept for such ‘Genossenschaften’ was developed by Friedrich Wilhelm Raiffeisen in the second half of the 19th century. Essentially, they are somewhat closed systems where the customers are also the owners. The owners’ profit motive becomes of secondary importance: if they earn less as owners because the ‘Genossenschaft’ makes less profit, they make up for that as customers who pay lower prices. Such ‘Genossenschaften’ are clearly interesting alternatives to capital market based ownership.

“Back in the 1980s, PASOK favored capitalist interests over the interests of the vast majority of the people.  Our lead is what society needs and not the imaginary ‘foreign ties of the country’ to its lenders. We say ‘people over profit’" – well, that is a statement for populist consumption. It would lend more credibility to SYRIZA if they didn’t use such statements which have general appeal but no specific meaning.

“We represent the social front created in Greece against austerity policies and our ambition, together with the affiliated forces of the European Left party and others who will join in the process, is to enable the establishing of a European front against austerity” – sounds like milk & honey! Prof. Milios should explain that there is not one Eurozone country which can print its currency. Thus, and to the extent that the above involves deficit spending, a country must be able to borrow. If it can’t borrow and if it doesn’t have the above-mentioned ‘foreign ties to lenders’, the country is caught in extreme austerity.

“We will call for an international forum to discuss the viability and targets of Greek and European debt and budgets. We also intend to take up initiatives in the direction of re-examining the European Union treaties that make up the pivotal points of what brought us to this" – well, I think Angela Merkel could live with that.

“Wages, for once, will be decided through free negotiation between social institutions that represent the productive classes” – I presume Prof. Milios means that wages should be freely negotiated between employees’ representations and managements of a company. That would be a dream come true for many entrepreneurs who despise dealing with central union dignitaries who have other things on their agenda than the well-being of the entrepreneur’s company.

“SYRIZA considers increasing revenue from taxation to be a major priority. We will use tools like the newly established assets list, we will establish a code that will discourage tax-dodging and we will achieve a dramatic (according to current data) increase in revenue” – all I can say to this is: more power to you!

“It’s unthinkable that in a society facing a humanitarian crisis, expenditure is directed towards military spending instead of covering basic necessities like feeding the population and heating schools and hospitals” – all I can say to this is: more power to you!

“It’s certain that the prosperity they (powerful lobbies) enjoyed for decades, the immunity from taxation, has created enough “stock” the powerful could and need to share in order to restart our society” – all I can say to this is: more power to you!

“There certainly need to be new ways to finance our dying economy. For instance, apart from the savings from structural adjustment, special purpose banks will be founded, to operate essentially as investment funds” – Prof. Milios is blowing smoke again because he leaves the impression that all Greece needs in order to finance new productive investment are special purpose banks. As pointed out above, Greece needs the money from those ‘foreign lenders’ because Greece doesn’t generate enough savings on its own in order to finance the necessary growth. Even a new special purpose bank can’t do any lending if it doesn’t have the funding.

“If we define ‘investment’ as a fund coming to buy up businesses which have found themselves in a tough spot because of the crisis, downsize them, fire staff and sacrifice its long-term prospects for short-term profitability, then we are categorically against this” – all I can say to this is: more power to you! Greece does not need asset strippers as it tries to turn-around its economy!

“If we define ‘investment’ as providing capital for the development of activities that respect our society as a whole, that in order to produce profit make use of what modern technology can provide, that respects the worker’s rights and the natural environment, if they cover basic social criteria like jobs creation, then yes, we are for that kind of investment” – all I can say to this is: more power to you!

“If a left-wing government is backed by the people who, in the past, flooded Syntagma square and demonstrated their dissent against austerity policies in every city in Greece, then we have nothing to fear. This negotiation will prove to be of benefit to the vast majority of the Greek society” – all I can say to this is: power away from you!

Conclusion: I am reminded of a previous interview with Mr.Yiannis Dragasakis of SYRIZA. He, too, had given a rather reasonable interview only to blow it with his last statement. Prof. Milios repeats that experience: by and large a reasonable interview but with his very last statement he confirms all the fears that some people have of SYRIZA.


  1. The question-mark is very well fitting.
    I "hear" philosophical talking, a conversation, a good one however, between some people, sitting in a nice kafenio on a Sunday afternoon, somewhere in Athens.

    The biggest dreamer of them is visiting Berlin today.
    I would have loved it to sit with him and film, and make a video out of the result.
    As a witness of facts. Of what has been said really.
    To compare it with what he tells his friends and the people when he is back again in Athens, later.

    Not to be afraid of? No. But I am afraid of the amount of followers, who are drugged by the man's / party's words and ideas.

  2. Everything Milios said sounds like Mao-Leninist claptrap on steroids to me - surprised you 'fell' for any of it Klaus, as in :

    Milios said - “Wages, for once, will be decided through free negotiation between social institutions that represent the productive classes”

    Kastner said - I presume Prof. Milios means that wages should be freely negotiated between employees’ representations and managements of a company

    CK says - what company, the proletariat will have turned it into a workers co-op, which they will turn over to cadres (aka as central union dignitaries) before they join their old bourgeoisie bosses already having fun in the holiday camps. Then the cadres will call in the asset strippers. Only this time it wont take 70 years, should be all done in 70 days.

    But you know all that, I can see your tongue in your cheek, even from the other side of the planet :lol:

    The New Left Project site has been down for about 24 hours - lets hope it stays there.

    Oh, BTW the answer is the same as it always is - NO!


    1. Well, you caught me at it! But I don't mean to be cute about it. On the contrary, I have learned from the Jörg-Haider-experience in Austria that one is very well advised to take the success of pied pipers very seriously. They wouldn't be so successful if there weren't something seriously rotten somewhere.

      If you have read my previous posts on Tsipras, then you know my approach: I certainly don't call anything a 'Mao-Leninist clap trap on steroids' because in doing so I would make myself immediately - and rightfully so - subject to accusations of prejudice. Instead, I take for face value what is said and elaborate on it as though people had meant it the way they said it. And when face value is disguised with fancy words like the comment on wages and labor negotiations, I re-phrase it not in the way I know they meant it but, instead, in the way I think it should be.

    2. @kleingut "They wouldn't be so successful if there weren't something seriously rotten somewhere."

      Was it because of that what was/is "rotten" somewhere, or is/was it fear, confusion, and running after that what creates a good feeling, what keeps up the dream or creates one? Both, I think.

      It is a kind of a mass hysteria, and very dangerous, for the people and for the leader.

      Leaders are also humans, and humans are not resistant for success. It overwhelms them, they get drugged by it and want more, want it to be continued, it changes them into slaves, unfree, and it is dangerous for their development. They do all to please the mass.
      They are addicted to each other.
      It grows, and becomes hysterical.
      Nobody can stop that machine finally.

      That is where I am worried about.
      "The boy" cannot handle a mass that lost control. Nobody can.
      A new Junta time will follow automatically.

    3. Would have been good to have have been a fly on the wall in the Tsipras-Schauble encounter, and to have remained there after Tsipras' departure.

      When watching this interview Alexis Tsipras: Frontline of a financial war I could easily imagine voting for SYRIZA, until I realise that he hasn't offered any viable alternative, apart from 'anything but this'.

      I think there is a stark difference between Haider's Freedom Party and Tsipras' SYRIZA party (apart from which side of the aisle they sit on). Haider would have never been able to get an absolute majority (would he ?), but Tsipras probably could, and probably will given the 50 bonus seats rule.


    4. The phenomena Haider & Tsipras are 1:1 comparable in my opinion. The personalities are not.

      The phenomenon was/is that of a charismatic pied piper. An extremely talented populist. Someone who could literally sense what vox populi was thinking/feeling. And someone who could put a response to all that in beautiful, catching words and phrases. That's what the two have in common.

      Haider was a very well educated (constitutional laywer) and a very well read person. His formative authors were people like von Hayek, Popper, Dahrendorf, etc. The authors of true liberalism and/or liberty. In my opinion, Haider was in a completely separate league from right-wing people like Le Pen, Wilders, etc. Haider's intellectual capacity surpassed that of most Austrian politicians during his time, before and since then. I don't think that one can say that much about Tsipras.

      Haider was a psychologically unbalanced personality; strong symptoms of narcissism combined with traits of manic-depressive moods. Haider was a totally driven person; I would guess driven by his unsatiable desire to be accepted and loved. Tsipras doesn't strike me that way at all. On the contrary, Tsipras strikes me as someone who is in politics because he is having fun with it (and should the fun cease, he would get out of it). Tsipras doesn't strike me like a complex personality; Haider was an extremely complex personality.

      Haider was the absolutely best politician I can think of to have had in opposition in Austrian politics. He literally single-handedly took up the battle with the Red/Black-corruption in the country and drove 'the big ones' ahead of him in Robin-Hood-style. He caused the neat Red/Black-dividing-up-of-the-country to retreat quite a bit. I don't really see Tsipras accomplishing something like that.

      I don't think Haider could have ever gotten 51% of the popular vote and neither can Tsipras (I disagree with you when you think he could). But just like Tsipras, Haider had put his party into first place. As the largest party, Haider could have formed a government just like Tsipras could (albeit a lot more easily because of the 50-seat gift).

      Haider's biggest mistake was to have accepted the invitation to join a coalition government with the Blacks. Tsipras should learn from that. People of Haider's mold do not blossom in a role where they have to excercise responsible governance. They blossom when they tell their believers what paradise is like and that the only reason why they can't enjoy paradise is because their established political governance is so incompetent.

      In Austria, it had gotten so far that the Red/Black coalition, which had a two-third majority in parliament and which could therefore do what it wanted, still considered - before they took a decision - what Haider's reaction to it might be. About one-third of Austrians felt 'it's good to have Haider because he makes sure that those big guys are now more careful with their corruptive ways'. Tsipras should also strive for that kind of a role (providing that he is fit for it).

      The fear of Haider as a chancellor was absolutely misplaced. His period of government would have been a short one because suddenly he himself would have been responsible for delivering paradise and his voters would have discovered that even Haider could not do that. The same would happen to Tsipras, I believe. Perhaps the damage to Greece would be greater after such a brief stint than the damage to Austria would have been.

      I wish Haider would have stayed alive and in opposition and I hope Tsipras stays alive and in opposition. It's always good if established governments feel the pressure from a Haider or Tsipras to perform miracles and to achieve paradise, and who learn to worry that if they do something untoward, someone will be after them. People like Haider or Tsipras are wonderful instruments to keep political elites on their toes.

  3. In 1992 I bought a house in Slovenia, I'm not sure whether or not I would have ever 'settled' there permanently, I still own the house so I the option's still there. But after Croatia & Bosnia the region lost its appeal.

    But as a result of buying the house and being around the region during the Balkan Wars I was aware of the rise of Haider, his intellectual attributes, etc.

    I also had a friend in Graz, who owned a car sales franchise, a couple of filling stations etc. He explained how the Blacks and Reds divided the spoils, when he had to 'swap' one filling station for another because the Blacks had too many on that side of the city (something like that). Even though he was a beneficiary of the system he wanted to see it change.

    However by the time Haider formed the coalition with the Blacks I'd retreated to Singapore and my day time IT job, and my old pal in Graz had passed on. Once I lost my geographic proximity and my insider contact it was hard to keep up with events. Until the EU imposed the diplomatic sanctions on Austria. After its inaction in the Balkans, that stunt destroyed what little respect I had for the EU as an institution.

    Yes governments need a strong opposition, and I would add one that offers an alternative set of policies - not a no-alition that opposes any and everything. You cannot replace a bad system with no system, any more than you can replace a rotten floor with no floor.

    My scenario for a Tsipras government is disintegration of PASOK, worsening unemployment, collapse of government, yet another election, low voter turnout and the 50 seats. Maybe in coalition with one or all of - DemLeft, IndiGreeks & PASOK rump (if any of them have any seats) but not with ND - it would be in opposition.


    1. To bring you up to date: Haider got 27% at the election, making his party the number 2 (a few hundred votes ahead of the Conversatives; the Social Democrats were no 1 with around 30%, if I recall). The head of the Conversatives (Schüssel) had promised before the election that if he didn't become no 1, then he would go into opposition. Non-negotiable!

      For seemingly endless weeks, Red and Black played an embarrasing game. The Reds (short of an alternative coalition partner) begged the Blacks to form a coalition; the Blacks said they could not break their word to go into opposition. It was a charade. Haider was off on a private trip to the US and watched from there how surveys showed him going from 27% to 33% without any doing on his part!

      Finally, the Conservatives gave in and agreed to a coalition. I still remember how that news was given by a ORF-crew to Haider on a street in NYC. Disappointment was written all over Haider's face. I couldn't understand that because I thought he would be happy to continue in opposition and automatically collect more support.

      As it turned out, the Red/Black deal fell apart at the last minute and Haider stood ready to join the Convervatives. Some say that this had been planned behind the scene from the start; others say that it just happened.

      Looking back, I truly believe that Haider thought he should contribute something good to the country. He must have known that his party would be slaugthered once in government and once forced to act with responsibility. What he probably did not expect was that the 33% would relatively quickly go down to about 5%.

      Perhaps Tsipras ought to study that decline a bit before he pushes his luck too much...

  4. People like Haider or Tsipras are wonderful instruments to keep political elites on their toes.

    Problem is that the leader often has no staying power once they get any, and their parties often disintegrate because of factions. The best you can hope for is that they last long enough to nudge the mainstream one way or the other.

    You can see it happening with the Tea-Party movement - what are Palin and Bachman up to these days - moose hunting, polar bear baiting probably. What happened to the Occupy movement - they never made it out of the stables, let alone to the starting gate.


    1. Haider was exactly the opposite of the Tea Party. Just to take a figure: I would say 4 out of 5 of his proposals made sense. The Red/Black-coalition always opposed them for 2 reasons: one, they couldn't say that something coming from Haider was good and, two, they feared about their own electorate if they did what Haider proposed. In the end, they almost always got both: they eventually did what Haider had proposed and then they lost their electorate, too.

      From that standpoint, Haider was - contrary to the Tea Party - a most constructive force. He couldn't have been destructive because the Red/Black-coalition always had the absolute majority, much of the time even the two-thirds majority.

      Actually, I think this is what the electorate wanted. They wanted Haider to be big enough to cause trouble for Red/Black but not so big that he could cause trouble for the country.

      Another reason why you don't want a Haider/Tsipras in government is that they tend to make complete turn-arounds once they see the spoils of power. Haider had made his name as the Robin Hood against the corruption of the mighty. Once his party had might, some of the party members did more corrupting than anyone ever did before them.

  5. Looks like at least one person is thinking along the same lines as me re possibility of a SYRIZA government -- Megan Greene, former Director of European Economics at Roubini Global Economics, now at Bloomberg - Thought it was safe to forget Greece? Think again

    If you're wondering who Maverick Intelligence is - its Greene's, registered 02/01/2013


    1. I would still argue that Tsipras better stay away from government responsibility in the near future. Should he indeed assume government responsibility, I am pretty sure that it would be a very short stint. Either he sticks to his line and gets alienated by the EU, or he doesn't and then he would get alienated by his followers. Tsipras can accomplish a lot more through opposition (and he can have a lot more fun in that role).

    2. SYRIZA can only remain in opposition if there's an elected government. And if there's no elected government———


    3. I cannot see a situation where SYRIZA alone would get 151 seats (or more). But even if they did --- it could still tolerate a minority government on the part of others. That way, they would have very significant control over government without any direct responsibility.

  6. I did not mean they would get an absolute majority, I meant they would govern in coalition. Hopefully this is closer what I meant to say.

    My scenario for a Tsipras government is 1. disintegration of PASOK, worsening unemployment, collapse of government, yet another election 2. SYRIZA govern in coalition, with one or all of - DemLeft, IndiGreeks & PASOK rump (if they have any seats), ND would be in opposition.

    In a unicameral centralized state such as Greece I can't see how a party such as SYRIZA (limited experience) can play a constructive role from the opposition benches - it's only choice is to destabilize. My assumption is that because its been in government ND is more likely to be a 'loyal opposition'.

    Maybe Haider in perpetual opposition was an option for Austria 10-15 years ago - Austria has a federal bi-cameral system, so I assume other forces are always in play - and I don't recall Austria's economy being on its knees at the time.

    BTW I was not comparing the policies of Haider with the Tea Party I was comparing their fate. They arrive on the scene, they influence the status quo, and then they are gone. As with Wilders, Pauline Hanson, Nigel Farange, True Finns etc, etc. Not sure what the Occupiers wanted to be, their economics team had some good ideas for Wall Street reform, it included insiders like clever quants, invest analysts etc who'd been part of the problem.


  7. PS - Unilever has a competitor - Hankel - should mean cheaper shampoo and detergent etc :)

    1. I am actually quite amazed! In the blogosphere and the twitter world, people are competing with one another for the best arguments why no one will ever invest in Greece. And in the real world, one can now add Henkel to Cosco, Unilver and HP (and perhaps others who have not hit the radar screens yet).

      Particularly when Henkel says that they want to produce locally for local distribution, one ought to think about that. What they are saying is that local production is more competitive than shipping to Greece from abraod. This competetes with the favorite argument of pundits that Greek production can never compete with foreign production.

      I don't even see the convertibility risk as such a threat to foreign investments. The foreign investor typically invests his equity in real assets (property, equipment) which are sort of a hedge against devaluation. And the rest is local expenses against local revenues (or rather: should be).

      So I conclude that the Greeks are going down the alphabet as they implement reforms and set new policies and they simply haven't gotten to the letter 'f' yet (standing for foreign investment).