Tsipras vs the rest: A clash of political cultures
03 July 2015
The present Greek debacle is the result of a clash of political cultures.
On the one hand is the culture of the European Union, where every decision has to be mediated through complex institutions representing 28 different countries, each with its own political culture, and then often has to win the assent of the European Parliament and of an independent European Central Bank. Theatrical gestures and moments of brilliant eloquence count for little in this world. Building a good track record, with good civil service staff work to back it up is what counts in the EU political culture.
EU bailout decisions also have to be approved by the IMF, a global body, most of whose members and clients are far poorer than the Greeks. This creates an additional layer of interests which Greece must try to satisfy, additonally to its EU partners. In this setting, credibility and patience are vital to success. The new Greek government did not have patience and soon it lost credibility as well.
In stark contrast with what was needed, it seems to me that the Greek Government is made up of people who come from a revolutionary tradition, who believe that progress will come from a harsh rupture with the past, and whose proponents envisage a nationalist or socialist utopia once that rupture is complete.
The Greek government are also people who have little or no previous experience of government. They have thrived politically by agitating against the existing order, without the necessity of explaining how things would work after they obtain power, and how they would survive and govern in the complex interconnected reality that is the global economy of today.
That the Greek electorate would elect such people to office is explained by the desperation into which they have been led by the irresponsible policies pursued by successive Greek governments since the 1980’s, who tried to win the votes of Greeks by promising them a standard of living that was not matched by their productive capacity, and by the mistaken decision to take Greece into the euro before the results of these bad policies had been properly rectified.
The problem is that the activities of the new government made things much worse than they were when they took office.
By creating doubt about whether they would honour the debts incurred by their predecessors, the new government created a crisis of confidence, and this loss of confidence led to a suspension of normal commercial activity. By looking for debt relief before reforms were implemented they put the cart before the horse.
The underlying problem of Greece is a lack of productivity and export potential, but the Greek government, and to a great extent the EU authorities too continue to ignore this. Greece’s productivity problem will take years to solve, not least because Greece is an elderly society. The structural reforms urged by the EU will help, because they will clear the clogged arteries of the Greek economy and allow talent to be reallocated to where it can do something productive. But the ageing of the Greek society will remain an intractable problem.
As a result of the drama generated by their new Government, Greeks, instead of focussing on ways to invest to make more money, became in recent months obsessed instead with protecting what they already had. Whereas the economy was on a path towards modest growth when the old government left office, it quickly plunged back into recession as money was withdrawn from the Greek banks, thereby further weakening Greece’s ability to meet its ongoing expenses, and to pay its debts as they fell due.
The timing of the Referendum, AFTER Greece has already run out of money, and on a proposal that has already been withdrawn, could not be worse. It compounds the panic and uncertainty. It is probably in breach of the Greek constitution. Apparently the Greek constitution does not allow referenda on fiscal issues, and the bailout offer contains many elements that are fiscal.
If ever there was a case study that shows how important it is to have political leaders who understand and face up to their responsibilities, and who deal with the world as it is rather than as they might wish it to be, it is to be found in Greece today. The lessons for Ireland are too obvious to require to be spelt out.
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