Piketty: Germany Has Never Paid Its Debts

[Valmy]

What are you on about?  Go back and look at the claim I was responding to. 

I am on about the fact that extreme material superiority doesn't mean much when it is so nationally debilitating to deploy and in scenarios, where it is not even decisive enough to bring about victory, and where vital interests are not even at stake.

[crazy canuck]

What are you on about?  Go back and look at the claim I was responding to. 

I am on about the fact that extreme material superiority doesn't mean much when it is so nationally debilitating to deploy and in scenarios, where it is not even decisive enough to bring about victory, and where vital interests are not even at stake.

So you think the Germans had material superiority in WWII but lacked the ability to deploy it because it would be too nationally debilitating to deploy it?

[Valmy]

So you think the Germans had material superiority in WWII but lacked the ability to deploy it because it would be too nationally debilitating to deploy it?

No because military gear was much less expensive back then. Even just training and equipping an infantry grunt costs a shitload for the US military of today. Which is why our "material superiority" is not the overwhelming advantage you have this need to portray it as.

But if they had fought a comparable war to ours in Iraq...actually say they decided to fight a war in Aghanistan and Iraq in 1939 instead of Poland. Now they might win just because they are a fascist dictatorship but it would be pretty damn expensive and not be particularly interesting to German soldiers having to fight it and civilians having to support it.

[crazy canuck]

So you think the Germans had material superiority in WWII but lacked the ability to deploy it because it would be too nationally debilitating to deploy it?

No because military gear was much less expensive back then. Even just training and equipping an infantry grunt costs a shitload for the US military of today. Which is why our "material superiority" is not the overwhelming advantage you have this need to portray it as.

But if they had fought a comparable war to ours in Iraq...actually say they decided to fight a war in Aghanistan and Iraq in 1939 instead of Poland. Now they might win just because they are a fascist dictatorship but it would be pretty damn expensive and not be particularly interesting to German soldiers having to fight it and civilians having to support it.

Ok, lets get a little more basic.  Do you content that Germany had a material superiority over the Allies in WWII?  I thought the consensus was that it was the Allies who had material superiority.

[Valmy]

Ok, lets get a little more basic.  Do you content that Germany had a material superiority over the Allies in WWII?  I thought the consensus was that it was the Allies who had material superiority.

No. I was referring to a hypothetical comparable conflict in central Asia where they would have had material superiority though.

[crazy canuck]

Ok, lets get a little more basic.  Do you content that Germany had a material superiority over the Allies in WWII?  I thought the consensus was that it was the Allies who had material superiority.

No. I was referring to a hypothetical comparable conflict in central Asia where they would have had material superiority though.

And I was talking about an event that actually happened when responding to Marti's comment about Germany in WWII 

[Valmy]

And I was talking about an event that actually happened when responding to Marti's comment about Germany in WWII 

And I was responding to it in the context of Iorm's comment which Marty was responding to. Because I thought it was part of an ongoing conversation and stuff.

[crazy canuck]

And I was talking about an event that actually happened when responding to Marti's comment about Germany in WWII 

And I was responding to it in the context of Iorm's comment which Marty was responding to. Because I thought it was part of an ongoing conversation and stuff.

Ok.  Well its a bit bizarre to disagree with position that Marti was wrong to compare the US which does have material superiority to WWI Germany. Your argument is that even though the US enjoys material superiority it is too costly to mobilize that superiority for most wars.  But that has nothing at all to do with the point I was making.  Germany was in a total war situation.  They would have used their material superiority if they had it.

[Martinus]

To bring the thread back on topic, here's an interesting essay by Zizek.

Slavoj Žižek on Greece: This is a chance for Europe to awaken

The Greeks are correct: Brussels' denial that this is an ideological question is ideology at its purest – and symptomatic of our whole political process.

The unexpectedly strong No in the Greek referendum was a historical vote, cast in a desperate situation. In my work I often use the well-known joke from the last decade of the Soviet Union about Rabinovitch, a Jew who wants to emigrate. The bureaucrat at the emigration office asks him why, and Rabinovitch answers: "There are two reasons why. The first is that I'm afraid that in the Soviet Union the Communists will lose power, and the new power will put all the blame for the Communist crimes on us, Jews – there will again be anti-Jewish pogroms . . ."

"But," the bureaucrat interrupts him, "this is pure nonsense. Nothing can change in the Soviet Union! The power of the Communists will last for ever!"

"Well," responds Rabinovitch calmly, "that's my second reason."

I was informed that a new version of this joke is now circulating in Athens. A young Greek man visits the Australian consulate in Athens and asks for a work visa. "Why do you want to leave Greece?" asks the official.

"For two reasons," replies the Greek. "First, I am worried that Greece will leave the EU, which will lead to new poverty and chaos in the country . . ."

"But," interrupts the official, "this is pure nonsense: Greece will remain in the EU and submit to financial discipline!"

"Well," responds the Greek calmly, "this is my second reason."

Are then both choices worse, to paraphrase Stalin?

The moment has come to move beyond the irrelevant debates about the possible mistakes and misjudgements of the Greek government. The stakes are now much too high.

That a compromise formula always eludes at the last moment in the ongoing negotiations between Greece and the EU administrators is in itself deeply symptomatic, since it doesn't really concern actual financial issues – at this level, the difference is minimal. The EU usually accuses Greeks of talking only in general terms, making vague promises without specific details, while Greeks accuse the EU of trying to control even the tiniest details and imposing on Greece conditions that are harsher than those imposed on the previous government. But what lurks behind these reproaches is another, much deeper conflict. The Greek prime minister, Alexis Tsipras, recently remarked that if he were to meet alone with Angela Merkel for dinner, they would find a formula in two hours. His point was that he and Merkel, the two politicians, would treat the disagreement as a political one, in contrast to technocratic administrators such as the Eurogroup president, Jeroen Dijsselbloem. If there is an emblematic bad guy in this whole story, it is Dijsselbloem, whose motto is: "If I get into the ideological side of things, I won't achieve anything."

This brings us to the crux of the matter: Tsipras and the former finance minister Yanis Varoufakis, who resigned on 6 July, talk as if they are part of an open political process where decisions are ultimately "ideological" (based on normative preferences), while the EU technocrats talk as if it is all a matter of detailed regulatory measures. When the Greeks reject this approach and raise more fundamental political issues, they are accused of lying, of avoiding concrete solutions, and so on. It is clear that the truth here is on the Greek side: the denial of "the ideological side" advocated by Dijsselbloem is ideology at its purest. It masks (falsely presents) as purely expert regulatory measures that are effectively grounded in politico-ideological decisions.

On account of this asymmetry, the "dialogue" between Tsipras or Varoufakis and their EU partners often appears as a dialogue between a young student who wants a serious debate on basic issues and an arrogant professor who, in his answers, humiliatingly ignores the issue and scolds the student on technical points ("You didn't formulate that correctly! You didn't take into account that regulation!"). Or even as a dialogue between a rape victim who desperately reports what happened to her and a policeman who continuously interrupts her with requests for administrative details.

This passage from politics proper to neutral expert administration characterises our entire political process: strategic decisions based on power are more and more masked as administrative regulations based on neutral expert knowledge, and they are more and more negotiated in secrecy and enforced without democratic consultation. The struggle that goes on is the struggle for the European economic and political Leitkultur (the guiding culture). The EU powers stand for the technocratic status quo that has kept Europe in inertia for decades.

In his Notes Towards a Definition of Culture, the great conservative T S Eliot remarked that there are moments when the only choice is the one between heresy and non-belief, ie, when the only way to keep a religion alive is to perform a sectarian split from its main corpse. This is our position today with regard to Europe: only a new "heresy" (represented at this moment by Syriza) can save what is worth saving in European legacy: democracy, trust in people, egalitarian solidarity. The Europe that will win if Syriza is outmanoeuvred is a "Europe with Asian values" (which, of course, has nothing to do with Asia, but all with the clear and present tendency of contemporary capitalism to suspend democracy).

***

In western Europe we like to look on Greece as if we are detached observers who follow with compassion and sympathy the plight of the impoverished nation. Such a comfortable standpoint relies on a fateful illusion – what has been happening in Greece these past weeks concerns all of us; it is the future of Europe that is at stake. So when we read about Greece, we should always bear in mind that, as the old saying goes, de te fabula narrator (the name changed, the story applies to you).

An ideal is gradually emerging from the European establishment's reaction to the Greek referendum, the ideal best rendered by the headline of a recent Gideon Rachman column in the Financial Times: "Eurozone's weakest link is the voters".

In this ideal world, Europe gets rid of this "weakest link" and experts gain the power to directly impose necessary economic measures – if elections take place at all, their function is just to confirm the consensus of experts. The problem is that this policy of experts is based on a fiction, the fiction of "extend and pretend" (extending the payback period, but pretending that all debts will eventually be paid).

Why is the fiction so stubborn? It is not only that this fiction makes debt extension more acceptable to German voters; it is also not only that the write-off of the Greek debt may trigger similar demands from Portugal, Ireland, Spain. It is that those in power do not really want the debt fully repaid. The debt providers and caretakers of debt accuse the indebted countries of not feeling enough guilt – they are accused of feeling innocent. Their pressure fits perfectly what psychoanalysis calls "superego": the paradox of the superego is that, as Freud saw it, the more we obey its demands, the more guilty we feel.

Imagine a vicious teacher who gives to his pupils impossible tasks, and then sadistically jeers when he sees their anxiety and panic. The true goal of lending money to the debtor is not to get the debt reimbursed with a profit, but the indefinite continuation of the debt, keeping the debtor in permanent dependency and subordination. For most of the debtors – for there are debtors and debtors. Not only Greece but also the US will not be able even theoretically to repay its debt, as is now publicly recognised. So there are debtors who can blackmail their creditors because they cannot be allowed to fail (big banks), debtors who can control the conditions of their repayment (the US government) and, finally, debtors who can be pushed around and humiliated (Greece).

The debt providers and caretakers of debt basically accuse the Syriza government of not feeling enough guilt – they are accused of feeling innocent. That's what is so disturbing for the EU establishment about the Syriza government: that it admits debt, but without guilt. They got rid of the superego pressure. Varoufakis personified this stance in his dealings with Brussels: he fully acknowledged the weight of the debt, and he argued quite rationally that, since the EU policy obviously didn't work, another option should be found.

Paradoxically, the point Varoufakis and Tsipras have made repeatedly is that the Syriza government is the only chance for the debt providers to get at least part of their money back. Varoufakis himself wonders about the enigma of why banks were pouring money into Greece and collaborating with a clientelist state while knowing very well how things stood – Greece would never have got so heavily indebted without the connivance of the western establishment. The Syriza government is well aware that the main threat does not come from Brussels – it resides in Greece itself, a clientelist, corrupted state if ever there was one. What the EU bureaucracy should be blamed for is that, while it criticised Greece for its corruption and inefficiency, it supported the very political force (the New Democracy party) that embodied this corruption and inefficiency.

The Syriza government aims precisely at breaking this deadlock – see Varoufakis's programmatic declaration (published in the Guardian), which renders the ultimate strategic goal of the Syriza government:

A Greek or a Portuguese or an Italian exit from the eurozone would soon lead to a fragmentation of European capitalism, yielding a seriously recessionary surplus region east of the Rhine and north of the Alps, while the rest of Europe would be in the grip of vicious stagflation. Who do you think would benefit from this development? A progressive left, that will rise Phoenix-like from the ashes of Europe's public institutions? Or the Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs? I have absolutely no doubt as to which of the two will do best from a disintegration of the eurozone. I, for one, am not prepared to blow fresh wind into the sails of this postmodern version of the 1930s. If this means that it is we, the suitably erratic Marxists, who must try to save European capitalism from itself, so be it. Not out of love for European capitalism, for the eurozone, for Brussels, or for the European Central Bank, but just because we want to minimise the unnecessary human toll from this crisis.

The financial politics of the Syriza government closely followed these guidelines: no deficit, tight discipline, more money raised through taxes. Some German media recently characterised Varoufakis as a psychotic who lives in his own universe different from ours – but is he so radical?

What is so enervating about Varoufakis is not his radicalism but his rational pragmatic modesty – if one looks closely at the proposals offered by Syriza, one cannot help noticing that they were once part of the standard moderate social-democratic agenda (in Sweden of the 1960s, the programme of the government was much more radical). It is a sad sign of our times that today you have to belong to a "radical" left to advocate these same measures – a sign of dark times, but also a chance for the left to occupy the space which, decades ago, was that of the moderate centre left.

But, perhaps, the endlessly repeated point about how modest Syriza's politics are, just good old social democracy, somehow misses its target – as if, if we repeat it often enough, the Eurocrats will finally realise we're not really dangerous and will help us. Syriza effectively is dangerous; it does pose a threat to the present orientation of the EU – today's global capitalism cannot afford a return to the old welfare state.

So there is something hypocritical in the reassurances about the modesty of what Syriza wants: in effect, it wants something that is not possible within the co-ordinates of the existing global system. A serious strategic choice will have to be made: what if the moment has come to drop the mask of modesty and openly advocate the much more radical change that is needed to secure even a modest gain?

Many critics of the Greek referendum claimed that it was a case of pure demagogic posturing, mockingly pointing out that it was not clear what the referendum was about. If anything, the referendum was not about the euro or the drachma, about Greece in the EU or outside it: the Greek government repeatedly emphasised its desire to remain in the EU and in the eurozone. Again, the critics automatically translated the key political question raised by the referendum into an administrative decision about particular economic measures.



***



In an interview with Bloomberg on 2 July, Varoufakis made clear the true stakes of the referendum. The choice was between the continuation of the EU politics of the past years that brought Greece to the edge of ruin – the fiction of "extend and pretend" (extending the payback period, but pretending that all debts will eventually be paid) – and a new, realist beginning that would no longer rely on such fictions, and would provide a concrete plan for how to start the actual recovery of the Greek economy.

Without such a plan, the crisis would just reproduce itself again and again. On the same day, even the IMF conceded that Greece needs large-scale debt relief to create "a breathing space" and get the economy moving (it proposes a 20-year moratorium on debt payments).

The No in the Greek referendum was thus much more than a simple choice between two different approaches to economic crisis. The Greek people have heroically resisted the despicable campaign of fear that mobilised the lowest instincts of self-preservation. They have seen through the brutal manipulation of their opponents, who falsely presented the referendum as a choice between euro and drachma, between Greece in Europe and "Grexit".

Their No was a No to the Eurocrats who prove daily that they are unable to drag Europe out of its inertia. It was a No to the continuation of business as usual; a desperate cry telling us all that things cannot go on the usual way. It was a decision for authentic political vision against the strange combination of cold technocracy and hot racist clichés about lazy, free-spending Greeks. It was a rare victory for principle against egotist and ultimately self-destructive opportunism. The No that won was a Yes to full awareness of the crisis in Europe; a Yes to the need to enact a new beginning.

It is now up to the EU to act. Will it be able to awaken from its self-satisfied inertia and understand the sign of hope delivered by the Greek people? Or will it unleash its wrath on Greece in order to be able to continue its dogmatic dream?

He rambles a bit here and there but makes a lot of salient points.

[Valmy]

Of course it is ideological this is a political struggle over if individual nations are going to act in accordance with the interests of the union or attempt to swindle the others. Can the financial union function in a confederation setting? Can there be any trust here? The money is kind of beside the point. I think it goes both ways.

[grumbler]

Of course it is ideological this is a political struggle over if individual nations are going to act in accordance with the interests of the union or attempt to swindle the others. Can the financial union function in a confederation setting? Can there be any trust here? The money is kind of beside the point. I think it goes both ways.

Governments should act in the interests of the governed.  If the interests of "the union" are the interests of the governed, the government should also serve the interests of "the union," but only then.  Talk about "swindl[ing] the others" is silly; the people who got swindled here are mostly the Greek citizens themselves (and only somewhat the citizens of the rest of Europe). Now I agree that the Greek citizens are not blameless, because they bought the swindle pretty readily for a long time, but neither are the citizens in most of the rest of Europe, who were also tolerant of the banks' end of the swindle.

As I have said, the best solution here is for Greece to exit the Euro (but not the EU) and get some breathing space and motivation for reform.  If Grexit is a disaster for Greece, it's still better than the disaster of staying, and if it proves a boon to the Greeks and stimulates and Italian or Spanish desire to do the same, that's a win as well, because if the people of Italy or Spain are better off outside the Eurozone, their governments shouldn't work to keep them in.

The interests of "the union" should not be a consideration.

[Martinus]

Of course it is ideological this is a political struggle over if individual nations are going to act in accordance with the interests of the union or attempt to swindle the others. Can the financial union function in a confederation setting? Can there be any trust here? The money is kind of beside the point. I think it goes both ways.

Governments should act in the interests of the governed.  If the interests of "the union" are the interests of the governed, the government should also serve the interests of "the union," but only then.  Talk about "swindl[ing] the others" is silly; the people who got swindled here are mostly the Greek citizens themselves (and only somewhat the citizens of the rest of Europe). Now I agree that the Greek citizens are not blameless, because they bought the swindle pretty readily for a long time, but neither are the citizens in most of the rest of Europe, who were also tolerant of the banks' end of the swindle.

As I have said, the best solution here is for Greece to exit the Euro (but not the EU) and get some breathing space and motivation for reform.  If Grexit is a disaster for Greece, it's still better than the disaster of staying, and if it proves a boon to the Greeks and stimulates and Italian or Spanish desire to do the same, that's a win as well, because if the people of Italy or Spain are better off outside the Eurozone, their governments shouldn't work to keep them in.

The interests of "the union" should not be a consideration.

I agree.

[Valmy]

[Talk about "swindl[ing] the others" is silly;

No because it is in each nation's interests to do what is best for them. In the context of a Union though that probably means taking as much advantage of it as possible as is politically feasible for your own benefit. Ultimately it is in their best interests to swindle.

The interests of "the union" should not be a consideration.

Indeed. That is the problem.

[grumbler]

No because it is in each nation's interests to do what is best for them. In the context of a Union though that probably means taking as much advantage of it as possible as is politically feasible for your own benefit. Ultimately it is in their best interests to swindle.

You have an interesting definition of "swindle," then.  Might want to check to see if it isn't hampering your ability to communicate.

Indeed. That is the problem.

My point was that you should not only avoid claiming it as the problem, you should eschew calling it a problem.  There is nothing whatsoever problematic about a government serving the genuine interests of the governed, even at the expense of the interests of some non-governmental body or organization.

[Valmy]

You have an interesting definition of "swindle," then.  Might want to check to see if it isn't hampering your ability to communicate.

Nonsense it completely applies.

My point was that you should not only avoid claiming it as the problem, you should eschew calling it a problem.  There is nothing whatsoever problematic about a government serving the genuine interests of the governed, even at the expense of the interests of some non-governmental body or organization.

Well it can be a problem and be problematic because there are other people in the world that are not governed by that government.

Now normally we expect all the countries in the world to squabble without regards to each others interests but this is not that scenario. This 'organization' is a pact, a trust, an agreement where that nation is supposed to sacrifice some of its interests for the freely entered into agreement. So say a NATO member letting its military rot away is swindling its allies by doing something selfish for its benefit while taking advantage of the trust of the agreement. It is a con job. Similar dishonest and selfish manipulations can be done in any sort of alliance or trade pact or even a confederation. It is why we have a federal government managing interstate commerce.

Not to mention that fact that it may be to the governed's benefit to enslave people or conquer a neighboring nation. That can be problematic as well.