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Sam. Saint gonna change. Welcome, friends, to another edition of Economic Update, a weekly program devoted to analyzing the economic dimensions of our lives, our jobs, our incomes, our debts, those of our children, the prospects economically that face us in the future. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I currently teach at the New School University in New York City. Before jumping into today's updates, I wanted to make a few announcements very quickly. I will be traveling around the country to a variety of places. I want to quickly list them in the hopes that it might induce you to come and that I could meet you between now and Thanksgiving. I will be speaking in the following Tampa, Florida Houston, Texas Ames, Iowa Fresno, California Seattle, Washington Bellingham, Washington Bothell, Washington Berkeley, California and Farmingdale in Long island in New York. The details for all of these presentations are available at our website, Democracy at work. That's all one word. Democracyatwork.info and I urge you to take a look. I do want to draw your special attention. If you are going to be in the Bay Area of San Francisco, Berkeley, Oakland on the 29th of October, I will be giving a talk there in the late afternoon and evening for a very interesting group that I would like to make you aware of. It's called the Living New Deal. It's an institute devoted to remembering and understanding what the New Deal was and the lessons it offers to us in this time of economic difficulty. It's based at the University of California at Berkeley, and I will be speaking with and for them at the Berkeley City Club, 2315 Durant Avenue, the afternoon and evening of October 29th. So if you're in the area, please again Check our website, democracyatwork.info or for that matter, the Living New Deal, which is their website, for details. Okay, quickly, some economic updates that I think merit our attention in terms of what's happened in the last the ongoing struggle around Planned Parenthood. Well, there's some economics here to keep in mind. If the effort to defund Planned Parenthood to deprive it of the government money that has kept it a very active organization in this country for decades, if that succeeds, they will be unable to provide their major service. You may not know this, but their major service is to provide birth control information, particularly to poorer women who can't afford to go to a doctor the way other folks can, and who turn to Planned Parenthood for crucial family planning advice. Of course, if the Planned Parenthood can't do that anymore, many of these poorer folks will have children that they would otherwise have been able not to have. And that, of course, will mean what, economically? Well, any money saved. And that's the argument you'll find made by many of its opponents, even though the reality of why they're doing what they're doing is quite different. But. But the argument is made the government shouldn't subsidize. Well, if women who might otherwise have gotten family planning advice are in fact denied that advice through their financial difficulty plus the defunding of Planned Parenthood, then there will be many more babies born. They will be born to the poorer women that are deprived of the advice. And those babies will need lots and lots of care, which will cost the Medicaid system, which. Which covers them. End result. This may be a problem for conservative folks. It will cost more in the way of government subsidies if you don't fund Planned Parenthood than if you do. But of course, the underlying problem, bigger than all of this is the fact that millions upon millions of Americans either have no job or get paid so poorly that they can't afford the medical care they would much rather be able to buy on and for themselves in a reasonable system because they're not paid enough or at all. That's the problem. And if we address that, all the rest of this wouldn't come up. Second economic update I wanted to talk to you about was some remarkable developments in Ireland. Ireland is a place where there's bitter anger about the austerity program that has been imposed on on that country. It's not quite as harsh as what has happened in Greece, but it is getting there. And in one of the attempts to shift the burden of the economic crisis since 2008 onto the mass of people, those who have already suffered, those who had the least to do with bringing the crisis, and those who have not been given much help ever since, shifting it on to them. The forms only differ from one country to another. In Ireland, it took the following Suddenly, the Irish government is going to charge everybody in Ireland for water. That's right, water. Used to be that water was available basically for free in the sense that basic taxes were paid by the people and by the businesses to provide water for everybody. But now the government wants to slap water fees on top of everything. And that, of course, hurts those at the bottom the most because they have the least to pay for the water fees and troubles those at the top the least. So it's a further injustice. Here's the good news. August 29, 80,000 people gathered from all over Ireland in Dublin to march together in opposition to water fees. And it looks like the government may be forced to back down. But it was an initiative taken by the trade unions and in Ireland, showing that they're going to fight austerity by doing something together with a mass of people around the water charges and moving right along. Same kind of story comes out of France this last week. There were headlines. Two executives of the Air France company were roughed up by workers and had their shirts torn. Can you imagine? Their shirts were torn trying to exit from a meeting when angry workers confronted them. Why were the workers angry? Because they threatened to fire 2,900 workers in a cost cutting, profit boosting measure defended by Air France. What struck me were two things. First, the papers covered this as ready now an act of violence. These workers menaced the executives the which they did. And they tore their shirts, which they did. And this was condemned by Air France, can you believe it? As terrible violence. Notice the interesting lack of attention to what it means to fire 2,900 people. They are going to be without work. That exacerbates all the family tensions, all, all the personal problems those people have. Will violence result from firing them? You bet. Those who are in the greatest difficulty may well turn to one or another violence, whether it's kicking the dog or kicking the wife or doing something else that qualifies as violence. American Airlines, like French airlines, have a peculiar notion of, of where violence is when they denounce the tearing of the shirts of their executives, but don't see fit to use the word violence in terms of what they are doing to the lives of thousands of working people's families. But the French know something. They know that aggressive behavior works. Let me give you a few examples. And I want to also make you aware that the Bloomberg news service on 5 October carried a story in which they noticed also the success of aggressive French unions. So here's a quick rundown. On July 2, French farmers turned pigs loose in front of government buildings. And there they also dumped piles of pig manure on the roads and in front of supermarkets and banks to protest low prices for meat, milk and other products. The demonstrations subsided, those by the farmers, after the government promised $1.2 billion in additional support. Hmm, Dumping doo doo seems to have an effect. On June 25th in France, taxi drivers protested against the Uber car service company as destroying their livelihoods and that it should not be allowed. They piled up their taxis on the runways, to the airports and in several other places. And guess what? The French government came down on Uber and did not allow it to run its Uber POP service anywhere in France. Final example, 23 June, striking ferry workers, angry that the English Channel company was going to fire 500 workers, disrupted the flow of ferry traffic. Sporadic protests disrupted passenger and freight traffic, and a new agreement was won in September that saved 400 out of the 500 jobs. It turns out that the French unions are very careful. They don't in fact, hurt people at all. They go out of their way to make their disruptions, disruption of normal life, not of personal injury. And this aggressive behavior in France works for them, which is why they do it. Last quick story before I turn to the big issues that you've asked me to talk about. This has to do with the final decisions of Johns Hopkins University in Baltimore, Maryland to suspend its black lung program. This has been a program that has been in trouble ever since 2013, when a Pulitzer Prize was won by a news service for exposing what. Well, here's what they exposed, and it is something that everybody should know about. When miners work deep in the mines, they get a disease called black lung disease. Terrible, often fatal, destroys your lungs. In order to qualify for government help to deal with this illness when it strikes them, miners have to go through a medical test to determine whether or not the black lung disease they have came from mining. And in order to do that, many of them went to the Johns Hopkins University Black Lung center to get examined in order to qualify. The head doctor in that case, a Dr. Paul Wheeler, has since retired. But here were the statistics that brought in the government to look. Between 2000 and 2010, more than 1,500 cases of minors with black lung disease were brought to his center at Johns Hopkins University for review. How many of them did this Dr. Wheeler find to have a disease attributable to their mining experience, which would have meant that the mining companies had money to pay zero. That's right. Out of 1,500, Dr. Wheeler didn't find a single example that that might cost the government and the coal companies money. That center has been closed down in an act of embarrassment by this university. For what? For its complicity with corporations. You know, you spend a lot of time regulating corporations and you discover that they have long ago figured out how to compromise, buy off and, and undermine the regulations. The really only interesting thing when you think about it is that after this experience, there are still so many people who think that these flagrant behaviors by corporations, capitalist corporations, are manageable and containable by regulations. And so we're going to have some More. And they will get around those just as easily as as they got around black lung disease. I want to turn now to perhaps the biggest story of the last two weeks. And this is the case of Volkswagen in Germany. Vw, as will be called, as most of you I'm sure know, and I won't repeat the details. What basically has happened is that VW produced something on the order of 11 million diesel cars over the last few years whose toxic emissions of gases into the atmosphere far exceeded what various rules and regulations. There they go again. Rules and regulations stipulated as the maximum. And the way VW got around this was by having a device in the car that VW developed and put in the car that would give a different result when the emissions tests were performed by government regulatory agencies than was actually the case when the car ran on the road. So when they got tested, it looked one way. And when you actually ran the car on the road, you got much more toxic emission of bad, unhealthy gases than you thought you were getting. Now, Volkswagen got caught and now they're in trouble. Let's see what it all means analytically from an economics point of view. First, VW is not the only company to do this. Back in the 1990s, the Ford motor Company in the United States had something called the Econoline van, an important vehicle in this country. Guess what? They got caught by the government doing exactly what Volkswagen did. So Volkswagen knew the story. Volkswagen knew that it might get caught because another company doing the same thing had been caught. And they did it anyway. They knew what they were doing. There's no mystery, no way this could have happened as an accident. What does it mean? Well, here's a simple explanation. One, it was profitable to do that. It was profit that drove vw. As anyone who studies these corporations knows, profit is a major driver of their behavior. Oh, yes, in economics courses we like to tell the fairy tale that profit is a driver for efficiency. Sometimes it is. But it is also a driver for every kind of awful behavior, of which VW is a wonderful, stark and unambiguous example. Well, what was the goal of VW in doing this? The answer is another nice story of competition. In economics courses, we are supposed to teach that competition drives one company to try to outdo the other company by producing more cheaply or producing a better product. Does competition sometimes get that result? Yes, sometimes it does. But it also can get a different result. And here's an example in VW of what I mean, what VW wanted was a car that would have to pass muster with the toxic emission control of the United States and other countries. And if you actually limit the the toxic emission, the car doesn't run quite as quickly and quite as peppily as otherwise. So every other company that abides by the rule has to deliver to the public a car that is a little less peppy than it used to be. Because we're saving the environment, we're avoiding provoking in people worse cases of lung cancer, emphysema and asthma than they already suffer. So cleverly as a competitive advantage, Volkswagen came up with what a way to meet the requirements of the testing and yet still have a peppy car. Because the control didn't actually work when you drove the car, just when it was tested. So they could run around as they did, telling everybody about how they were protecting the environment. A clever thing for corporations to say these days, but they were such brilliant German engineers that they had a peppy car that was peppier than the alternatives. Well, we now know what competition they were in fact playing with. They were offering something better to the public by poisoning the atmosphere. And you know, there's no patriotism here either. The largest number of these faulty diesels fouling the air are in Germany. The German company made money by damaging the health of two and a half million Germans. But unfortunately, out of 11 million cars, the majority were exported for other markets. So they are damaging people everywhere. There's no short way or polite way not to say what I'm about to say. VW has violently damaged the health of millions upon millions of people with its 11 million toxic emission automobiles. It is worsening the health of millions and it will probably contribute to the premature death of of unknown numbers hurt in this way. And it was done to make more profits and to out compete another capitalist car company. If you don't change the capitalist system, these are among its signal consequences. The fairy tale story about how profit and competition are some wonderful agencies for nothing but good results ought to be packed away with the fashions that grew out of style 10,000 years ago. It's nonsense. The companies look for profits and competitive advantage anywhere and everywhere. They're not held back by the law. They're not held back by consideration of people's basic health. They're not held back because their survival in this kind of a system that depends on not being held back. And that's a fundamental flaw. Failure and problem of a capitalist economic system. Even if it's scary for people to face it and to deal with it, if you had a different economic system. And I'm going to give you two examples of what I mean. You wouldn't have these problems, or at least you'd have a lot less of them. Number one, the decisions about what gets produced and how it gets produced should be made by large numbers of people as they would be if business were organized as worker cooperatives. Many people would be involved. And the chances of a few people doing something as horrifically criminally dangerous as was done by the executives at VW would at least be less likely to occur because more people would raise their hand and in horror at what was being proposed. Number two, if we guaranteed a job to everybody as a matter of right, just like they have the right to get a public school education, just like they have the right to go to the public park, we maintain if we make sure that everybody has a job, then nobody would be scared to be told, look, we're not going to produce what you're producing anymore because it turns out to be unhealthy, it turns out to be bad for the environment, it turns out to be socially undesirable. We won't find people objecting because their jobs are not in question. It's just a particular thing they're doing. And the society that they're part of will promise and deliver to them an alternative job, doing something socially positive to stop doing something socially negative. There'd be no opposition then to cutting back production because the jobs of people wouldn't be in play. That's just using your head as to how to get the benefits of modern production without the awful way in which capitalism delivers not the goods, but the bads. Last item that we have time for in this segment has to do with the other big story of this last week, the tpp. Again, quickly, what does it mean? It stands for Trans Pacific Partnership. An agreement was reached last week to which the word final was attached. In a moment, I'll make clear to you why there's nothing final about it at all. But it was the end of one bout of negotiations. About a dozen governments and a whole lot of corporations have been meeting for many months to secretly to work out a new set of rules governing what kind of foreign trade can take place, whether a tariff can be attached, that is a tax. When goods come from another country into yours, do they have to pay a fee, a tax, a tariff, it's called, and how do all the rules and regulations affect it? Corporations are very concerned because depending on what rules get agreed to, they their business will be affected positively or negatively. So some corporations want this agreement and some corporations don't want it. What's interesting is that it was done in secret so that the mass of people, you, me, working people, consumers, were not part of these negotiations, did not have their own democratically elected people in charge. They just had the conventional politics, politicians, and we know in whose pockets they already sit together with the corporations who are the ones who pay the politicians in the first place. So we have buddies getting together to make a system that works real well for them. But here's the problem and why it's going to be partly amusing as well as angering to watch the next few months, and that's the crucial time, because all of these things that they said were final are in fact up for grabs. We won't even know the details for another few weeks. And then there will be months and months of bargaining in which virtually everything that was supposed to be final this last week is up for grabs. And much of it will be different. Here's what's going to happen. Company is going to. Company A is going to discover that it got what it wants. It got access to the Japanese market that it didn't have before as part of the agreement. But of course, they only got access to the Japanese market in a way that might hurt some Japanese companies who had no fear of American competition because they had closed Japan off. Now that the new agreement gives the American companies access, those Japanese companies are going to be opposed to the deal. Well, why would the Japanese government have agreed? Because they got something in return, something Japanese companies can now do in the United States that they didn't before. And when the American companies that are going to be hurt by this discover it, they won't want the tpp. You get the picture. This is a deal. It's like a horse trading deal among criminals for the horses they've stolen. Here, each corporation seeks an advantage but is fearful that its negotiators, its politicians, can only get the advantages they want by giving up something which will hurt somebody else who will then become an enemy. This is all that's going on. The end result is that for working people and for consumers, it's hard to know what the end result will be, whether it'll be any worse or better than it is today. Because that's not the issue. When the President of the United States says he'll protect workers more than ever before, he's saying to you, I'll do a little bit better job than we've done in the past. The one we've done in the past is so awful. That means nothing. And if you really want to protect the interests of consumers and unions, they would have been in there and these things wouldn't have been secretary in the first place. The TPP is no friend of working people. It's not at all surprising that Bernie Sanders has announced opposition and that even Hillary Clinton has now joined him in opposing this. And that's just the beginning of the wrangling that will occur. We've come to the end of the first half of today's program. Please be aware that we're going to have a really interesting interview in the second half having to do with all the things that have transpired in Greece over the last few years to bring us up to date and to make us aware of what's happening in that important part of the world economy. Stay with us. We will be back in a very short number of seconds. It's. We put the horse before the car got so hot. We burn the paper. All your premonitions of our condition came true. Cause everything you do. Welcome back, friends, to the second half of Economic Update for today. I am very, very pleased to introduce to you my guest with whom I'm going to have a conversation about the conditions and the situation and the prospects in Greece, a country that has been at the forefront of the fight against austerity in Europe now for years. We've covered much of it on this program at various times. But let me first begin by introducing my guest. He is Harry Konstantinidis. Harry I've known him for years. He's an assistant professor of economics at the University of Massachusetts in Boston. But he is also a person of Greek background, intimately involved with and knowledgeable about the developments in Greece for the last period of time. His primary research interests lie in political economy, with particular emphasis on agriculture and the environment, and with a broad focus both on Greece, but Greece in the context of the European situation. So, Harry, welcome to the program.
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Thanks for having me.
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Okay. I don't want to spend a lot of time on the history because we already have. So let me try very briefly to summarize it as a way into our conversation. Greece is a small country. It might be important to remind Everybody of that 11 million people. And for those of you that were listening to the first half of the program, I noticed as I prepared today that 11 million is not only the number of people in Greece, but it's the number of destructive diesel cars that the VW Corporation dumped on the world. That's interesting because the Germans that were in the forefront of of explaining to the Greeks that they were immorally not working hard enough, immorally enjoying pensions earlier and more generous than they ought to have gotten, and a whole lot of other crimes of moral inadequacy. This was being done by a country that was failing at the time to control the pollution of the entire continent of Europe and other continents too, by producing illegally and marketing fraudulently automobiles that they had designed to evade pollution control and emissions control. It's a very interesting example of what we called when I was growing up, a case of the pot calling the kettle black. Whose morals are in question, who's got the authority to wave their finger at who else? But anyway, we'll come back to that. In 2008, global capitalism collapsed. A small country like Greece couldn't possibly be held accountable for causing this event. Greece, like many other small countries, was a victim and its participation minimal. What its politicians had done, indeed, like so many politicians, was to solve many of its problems by borrowing money, rather than coming up with other solutions to that would have been better. But that's not unique to the Greek government. Every other government, the United States included, does this. But when the crisis hit, the Greeks had a hard time paying back their debts and they wanted therefore to get the debts relieved. They wanted debt relief, like debtors in trouble always do, like the people of Detroit tried to do to cope with the crisis of Detroit, like the people of Puerto Rico, as we reported last week, struggling to do now, the Greeks wanted to relieve their debt. The Europeans, led by the Germans, basically wouldn't allow it and demanded that the Greeks not only pay off their debt, but that they use money that they had before used to pay salaries to public employees, to operate their public services, that that money be cut back. The employees deprived of parts of their salaries, the public services destroyed, public property of the government sold off, and to use the money instead to pay the creditors, both Greek wealthy creditors and European wealthy creditors. There was a lot of struggle, which we've talked about. There was even a referendum where the majority of Greek people voted unambiguously that they don't want that they don't think that's appropriate. I should add, not to take too much time, but that it is normal when a creditor lends to a debtor, that we require of the creditor in all transactions to do what's called due diligence to determine whether the borrower is capable of borrowing. The German banks, the French banks, the Greek banks, all knew that the Greek government was borrowing a large sum of money and that therefore, if There was economic difficulty, that borrower couldn't pay back there. They made the decision nonetheless to take the risk, to charge high interest rates, to take the risk. Then when the crisis came and the country can't pay it back, they weren't willing to admit that they had made a loan they probably shouldn't have made. And they didn't want to pay anything. They wanted all the burden to be on the borrower and none on the creditor or very little on the creditor, even though the borrower wasn't terrible shape. That's where we stand. We've had the decision by the Greek people, not only in a referendum to say we hate this, but even more profound, the decision of the Greek people to throw out of office the two parties that had basically dominated Greek politics for decades, the Greek Socialist Party and the New Democracy Party, which used to together get 2/3 of the vote, now can barely get one third of the vote and a new marginal corner of the spectrum, a left wing, small party, Syriza, has become the dominant party in Greek politics. So you see the anger and the resentment of the people, but they still now, because of what has happened, because of the use of the power of money and the banks to have any money to run the Greek economy, despite the referendum and despite the political changes, basically where they are today is facing a mountain of debt and having an economy that has shrunk over recent years, that is actually predicted to shrink over the next year or two, even with some help from Europe. And the amount of that help is not yet clear. So I want to begin, Harry, by saying in this awful story of what is being done savagely to one small corner of Europe? Let's begin by your telling me what has this meant for the people of Greece, for the average man, woman, child, school, kid, worker? What is it? And you know this not only because you're a student of all of this, but your family's Greek, you're Greek, etc.
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Yes. So the consequences of austerity are really hard to describe. It's really hard to actually explain the magnitude of a disaster that austerity policies and have caused on the average Greek household. To give you, to start a little bit with the numbers, right, the unemployment rate in Greece used to be 7 to 8% before the crisis started. By 2010, before the austerity packages were put in place, the unemployment rate went up to approximately 12%. And after the rescue packages, the austerity packages started being implemented, the unemployment rate has skyrocketed to 27, 28%. This is not capturing the fact that a significant number of Greek people have emigrated over the last five years. Essentially approximately, if I'm not mistaken, 200,000 people are trying to leave Greece every year. And this mostly revolves around the people who are the youngest, the educated, the most productive young people of Greece. The unemployment rate among people who are below 25 years is approximately 60%. This means that three out of five young workers under 25 are unable to contribute. They're unable to be productive, they're unable to work. Homelessness has skyrocketed. Only between 2009 and 2011, it increased by approximately 25%. So if you walk around the streets of Athens, you're going to see a lot of people sleeping on the streets. People who were living in homes before and who lost these homes because of the changes in austerity. Maybe they lost their jobs. And maybe the eviction laws based on this, you know, implemented by virtue of the structural adjustment programs, made them go on the street. Be on the street, by the way.
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Let me just interject for my American audience and for the world audience. In the depths of the American depression of the 1930s, unemployment peaked in 1933 at 25%. So you're basically telling us that the conditions in Greece over the last few years are worse than the worst time in the greatest depression of American capitalism.
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If I'm not mistaken, I saw last year a graph in the New York Times comparing the Great Depression to the US to the, to the Greek crisis right now, and that was last year. If we were in the Great Depression, we would have already recovered, given the projections that project that Greece is going to be in a worse depression for the next three years. There is no end to this. And there's no end to this. The more that we implement more of these disastrous austerity policies that kill the patient. So the austerity package, the austerity packages, now we're in the third austerity package were supposed to cure the problems of the Greek economy and instead they are killing the Greek patient right now.
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Okay, so now let me ask you the difficult questions based on all of this. Thank you very much. Many people around the world are wondering, as I know Greeks are themselves wondering, given the referendum that that was almost, if I remember, 60% or so against austerity. Given that the Syriza Party became the dominant party by being in principle against austerity. We know that the pressure of the Germans and the rest of the Europeans made Alex Tsipras and the Syriza Party change their position and, and accept the austerity that they had opposed. I don't want to go into what the calculations were that made him and his party do that. What I want to understand is how do you see the situation now given all of this? What is the goal of the government now? How is it going to get Greece out of this disaster of having to pay off mountains of debt and crunching and destroying its own economy and thereby kind of worsening the situation? Tell us what possible way out might be here and how you assess it.
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I think there are a couple of calculations here. The first calculation is that Greece, if it behaves and if the Syriza government plays by the rules, will get debt relief. Right. So the first calculation that I think parts of the Syriza leadership made over the summer is that if they play along they may get something in exchange for more austerity. I think this is disastrous calculation. I think this is.
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You think it's disastrous because they won't get this relief or the relief won't make a difference if they do get it.
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B
I think that debt relief won't make a difference.
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I think that even if they get.
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It, yes, I think that the terms of debt relief that are, you know, being mentioned in the press as potential schemes are not going to make a significant change. So one of the schemes that was basically proposed was that if Greece there will be a cap on the payments on the repayments of debt every year that Greece is going to be making. So I think I saw a proposal where 15% of Greek GDP would go for payments towards the debt. That's a huge number. And it's not clear that the Greek payments are of the order of 15%. So it's like offering you something that you're not going to hit anyway. So that doesn't really make a difference for the day to day operations of.
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The Greek economy and the Europeans. If the Greeks don't deliver these payments, then even the relief, because it'll be trickled out, won't continue.
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B
That's the other thing.
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Here at least they threaten that.
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B
So here we have a relationship of power, right? So the way that the negotiations have been proceeding, we have seen the power structure of Europe, we have seen the power structure of the Eurozone. Well, in the case of Greece versus the lenders, it's Greece that has to perform and the lenders then reward the good or the bad. But even though the Greek crisis and even though the problems of the Greek public debt are not really a mating of the Greek economy only and of The Greek policymakers only. Even though there's an intimate involvement of, of the German and the French banks, for example, for the ballooning of the Greek debt before 2010, even though.
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The.
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Greek state was a major buyer of German arms. Right. So to give you an example, because I don't think many people know this, in the 2000s, Greece was the highest spender in terms of military expenditure in the European Union among all, as a percentage of gdp among all European countries, Greece was spending the highest amount of money to buy arms, mostly from the US, Germany and France. If you look at 2003, the military spending of Greece as a percentage of GDP is actually comparable to the US military spending for 2003.
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A
So then am I correct? One could say that the German and French banks lent to Greece the money that they knew would come back in payment for German and French arms.
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Absolutely, absolutely. I mean, look at the numbers. Look at the current account balance of the Greek economy and the German economy between the 1999-2012 period of time. Essentially the German banks were lending money to the Greek government that then the Greek government could use in order to buy arms from the German and the French. From the German and the French industries. So you have a very peculiar situation now when the crisis hits, for reasons that of course go well beyond the interest of Greece, I mean, like Greece does not cause the crisis. When the crisis hits, the Greek taxpayer is asked to pay the bill, right? And this is what we've been seeing over the last five years, that the Greek taxpayer has been suffering, the Greek household has been suffering, and the Greek economy has been plunged into a depression that there is no end to the way that we have been going.
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A
And yet, to get to the next big question, it seems that one of the reasons Tsipras gives for doing what he did is that the majority of Greeks, despite everything you've just said, don't want to leave this eurozone that is crushing them. Can you help us understand this?
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B
I think that when we're talking about the currency, right? And when we're thinking about money, some economists tend to be very narrow minded when it comes to thinking about money. Money, yes, is perhaps a medium of exchange, but it does so many other things, right? Money is a symbol and money is important to the way that we view the world. Money is important to the formation of our identity, right? So if I told you that all of a sudden you wouldn't be able to pay in dollars, but you would have to use the drachma. You may all of a sudden feel that you are threatened or that your identity is being challenged in very profound ways. And this is also important because the euro was seen as a sign of progress over the last 20 years or so. Finally, the Greek middle class was able to travel abroad and use the same currency when it was going on vacation in Paris that it was using when in Athens. So symbolically speaking, the euro is considered a sign of modernity, a sign of progress, and a large number of the Greek population does want. Does not want to let go of that. Now add to that the fact that we have not had a serious conversation in Greece about the economic implications of the Eurozone. What does it mean to be in the eurozone?
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Right.
- [46:46]
B
How does the Eurozone promote these types of adjustment of neoliberal restructuring that has been taking place in Greece over the last five years? How has the Eurozone basically dictated the terms and has been asking Greece to privatize its water supply, to open up its electricity system so that, you know, like private companies from Greece, but also mostly from abroad are going in to buy these assets at very, very reduced prices? Right. How has the eurozone basically dictated these terms that have affected this internal devaluation is what we call it like making everything cheaper inside. Making everything cheaper, which mostly means making wages fall. The minimum wage in Greece has fallen by approximately 30% over the last five years.
- [47:37]
A
So what, what was it and what is it?
- [47:38]
B
The minimum wage in Greece was €751 per. Per month.
- [47:45]
A
Right?
- [47:46]
B
€751 per month. And I don't know if this translates, but the cost of living in Greece is not very low. I mean, I just saw a survey, actually that. Not a survey, a study that basically says that the cost of living in Athens is approximately 2/3 of the cost of living in New York City. So this gives you a little bit of a sense as to whether you could live in New York City with $900 a month. So the minimum wage fell from €751 to €586 within two years, within three years.
- [48:22]
A
There are a significant number of Greek workers who get the minimum wage.
- [48:25]
B
Yes, that's right, yes. At this point, actually more. It would be more correct to say that there is a significant number of workers who technically should be getting the minimum wage, but are not getting paid because their firms don't have any money. So they have them work without them getting paid. So workers are going to their jobs, they're reporting every day, and then at the end of the month, when the time comes to actually get your paycheck, you are Told that the firm doesn't have any money, you should wait, right?
- [48:55]
A
So there are people, they're waiting in the hope that they get paid.
- [48:58]
B
They are waiting in the hope that the firm is not going to go out of business. I have friends and relatives who have not been paid for six to eight months waiting that at some point the situation. So this is where you have the family networks basically act as a safety mechanism that allows people to get by. This also tells you why the crisis has been much more dramatic in Athens where the family networks are not as visible as opposed to the countryside. So in the countryside, I mean, I'm from a small place in the west of Greece, people have access to land or the family networks are more important and people can, you know, like garden and grow some of their food. In Athens you don't have these safety mechanisms. And this is why you have a much more pronounced cross crisis. A crisis that doesn't seem to be coming to an end the way that this has been developing.
- [49:51]
A
I want to interject for a moment that people hearing this report, listening to you have got to understand and see this as a cautionary tale about the future of the United States. Pay attention folks, because this, that you can't imagine happening here. The Greek people didn't imagine a few years ago that they would confront either. And they are now going through a level of deprivation. That is absolutely one of the options. I'm not saying I can tell you it's going to happen, of course, no one can. But is that a possibility? Absolutely. And part of the shift of capitalism to Asia, for example, and out of Europe and demanding that the only way they're going to stay in Europe is if the wages come down so they can compete with the low wages of Asia. This is a problem that is happening in the United States as well. Each country will do it in its own way. But what we're hearing about Greece is a cautionary tale it would be unwise not to pay attention to. Harry.
- [51:06]
B
No, I think that's right. And I think there's definitely the argument that, you know, it's the workers fault when the economy is not performing right. Even though it was the banks that made these bad bets and even though it was the arms industry that was benefiting from the public debt of the Greek government. We are then being told that it's a workers turn to pay because they were lazy, they weren't productive enough, and it's time for them to accept reductions in their benefits, to accept reductions in their pensions, to accept reductions in health Expenditure, educational expenditure that has like fallen to unprecedented to dramatic levels in Greece. So it's a cautionary tale and I would also add it's a cautionary tale about what happens when the political and economic system is hijacked by free market fundamentalists and also by people who believe that, you know, you always have to restrict the state spending or spending that eventually goes to workers.
- [52:10]
A
Right.
- [52:13]
B
I would also want to draw the parallel between the Eurozone and some fractions at least of the American political elite who have been talking about public debt. For example, when the Greek crisis started, approximately 2009, 2010, and debt as a percentage of GDP was approximately at 120% of GDP. Right now, public debt as a percent of GDP is at 180% of GDP.
- [52:42]
A
Right.
- [52:43]
B
We have people, situation has gotten worse.
- [52:46]
A
The situation has gotten worse, supposed to fix it, Right? Right.
- [52:49]
B
So we have people running the Eurozone who are really obsessing about public debt. They really think that quantitative easing is a dangerous policy. And I do think we have certain fractions of the American political system. Right. We know them, the Tea Party and significant parts of the Republican Party that basically echo similar feelings and similar sentiments about how the state should fix its finances.
- [53:19]
A
You know, it's a hallmark of the capitalist system when things are going well, when the business cycle is on the upswing, we hear a great deal about innovations by entrepreneurs. And when the system is going down, we understand that workers are lazy, are not productive enough. It's, you know, when it's good, it's my responsibility, when it's bad, it's somebody else's. And the system teaches you how it pigeons holes people. And you can see that in Greece. It was very disheartening for me, as a friend of Greece, but not Greek myself, to discover how many of the people I knew in Greece, instead of being angry and upset about what the Eurozone participation meant, were actually turning on each other. If they were private sector workers in Greece, they were blaming the public sector. If they were business people, they were blaming the government. If they were the government in business, they were blaming the worker. It's sad. It's dividing up people who if they got together, could actually change the situation.
- [54:23]
B
That's right. And I think this is the lesson forward. Right. I mean, at least for Greece, the lesson forward is that we have to think about challenging austerity, but also challenging what the capitalist system actually is and what it does. So this to some extent is the challenge for the Greek people. It's the challenge for the syriza government.
- [54:41]
A
Going forward, what do you think is going to happen? I know it's difficult, but you have a better sense of it than I do. And maybe our listeners will get something from your sense of where it's going.
- [54:51]
B
I think there are certain fractions in Syriza that have different visions. And I think that Syriza is in need of a new narrative because the old narrative that we would go to Europe and convince them that austerity is not working has failed. Austerity is not actually austerity is working. Austerity is not a flaw. Austerity is not a mistake. Austerity has been working not for restoring jobs, not for restoring growth, but for.
- [55:17]
A
Smashing down the wages and the standard of living precisely in order that eventually maybe the Greeks can go back to work, but at a completely lower standard of life than anything they expected or had assumed was in their future.
- [55:31]
B
That's exactly right. And always thank your employer that you have a job every day that you go to work. Right. So getting paid is not enough. You also have to be very, very thankful that you have a claim to a job, not to a claim to a salary. Now the other thing that would be important to note is that it also means, you know, what do we do with firms that are going out of business? How are we going to turn things around? So if austerity has failed, how can we change the lives of people in their everyday settings? What are we going to do with firms that you know are going out of business? Are we going to turn them over to something different? Are we going to turn them over to a situation where if your boss can't pay you well, maybe it's time for you to take over the firm and the state would help you set up shop and work the firm as a different way, as a different way, as a co op, as a self managed enterprise, self directed enterprise, or something else?
- [56:27]
A
Right.
- [56:28]
B
How do we do our budgeting? How do we have participation every aspect of everyday life? And that will also help us solve the questions of corruption. You know, if workers, if people knew where their public spending goes, they would probably not spend as much money for military expenditures. They would probably spend more money for schools, for hospitals, for things that we need in our everyday life? That's the challenge. That's what Syriza needs to do now and they need to do it fast because we don't really have much time.
- [56:58]
A
Harry, thank you very, very much for sharing your insights.
- [57:01]
B
Thanks for having me.
- [57:02]
A
Folks, this is the end of our program. Again, I want to remind you that we maintain two websites for your use where all this kind of material is available to you 247 at no charge. Rdwolf with two Fs.com and democracyatwork.info Please make use of them. You can follow us there on Twitter and Facebook, just click on the icon. You can sign up for our free newsletter and follow us in that way and be contacted by us on a regular basis. We are also looking for new radio stations around the country to carry our program, the one you're just listening to. Thank you very much for being with us this week. I want to thank truthout.org, that remarkable independent source of news and information, for being a constant partner in what we do. I look forward to speaking with you again next week. Sam.