Perhaps I am stuck in the middle of the 20th century in terms of intellectual thought. But when I look at the great big world, I see most people involved in the process of defining themselves. In its most pernicious form, it is the good “us” versus the bad “them.” But even when it is not done for such negative purposes, it is extremely wasteful. And what’s more, those who have power in a society can easily use this natural tendency to get people behind policies that are quite bad. This is what I see going on in Europe with regard to Greece. Especially in Germany, the prevailing narrative is that the Greek people are corrupt and lazy and if only they acted more like the Germans (By invading Poland?) everything would be okay.
Last week, Simon Wren-Lewis call bunk to all this, The Eurozone’s Cover-Up Over Greece. Over the last five years, the Eurozone has given an enormous amount of money that was nominally for Greece in exchange for austerity policies. But all that money did was hold off default. The money didn’t go to Greece but rather its creditors. If Greece had simply been left to default on its debt in 2010, it would have suffered under roughly the same austerity because it wouldn’t have been able to borrow money. The only difference would be that the banks who had lent money to Greece would have lost it.
The Greek bailout was not a bailout of the country at all, but rather the (mostly) German bankers. I’ve never been able to get my head around this disconnect. After the financial crisis of 2008, everywhere you looked, people were pointing fingers at borrowers. Here in the US it was homeowners who couldn’t afford their mortgages; in southern Europe, it was governments (actually just Greece) who borrowed more than they should have. But anyone who has ever even tried to get a bank loan knows that this is not how it works. The banks are supposed to be the adults who only give out loans to worthy borrowers.
But somehow, the idea that it takes two to tango, has been lost in this discussion. And it is worse than that because we expect borrowers to want more money than they can afford. So it’s pretty amazing that €42 billion have been given away to bankers who were clearly reckless, yet they are never mentioned. They are seen as good and pure — taken advantage of by the evil Greek government, which should have known that it couldn’t afford the loans it was taking.
I pine for the days when people were more class conscious. I blame mass media. If it wasn’t for the constant assault of “respectable” news outlets repeating lies about poor deceived bankers, people would see things more clearly. Remember the founding of the Tea Party: millionaire Rick Santelli surrounded by other millionaires on the floor of the Chicago Mercantile Exchange, ranting about a law designed to help homeowners. And millions of middle class Americans — most of whom were too old to have been caught up in the housing bubble — jumped on board. There was instant common cause between the bankers and middle class homeowners who just had the good luck of being born at a better time. Or in Germany, there are working stiffs who align with the poor bankers. “Us” and “them” have been sliced and diced by the power elite for the benefit of themselves, so they will never be held accountable and so the money will keep moving from the poor to them.