I am well aware that I often appear to be anti-German. That’s not entirely an incorrect assessment. Germany reminds me very much of the United States. Both are countries filled to the brim with undeserved self-righteousness. They say to anyone who will listen, “If only you were more like us, you would be fine — or at least better.” I hate this attitude in individuals and when I see it in countries, it frightens me. But is it really the case that Germany is behaving so badly toward Greece because of their pigheaded self-delusions about the German work ethic and frugality? Let’s say that it is at least a bit more complicated.

On Tuesday, Simon Wren-Lewis wrote, Why Germany Wants Rid of Greece. The title itself reminds me of World War I. There was a sense of relief among the power elite of Europe once the war came. Up to then, there had been all this messy and difficult negotiation. And as always, the power elite don’t like to negotiate. They are of the “all or nothing” persuasion (given that they are used to getting “all”). And there is little doubt that Germany would like to get get rid of Greece, as though that will get rid of the problem, and even more, as though that will be good for Germany.

Wren-Lewis confirmed what I’ve long thought:

The reason I’ve thought this was so is because people over here repeat that kind of nonsense. In 2011, Thomas Friedman wrote, “Germans are now telling Greeks: ‘We’ll loan you more money, provided that you behave like Germans in how you save, how many hours a week you work, how long a vacation you take, and how consistently you pay your taxes.'” David Brook similarly wrote, “[Nations like Germany and the US] believe in a simple moral formula: effort should lead to reward as often as possible.” Far be it for these two over-paid pundits to actually do a little research when they can just base whole articles on stereotypes. Matt Yglesias responded with facts, Are Greeks Lazy? He noted:

Wren-Lewis has an interesting argument to explain why it is that the Germans can believe such patently false things. He says that Germans have never liked Keynsian economics. They prefer marginal economic ideas like expansionary austerity, because it goes along with how they see themselves. But Greece represents a great problem to this. Despite what you will hear on the right, Greece has done almost exactly what the Troika has demanded for the last five years. The result: economic catastrophe with unemployment above 25%. The Germans have only two choices here: either admit that their economic theories are bunk or blame the patient. We know what their choice is.

Being here in the Bay Area, it has been really sad to watch so many people demagogue Juan Francisco Lopez-Sanchez, who apparently killed Kathryn Steinle. The event is a tragedy, of course: a young woman is dead. Lopez-Sanchez was an undocumented immigrant. So there has been all kinds of wringing of hands over the fact that San Francisco is a sanctuary city. As if that had anything to do with this crime. And now, Donald Trump has grabbed the case, after having seen what a little undocumented immigrant scapegoating can do to one’s poll numbers in the Republican presidential primary. What’s interesting about this is how it pulls back the veil on what all this talk of “illegal immigration” really means.

Using an incident in which an undocumented immigrant kills someone as indicative of the threat of all undocumented immigrants is the very definition of racism. Now before anyone gets down on me by claiming that this is not a racial category, let me be clear: race itself is a made up concept. Race is a system for categorizing a certain group of people who another group of people want to oppress. Sure, it can be based upon skin color or region, but the truth is that it can be anything. There is no reason why the blue eyed people couldn’t decide that brown eyed people are inferior and should thus be enslaved. So it is meaningless that “undocumented immigrant” or “illegal immigrant” don’t refer to people who look the same.

Or course, the truth is that we all do know that these evil undocumented immigrants look the same. We are talking about Mexicans — or at least Latinos. That’s as clear as the fact that the “welfare queen” was black. (Even though she wasn’t really black.) But it doesn’t much matter. That just makes it easier to instill hatred and fear — the weapons of the demagogue.

What we’ve got here is the real nature of racism. This is why ideas like Twice as Good don’t work. The undocumented community can never be good enough, because people like Donald Trump are more than happy to use someone like Lopez-Sanchez to tar all immigrants. This has been going on for centuries here in America. The only thing that changes is the targets. Except for blacks: that’s a constant; that never changes.

What is so remarkable is that every time racism rears its ugly head, it always has a different justification. No person in polite company will admit that thinking that there is anything wrong with African Americans genetically. But former vice-presidential candidate Paul Ryan finds things wrong them them culturally. And so it is with Trump, who has no problem with Mexicans — just the awful ones who come here. So really, Trump’s problem is with statistics: we are getting a skewed sample of Mexicans.

Now Trump is demagoguing a second murder. Jamiel Andre Shaw was apparently murdered by Pedro Espinoza. This is a big deal, because Espinoza was the right age back in 2008 to have been a Dreamer. Of course, there was no such program at that point. And as Steve M noted at No More Mister Nice Blog:

Thus: Espinoza would not have qualified for the program. So he wasn’t a Dreamer in fact, and in the alternate universe where Obama became president in 2000, he wouldn’t have been a Dreamer. But the point is not about Espinoza at all. What the conservatives are getting at — and Donald Trump in a big way — is that there must be people who would be Dreamers who will commit murders. Therefore, it’s a terrible program. And since there are undocumented immigrants who commit murders, all of them must be bad.

This is, of course, entirely the wrong way to think about this. If we look at the statistics, we find that undocumented immigrants commit less crime than American citizens. But this doesn’t matter in this discussion. What matters is that Donald Trump has two of “those people” he can use to demagogue this issue. And he’s hardly alone; I haven’t been too happy about Hillary Clinton on the issue of sanctuary cities. It’s all horrible. But maybe we shouldn’t blame the politicians. This kind of simplistic thinking is apparently all that Americans can appreciate.

Also: we’re a bunch of racists.

Jared Bernstein recently wrote about one of my favorite issue, People on Third Base Claiming They Hit a Triple, or Marginal Product Theory at Work… Not! The idea of marginal product theory is that everyone is paid what they are worth. It goes something like this: if I start working at a factory and as a result, it’s productivity goes up $50,000 per year, then that is more or less what I am worth and more or less what I will get paid.

There’s just one problem with the theory: it isn’t true. Bernstein offered up the case study of Jeb Bush. After leaving the governor’s mansion, Bush and his family made a whole lot of money. Now, in our cynical society, we don’t tend to blink an eye at this kind of thing. In fact, to a lot of people, it just makes sense that ex-politicians ought to be able to cash out. But here we aren’t really talking about Eric Cantor getting a lobbying job, where he most certainly is worth all the money that he is paid. (Such lobbying is ultimately bad for the economy, but that’s a different matter.)

Bernstein put it exactly right:

But I think there is an easier way to think about it. Consider the fact that in the 1950s, CEOs tended to make 30-40 times as much as the average employee at their firms. Now, they make 300-400 times as much as the average employee at their firms. If anything, the films were more profitable then. Yet they are making ten times as much now. Either the “free market” then was greatly underestimating how much they were worth or it is greatly overestimating how much they are worth now. Regardless, the “free market” is nothing like infallible.

I understand that a single example doesn’t disprove the theory. The marginal product theory is something that is used in models. Clearly, in individual cases, people will get more or less than their marginal product. But very clearly, when we are talking about a class of workers (CEOs), there is something besides their value to the company that is controlling their pay. And that thing is power. CEOs have the power now to demand more money. Similarly, when unions had any degree of power, they could demand a greater share of profits for workers.

This reminds me of a great difference of opinion that I had with the vast majority of libertarians when I was still a fellow traveler. Most libertarians are aggressively anti-union. But it was clear to me, even as a libertarian (because I wasn’t a total idiot), that the ability of workers to organize was necessary for the “libertarian utopia” to function. You couldn’t have a situation where management was able to organize itself but workers were left with “every man for himself.”

What’s ridiculous about the marginal product theory is that it constructs a world apart from everything but economics. What’s more, it assumes a “free market.” But there is no such thing. The “free market” is defined as a system that gives excessive power to the owners of capital. But even that doesn’t exist in the real world. People get extra economic benefits for things like their fathers being president. And it goes right down the line from there. People who are good looking make more money, even though there is no marginal product for looking great on the assembly line.

In general, economics is not a real science. There are certainly scientific aspects to it. And there are economists who do good work that provides insight into how the economy works. But by and large, economics is just a specialized form of apologetics for the power elite. And that’s not just sad; it is incredibly harmful to our society.

I was listening to a little bit of Majority Report on Monday, when Sam Sader was interviewing Georgios Giannakopoulos about Sunday’s vote in Greece. It was all quite interesting. But there were two things that Seder brought up that I thought were worth discussing a little bit.

The first thing was a common analogy that anti-Greece people in Europe say, “How would you like it if the people of New York had to bail out Texas?!” As Seder noted, we already do. That’s what a real union does. It isn’t every state for itself. California pays a lot more in taxes per capita to the federal government than it gets back in benefits. Part of that is just that we have a relatively young population, but that’s just part of our general system that money goes to where it is needed. The argument that people are making in Europe is a big part of the problem. They want a united Europe, but not if it has to cost their particular country any money.

Associated with this kind of thinking is something that has been bugging me for years about rhetoric against Greece. That is this idea that the European countries are bailing out Greece. To begin with, that isn’t even true. All that the loans from the EU have done is to cause Greece to sink slower than it normally would have. It’s kind of a slow motion torture. But regardless, almost none of the money has gone to Greece. Instead, it has gone to the reckless banks that loaned Greece money in the past. It drives me crazy that everyone focuses on borrowers, when borrowers are not expected to be conservative. The bankers are supposed to be the “adults” in a lending situation. But it is always the bankers who are portrayed as the wounded party, as if we don’t all pay more in interest to make up for precisely these kind of bad bets that the banks know they sometimes make.

That leads us to Seder’s other comment. He noted that rather than “New York bailing out Texas,” the better analogy is the bailout of the banks in 2008. In that case, the government could have bailed out homeowners. After all, if it had stopped all the foreclosures, that would have indirectly saved the banks. But instead, the banks were saved. Now I understand: from a practical standpoint, there might not have been the time to do that. But the truth is that after the banks were saved, almost nothing was done for homeowners.

The government’s position seemed to be that it could give hundreds of billions of dollars to the banks without much thought. The banks were, in other words, the “right” kind of people. But when it came to helping out homeowners, the government saw them as the “wrong” kind of people. Troubled homeowners had to go through all kinds of contortions to get relief, which meant that most of them never got any. But it wasn’t just the government. To a large extent, the people agreed. I’m constantly amazed how the people in mass identify with institutions that on an individual basis are their tormentors.

The best example of this, of course, is the Tea Party. It started, for the umpteenth time, as a reaction to the idea of bailing out troubled homeowners. The actual bailout of the banks was not what got the Tea Party started. Sure: they complained a lot about the bank bailouts. But that was long after the hundreds of billions had been given out. Where were they when that was happening? I don’t know. Partly, it was just that Fox News and the Koch brothers weren’t around to fund their outrage. But it was more that they just didn’t care when bankers were getting bailed out.

It’s the same thing in the EU now. Greek would have been best to just default on its debt. I’ve been saying that since 2010. Everyone knows that at the very least, the bankers will have to write off some of Greek’s debt. And it may end up a full default. So what have the last five years been all about other than giving hundreds of billions of euros to the bankers? The people of the EU should be angry at the Troika for wasting their money on rich German banks; Greece has only been harmed because of these bailouts.

Update (Before Publication)

Paul Krugman addressed that “New York bailing out Texas” analogy:

I got the graph above from Mark Thoma, Austerity: The Public-Sector Jobs Gap. I was aware of the basic information, but I’ve never seen it displayed in such a startling way. What it shows is the total number of people employed by the government at all levels. But let me go over it in a little detail, because it is important stuff.

The first thing that comes into my mind when seeing this graph is that conservatives will think, “Great! The government shouldn’t be growing!” But the government should be growing. The extrapolated number of government workers in 2015, is roughly 14% higher than it was in 2000. It just so happens that the US total population is also 14% higher than it was in 2000. People can argue about which government programs should exist, but that is a different issue. The government is doing exactly what it was doing 15 years ago. It just doesn’t have nearly as many people to do it.

Another thing to note here is the timing. If you go back through Bush, Clinton, Bush, Reagan, and on and on, you will see that after recessions, we increase spending. As Keynes said, “The boom, not the slump, is the right time for austerity at the Treasury.” And everyone learned that lesson — right up to this crisis. And as a result, we have had a very sluggish recovery. And the Republicans blame Obama, because they thought that even more austerity would have solved all our problems. To see how ridiculous that claim is, just look at Spain, which has had an unemployment rate over 20% for years because of misguided austerity policies.

Even if austerity had been called for, what we should have seen is the rate of growth of government workers decline. We shouldn’t have see growth stop and then actually go into reverse. These numbers are shocking: 1.3 million jobs that should have been created weren’t; and almost a half million jobs cut. That’s almost two million jobs lost. Using a reasonable 1.5 multiplier for the economy, that means our economy has three million jobs less than it should have. This is like someone taking a frying pan and hitting themselves over the head. Of course, in this case, the people who decided on this policy were not the same people who suffered from this policy.

Another conservative criticism would be that these jobs created by the government would have been offset by jobs in the private sector. According to this theory, the money to pay the people has to come from somewhere, so the money collected in taxes wouldn’t have been available to the private sector to create jobs. I hate this criticism because it is based on one thing that is true: when the economy is booming, government spending really does take money out of the private sector and slows the economy. But that is only true under that circumstance. And that hasn’t been true for years. This is why interest rates are so low: there is loads of private money swimming around looking for investment opportunities. Private sector money is not going to create jobs. Therefore, the government should have used that money to employ people. As it is, the government has been able to borrow money almost since the beginning of the crisis nearly for free (sometimes, people are actually paying the government to take money).

If the bad economy is hurting you, all you need to know about why can be found in that graph above. Notice that when Bush took over the presidency, the hiring actually went up at a faster rate. That’s because there was a recession. That was the right thing to do. I can’t help but think that if a Republican had become president in 2009, we would have seen the same thing. But when a Democrat is in the White House, the Republicans have to do everything they can to harm the economy and the nation. Because they are “patriots.”

This graph should be the shame of Congress, and even Obama, because he was definitely pushing austerity too.