Greek vote cannot be ignored

The reaction in Brussels and Berlin to the outcome of the Greek General Election, whose result came as no surprise, looked alarmingly like the usual one. “The people have spoken, but they don’t really understand so we’ll ignore them”.

To be clear, I am not an opponent of calling for countries to get their public finances in order (what some falsely like to call “austerity”), even if that means reducing incomes from an artificially inflated or subsidised state. I am not an opponent of ensuring this even more urgently in the case of a shared trading bloc. I am absolutely not an opponent of demanding it outright in the case of a shared currency.

To be clear, I am not someone who justifies what Greece did during the “boom” years – namely develop a grossly inflated and corrupt public sector entirely unfit to manage a country in currency union with hundreds of millions of other people.

To be clear, I do not think the answer to this is to pretend that Greece can go back to the bad old days. I do not believe that half of Greece’s debts can be written off, nor do I think it would be good for Greece if they were (after all, no one would ever lend to it again). I do not believe it is a good idea for Greece to leave the Eurozone, again because it is not in its own interests (any “new drachma” would be inherently unstable and would make it almost impossible for Greece to trade meaningfully).

In other words, I do not support Syriza. I do not think its policies are wise. Most of all, I do not think it is remotely competent enough to deliver any of them. That Sinn Fein is a fellow traveller is probably enough explanation. Sinn Fein was also a fellow traveller of Presidents Chavez and Maduro in Venezuela, who have left the country (in terms of resources the wealthiest in Latin America) in such a mess that its own citizens cannot even return to it because it is so indebted to airlines that they refuse to fly there. That’s what you get for not paying your way, and it’s the kind of outcome likely in Greece if Syriza remains in power for any length of time.

However, I do support democracy. And although I believe in countries paying their own way and reforming their systems when it turns out they are not, I do support those who suggest that the terms imposed on Greece were too severe. Whether they brought them upon themselves is not the point, or at least it is not the point as much as Germany suggests. Had the UK adopted the same level of public spending reductions as Greece, public spending would be less than three quarters of what it is. To localise that, the NI Executive would have to get by on £7.5 billion of Current Resource Spending rather than the £10.2 billion it is already struggling with. It is unimaginable and no surprise, therefore, that the Greeks have comprehensively rejected it.

The Germans make a subtle but important error when dealing with these things, and now is the time to correct it. They believe, fundamentally, that it is the role of the government to run a surplus – i.e. to raise more in revenue (taxes, duties etc) than it spends on public services (and welfare). Germany itself typically achieves this, but it is almost unique in the Western World in doing so.

In fact, it is the role of the government to pay off its debts to a significant enough degree that people are always willing to lend it money (at reasonable rates). That does not require it to run a surplus; it just has to ensure the overall debt does not get out of control. As was noted in the news over Christmas, some of the debts the UK is currently paying off date back to the 18th century!

Indeed the UK, for its many financial sins, is a good example of what is required now. The new Coalition Government, coming to power in 2010, was so determined to clear the UK’s deficit that, perversely, people lined up to lend it money (in good faith that the new government would be serious about paying it back). So numerous were these people, that the UK ended up being able to borrow at rates even lower than Germany – which runs a surplus. That is the fundamental reason that the UK has not, in fact, cleared the deficit (and indeed would have been foolish to do so, as it was able to borrow money at lower rates than some of the debts it was paying off).

The same arrangement is required for Greece. Rather than forcing it to try to run a surplus, a plan has to be put in place to enable it to borrow money at reasonable rates – a plan which will require creditors to be safe in the knowledge that government is being competently enough run that they will get their money back. In Jean-Claude Juncker’s technocratic world, Greece has to honour its obligations; however, in the Greek people’s real world, those obligations as currently cast are crippling. It is nonsensical for the Greeks to demand everyone else bail them out without repaying their debts; but it is equally nonsensical to insist Greeks stay on a path which is crippling, and which fundamentally has not worked (Greek national debt has, after all, increased as a share of GDP since 2010, not decreased).

It shouldn’t take a populist leftie to point out that democrats should listen to the people ahead of the technocrats and be seen to listen to the people ahead of the technocrats, even if they cannot offer everything they want. Yes, the Greeks deserve to be challenged for their past excesses – but they also deserve to be heard for their current pain.


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