First it was Troy. Now it’s the European Union.
The Greeks are revisiting their propensity to disrupt narratives with daring and spectacular action. In the case of Troy it was the gift of a wooden horse filled with Greek warriors which ended a 10-year conflict. In the case of the EU it was a general election which put the anti-austerity party Syriza into power.
Austerity as a response to the financial crash of 2008 has become an orthodoxy.
Whether it proves to be the right remedy for the sickness is open to question. My own view is that it is not, but that’s not the point I want to make. Those economies that have returned to something like growth are the ones which have had the saline drip of quantative easing plugged into a vein. That’s something the European Central Bank has until recently refused to countenance despite evidence that the patient was still deteriorating.
What concerns me is the psychological effects of austerity.
Prolonged exposure to a narrative of scarcity is bad for people. It creates a collective hopelessness.
I don’t wish to be ironic or disrespectful if I compare Greek austerity with Germany of the 1920s. In both cases, a nation state was constrained by larger forces beyond their borders. Both were being punished for (military or financial) wrong-doing. Both experienced severe social problems as a result. There are stories of Greek children fainting in school through lack of food.
The rationalists of the ECB and EU Governments are not interested at the human cost of their decisions – the important thing to them is that the system retains its power through the application of the orthodoxy which established it in the first place.
In Weimar Germany, the pressure created Adolf Hitler and the Nazis. The consequence was a World War of unprecedented death and destruction. In Greece, happily, despite some civil unrest, it has led to the democratic election of a new party that refuses to accept the orthodoxy of austerity. The consequences will be interesting.
My hope is that financiers and politicians understand that their narratives of austerity are going to prove counter productive. Greece is the first domino. They need to begin to change the story to one that puts people, rather than a doubtful economic orthodoxy, at the centre. Otherwise, Greece will be a lightning rod to further resistance creating instability and further social tension.
In this case, it’s not about the economy, stupid.