The Greek Crisis: Austerity is Not Working. Is anyone listening?

In answer to the question does austerity work you only have to look at the Greek crisis and discover the dismal news. In one word No--in fact it makes this short sighted policy makes things worse--much worse. Take a look at the Washington Post report today:

Unemployment has surged to 18.8 percent from 13.3 percent only a year ago. Overburdened public hospitals are facing acute shortages of everything from syringes to bandages because of budget cuts, with hiring freezes forcing the mothballing of operating rooms even as more unemployed are relying on the public health system. Rates of homelessness, suicide, crime and HIV cases from intravenous drug use are jumping."

There is more:

“Conditions have deteriorated so dramatically that doctors in this country now believe that the Greek crisis is no longer just a financial crisis but a humanitarian crisis,” said Dimitris Varnavas, the president of the Federation of Greek Hospital Doctors’ Unions.

Is anyone listening? No. Certainly not the Germans who now control the fate of the Greek people--they want more suffering:

On Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy turned up the heat on Greece, suggesting that its bailout deal is in danger of unraveling if Athens does not press ahead quicker with pledged budget reforms and seal a deal with bondholders to voluntarily restructure its massive debt. But they also acknowledged that new steps are needed to combat slowing growth in the euro zone, where economists fear a looming regional recession as other indebted nations from Italy to Spain to Ireland also make deep spending cuts to reassure worried investors.

To the people who like to blame the victim--it appears from the Wall Street Journal's evidence that the Greeks work harder than the Germans and the Americans

The most recent data from the OECD covers 2008 and shows that in that year, Greek workers on average worked 48% more than their industrious German neighbors. The OECD data shows the average Greek worker spent 2120 hours at work compared with 1429 hours in Germany. Moreover, Greece is one of the only OECD countries in which workers were working longer in 2008 than in 1998. With 1802 hours at work, the average Italian employee spent more than 25% more time at work than the average German worker.

The question is as the Wall Street Journal reminds "is not the industriousness of the people, but the relative productivity of the economy, which derives from some structural issues that the people can’t help and some that maybe they can (unit labor costs, including those benefits that get people in Germany and the US all worked up). " How about a proper debate about what to do in these circumstances that does not end up causing long term damage to the people and country that you say you want to help.

Educators Need to Respond to a Changed World

I have been traveling in Turkey this past month and while there had a chance to think through the issues the world is suffering which might be characterized as "a highly stressful period" here are just a few items:


• Japanese Earthquake /Tsunami
• Nuclear Power Plant melt down
• Libyan uprising
• Ivory Coast uprising
• Syrian crackdown

Apart from the usual worries about higher inflation, oil prices and general instability of the US and most of the European economies teetering on a double dip recession—we have got to wonder whether this is going to be the pattern for a while—just a general increased turbulence. Continuing with the turbulence metaphor the question arises-- is this like flying through a stretch of 'bumpy air' or is this is going to a fairly permanent state for the rest of the 21st century world-- a constant shift from crisis to crisis? My short prediction is yes—we are entering a period of extended crisis.

Two main factors seem to be driving this new semi-permanent state —our relentless pursuit of cheap energy, even at the expense of our own safety and the expanding thirst for democratic freedoms particularly from young people trapped in states whose rulers made a devils' bargain to provide cheap oil to the west in exchange for a lifelong grip on power. The comfortable part of the west --that receives most of its information through the corporate media --have cocooned ourselves in our nice cars and homes with the belief that there are few consequences for this state of affairs—we are lulled by infotainment shows and share (bolstered by the high tech gadgets we are so tempted to buy) an exaggerated belief that our ever expanding technology prowess will eventually resolve all problems favorably. What we are failing to recognize are two other very destabilizing factors- —a dramatic rise in population particularly within the Muslim world, and a new generation coming to maturity who lack the fear that virtually paralyzed their parents equipped with new tools of 21st century literacy and organizing--cell phones and facebook accounts together with improved English speaking ability. In Turkey 50% of the population is under 28 and there are similar numbers in the rest of the Middle East. In Turkey also many of these young people have moved to large cities like Istanbul (now over with a population of 13 million, also making (according to Wikipedia "the largest metropolitan city in Europe) believe they are entitled to a better future than their parents' generation. In the west we are good at reporting the daily headlines not as good at recognizing the big picture and how it has changed.

What are we to do? First admit that our institutions, particularly governmental and international bodies, educational and media organizations were built for a different world and are almost as overwhelmed with change as those Tepco Nuclear engineers who assumed they could deal with the emergency even though they well knew they had built the plant on one of the most active fault lines in the world— (the so called "ring of fire"). There had been no planning for a tsunami (a predictable outcome of an earthquake on the sea bed). We can expect more of the same kind of news reports we are currently receiving from Japan about other major areas as stories from once far away places such as the Middle East, Asia because of our globally interconnected world cause reverberations throughout societies that previously saw themselves as insulated affluent enclaves. These new stories have no neat endings--that begin with uncertainty and and end there too--a case in point today--they are flushing radioactive water into the oceans and polluting the air with the same poisionous smoke. Result? We are not told. These are the new 21st century news stories--narratives that follow no predictable curve. In the case of the Japanese Nuclear plant meltdown it is as if we were captive in a cinema watching an awful end of the world Stephen King movie but guess we are not--this is real. Our willingness to close off part of our minds to the reality is perhaps more evident with regards to the Middle East --did we honestly believe that dictators could exist in the same age as Facebook, Twitter and cellphones?

As educators we have some special responsibilities here too--to point out where the prevailing assumptions no longer match current realities and to not provide our students with easy answers--how ever tempting--but with a series of questions that we all have to confront about the world we have so comfortably remained closed to for too long. More about this set of new 21st century challenges in subsequent blogs.

Plutocrats Need to Decide the Future they Want for Themselves and the World in the 21st century

The lead article in this month's Atlantic by Chrystia Freeland of the Financial Times "The Rise of the New Ruling Class: How the Global Elite is Leaving You Behind" does not offer much in the way of new information about our increasingly isolated and entitled plutocratic class. We have known for a while that the economic meltdown was in part caused by a group of very well educated would be masters of the universe who newly equipped with turbo charged technology tools with money and access to the world's most powerful politicians, journalists and academics. That is why the global meltdown took everyone so much by surprise --I mean everyone! You knew that right? And why the deal that was arranged between the White House, the Congress, the Fed and Wall Street that bailed out the wrong doers was so quickly worked out away from the media spotlight.

What is new and interesting are the details--the quotes from the entitled that reconfirm that they feel victimized by having to pay a few percentage points more for their already grandiose lifestyles and their belief that it was the greed and ignorance of those who got locked into sub-prime mortgages and credit card debt that caused the meltdown. What is disturbing is that some of those most out of touch have working class origins--for example Goldman Sachs CEO Lloyd Blankfein is the son of a Brooklyn post office worker and Tony Hayward the disgraced Shell CEO has also blue collar roots. They all share along with their Russian plutocratic cousins a barely concealed sense of entitlement to not just modest rewards for a job well done but gargantuan ones. One of Freeland's informants comments about the change since the 1980s and 90s when “where there were men in their 30s and 40s making $2 and $3 million a year, and that was disgusting. But then you had the Internet age, and then globalization, and you had people in their 30s, through hedge funds and Goldman Sachs partner jobs, who were making $20, $30, $40 million a year. And there were a lot of them doing it. I think people making $5 million to $10 million definitely don’t think they are making enough money.” The executives featured in the article know the streets of Davos and Aspen where the rich and the famous gather with the rest of the global elite for their annual conferences better than their own neighborhoods. Many of them are as one CEO describes himself-"global nomads open to many perspectives." One of the perspectives is that the US is overpriced and that US businesses if they are going to be successful must "internationalize aggressively"--meaning they have to locate their businesses closer to their customers and that relatively high priced US workers must either take a pay cut
or demonstrate their superior value. One of the CEOs believe that if the price of three or four people in India or China to be lifted out of poverty is for a member of the US middle class to drop their living standards (read unemployed) then the price can be justified. It would be nice to believe they were saying these things because they genuinely wanted to help relieve poverty in Asia but it is doubtful. The real intention seems to be to want to bring the price of labor down everywhere so that profits can be more easily extracted. This maybe what Lloyd Blankfein was referring in his arrogant way to "doing God's work" when he tried to placate public outrage about his role and the role of brokerages like Goldman Sachs during the recent financial meltdown. If they truly believe that the world is better off with their version of global capitalism it would be great to subject these ideas to public debate, but as is so often the case these issues are never properly discussed except among their elite politician friends for whom they raise tremendous amounts of money for. Could we at least expect the media to ask the hard questions of our policymakers now that the public is beginning to discover the unfairness issue. Perhaps they could begin with the simple proposition that if we are to become in the US ten times more productive to successfully compete overseas and justify our more than subsistence level compensation--can the plutocrats give a little more back in taxes to create the kind educational and training opportunities for those most vulnerable to unemployment?

The problem in all this is even in a supercharged competitive global environment the oligarchs who bebenefited so richly from globalization seem blissfully unaware of the need to engage around these political and moral issues. Instead they seem to want more and more rewards for their efforts. It would not be so bad if the Wall Street world they inhabit bore any real relationship to the rest of the economy but like the Tulip crazes of a time ago the derivative markets in particular more closely resemble the casino hall as numerous other commentators have pointed out than they do a stock market. As Freeland remarks, "This plutocratic fantasy is, of course, just that: no matter how smart and innovative and industrious the super-elite may be, they can’t exist without the wider community. Even setting aside the financial bailouts recently supplied by the governments of the world, the rich need the rest of us as workers, clients, and consumers." Politicians and the media have sometimes indulged these fantasies and pretended otherwise glamorizing their outsized life styles and party-going in return for favors large and small. Freeland well the consequences of a world where the media and political elite mingle with plutocrats in meetings like Davos and a score of prestigious think tank events. How these gatherings tend to reinforce each others sense of huge privilege and entitlement. No wonder so many of them are prone to foot in the mouth "let them eat cake" type statements that will eventually in this new age of austerity force a political backlash that will begin a new round of protectionism. As Freeland points out that while "plutocrats’ opposition to increases in their taxes and tighter regulation of their economic activities is understandable, it is also a mistake. The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda—that, for instance, middle-class Americans could conclude that the world economy isn’t working for them and decide that protectionism or truly punitive taxation is preferable to incremental measures such as the eventual repeal of the upper-bracket Bush tax cuts." It will be interesting to watch as the next decade unfolds how far this new global class are prepared to push the extremes. Do they really want to live lives ensconced within high security skyscrapers with their own helipads overlooking the slums where their fellow men and women eke out their daily living--is this what they regard as success in the 21st century? In case you don't believe this type of behavior is possible --take a closer look at the photograph at the top of this blog--it is the 27 storey "home" that Indian Billionaire Mukesh Ambani, that according to one report is "believed to be the most expensive home in the world" ….Located in Mumbai it overlooks the sprawling slums, and as well as a Cinema, Swimming Pools it has you guessed it a helicopter pad...maybe for a quick escape?