Agreement on austerity measures! Mission accomplished?

Had someone asked me after the last election whether the new government would agree, within one month, on new austerity measures to the tune of 11,5 BEUR, I would have said “no chance!”

Now, as I read in the papers, they have done just that! An unbelievable accomplishment! Or is it perhaps not?

First a comment regarding the integrity of election promises and actions taken after being elected. In an ideal world, parties would do when in power exactly what they promised during the elections. From that standpoint, the coalition parties cheated their voters.

However: in unusual times of national emergencies, responsible parties may understand what needs to be done but they may also understand that they will never be elected to do it if they are honest about their intentions during the election campaign. The logic would be: promise voters whatever they want to hear just so that you get elected and, once in power, you can do whatever is responsible and best for the country.

As I said, in unusual times of national emergencies, such actions may be justified. I believe Greece was/is in a situation where such an action was justified (particularly when considering the alternatives).

Will these decisions solve Greece’s problems? They will certainly solve the problem of the next weeks and months. Some may say “What’s the big deal? All they did was to agree to do what they should have done months ago!” True. But what they really did was to agree on something which was totally unimaginable only one month ago; something which will increase the hardship on large parts of Greek society; something whose outcome is definitely uncertain; etc. Against the latter background, it is an accomplishment where the Troika has no choice but to reward it with continued funding.

The major weakness of all of this is the same as it has been since the start of the crisis. If I were a Greek, I would not have the feeling that the government agreed on measures which they always wanted to implement and where they are convinced that they will improve the economic condition of Greece. Instead, I would be convinced that the only reason they did it was because they were with their backs against the wall and had no choice but to comply with those “neoliberal foreign creditors”.

Alexis Tsipras can look forward to some wonderful months where he can stir such feelings and emotions among the Greeks!

Did the government have a choice? At this time, no. Does the government have a choice going forward? Yes, it still does!

The importance of meeting financial targets is highly overrated. We have now seen about 8 quarters since the first rescue package of May 2010, as well as 8 quarterly reviews. Greece has not been in compliance ever. And still, Greece is still in business.

Financial targets should ideally be complied with but the much more important aspect is that financial targets should always be agreed to. Once you have agreed to them, you have gained time to take care of those things which are really important. And if you successfully take care of those things, no one will worry so much about the fact that you have – once again – missed the financial targets.

So, here you have it: to agree on these austerity measures was the right thing to do provided that this is understood as having gained time to work on the really important issues. How much time was gained? I would guess not much more than two more quarterly reviews; perhaps three. And how should the government use that time?

Well, if I were a “regular Greek” (i. e. someone who does not have special insights into economic affairs), I would say the following today: “I have no idea what our government plans to do to turn this country around and to make our lives better again, other than making foreign creditors happy. I don’t give a damn about making foreign creditors happy. Instead, I would like to make my family happy and see that my children have a future in this country!”

If the government does not use the limited time now available to take those measures which really promise a better future for Greeks and, equally importantly!, if it does not succeed in communicating this covincingly to the Greek population, they will not succeed (even if what they do were, objectively, the right thing to do).

The graveyards of the world are full of people who were right!

The parks of the world are full of statues of people who were perceived as having done the right things!

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4 Responses to Agreement on austerity measures! Mission accomplished?

  1. "If the government does not use the limited time now available to take those measures which really promise a better future for Greeks and, equally importantly!, if it does not succeed in communicating this covincingly to the Greek population, they will not succeed (even if what they do were, objectively, the right thing to do)."100% ack! Exactly, the government should tell the voters that they engage in a huge modernisation drive inn order to finally get the country into the 21st century. There probably would be a huge majority supporting measures that stop the "fakelaki" blackmail, that would reduce the time citizens have to spend in offices to get papers from the bureaucracy, to assure that justice will actually be served within the lifetime of the plaintiff, etc etc. But to engage in such a popular movement of reforming the nations requires that the politicians actually want to do that, despite the huge resistance from powerful interests who want to preserve the status quo, no matter what. In short, since the political carreer of so many officials and the lawmakers depends on not changing anything, we most probably won't see that happpening.

  2. kleingut says:

    I obviously don't disagree with you!

  3. Anonymous says:

    Sorry, but what I would like to see as 'modernisation' is-accountability for those in public office. Why am I paying a comparatively huge salary of a public prosecutor who can rule that a fugitive caught is not suspect of fleeing, so he is released and of course flees. The prosecutor has NO consequences. Same for courts who can -and do -rule that pigs do fly and are immune. The justice issue is not mainly the delays: It's also the crazy decisions made. I do not mind paying competent people well to work for the state. I do mind paying for people who dissect the hair and swallow the camel. Or the guy who granted a furlough to a mudrerer seving life sentence who already had broken his last furlough -which he should not have gotten anyway. Why should I pay for the state wasting 15mil of taxpayers and lenders money and give up government land to build a mosque and pay a mufti for eternity(and of course do the same for any other religion?) Don't they have better things to do with that money? Why should I pay for the government breaking their own rules and appoint people just because they have a ring of acquintances in the ministry and elsewhere?Furthermore, I must take exception to the claim that fraud=modernization. For example if I were to buy Bayern Munchen and then decide that I do not like the players contracts, and go to the Bundersat to ask them to make a law and change 5yrear contracts to 1 year contracts, what do you think their reaction would be?Similarly, the state had actively pushed for solar installations giving attractive guaranteed prices and 25 year contracts. So people did invest and some even borrowed to do that. Now the great minister decides that these prices are too much, so he is unilaterally changing these contracts to less than half to start with and with further gradual reductions. If that is really what's necessary to save the country, fine, I'll accept it. But I cannot accept that the two great ministers who gave the original prices in the contracts plus the MPs who voted them without reservations as to whether this is sustainable(leaving aside that they have been collecting a special tax for 15 years before that), which is also debatable, will lose nothing and only the average citizen will. And of course why will anyone invest in a country where the government interferes to change contracts at will? If that's modernization, why does not the rest of the western(at least) world do that?

  4. kleingut says:

    Let me begin with a "cute" answer: much of what you say about Greece, I could similarly say about my home country Austria. The only difference is that perhaps to a lesser degree.Seriously: a society which does not have a well-functioning state of law and/or well-functioning public institutions is doomed in the long run, in my opinion. 165.000 pending court cases on tax problems is, to me, one indication (of many) that the state of law is not functioning well in Greece. If thousands of Greeks can collect unwarranted pensions, that is, to me, one indication (of many) that public institutions are not functioning well.I am a great champion of the EU Task Force for Greece. Its objective is: "The Task Force is a resource at the disposal of the Greek authorities as they seek to build a modern and prosperous Greece: a Greece characterised by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos".http://klauskastner.blogspot.co.at/2011/12/surprise-surprise-eu-task-force-was.htmlThere is no way that a country like Greece can eventually succeed if the leadership cannot, at some point, convince people like you that it is a worthwhile and notable effort to take part in and support that effort. If I read you correctly, you no longer want words but action instead. I am with you.I have no answer how Greece could get the kind of leadership it needs and deserves. Actually, I am quite impressed by the present government because, so far, they really haven't committed any great blunders and they haven't even said all that much. I am always prepared to give someone the benefit of the doubt and benefit of the doubt is now called for. The good thing is that we won't need to wait forever to find out whether the benefit of the doubt was justified. My guess is that before year-end we will know.

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