The Greek “outcome” is symptomatic of a broken economic ideology. Underlying that ideology is an expectation that private losses flowing from reckless activity will be ultimately supported by public money.
“Outcome” perhaps is too pre-emptive a word given the upcoming referendum in Greece this weekend. Greece will essentially vote on whether to remain within the European contract, or experiment, or however you choose to describe it. Greece, this home of democracy, having been forced through undemocratic means to endure austerity resulting in wiping almost 30% off its economy, is returning to democracy to seek a mandate.
Regardless of this outcome, the post global financial crisis western world has seen public bailouts following this reckless behaviour. Few people remember that the last action of the George W. Bush administration was to shepherd the largest transfer of public wealth in private hands following the unethical and immoral collatarized debt obligation tsunami brought about by the derivative market.
In Greece, derivatives were at play too with Goldman Sachs masking the debt through the cloak of clever financial instruments to lubricate membership to the EU.
Prior to this, banks in France and Germany were only too willing to loan to an equally unethical Greek government seeking to prop up the façade that was their complete absence of tax revenue. Clearly, those governments are culpable, but where is the culpability of the bankers who made the loans? Any layer of due diligence would have revealed the façade leading to any sensible institution to determine that the loans were never going to be repaid.
There is an entitlement from those who work in the financial services industry that they reap all the benefits while the risk sits with the ignorant public. Any bailout from the troika goes to the banks, while the people of Greece have just absorbed five years of austerity.
Ireland was no different. The banks made all the mistakes, but the people were the ones who absorbed the losses, the pain, and the ignominy.
And why would the folks in the financial industry feel any different? Where is the evidence for their accountability? Where have been the wave of prosecutions following the global financial crisis? It is business as usual now, the bonuses are back, and the only real losers are the public, in every sense of the word.
There is no free market when only one group gets to set the rules.
Despite the irrefutable evidence of the flaws of this economic model following the global financial crisis, this mantra of the free market inherent in neo-liberalism, it remains the economic orthodoxy. It seems that the truth can be ignored, when it is really dogma that drives the thinking trumping the evidence.
And it is this orthodoxy that continues to drive economic discussion in Aotearoa. Our lack of economic diversity and inability to truly leverage our assets leaves us lagging in creativity and future scope. We continue to favour short term advancement over longer term thinking. It is this thinking that ultimately disarms us when we should be moving beyond this flawed orthodoxy.
In truth, we face the challenge of these generations in the reality of climate change. Yet, this government prefers to remain blind in the spotlight of our future. Our intransigence only embarrasses us and leaves us behind the curve, when we should be way out in front. Imagine our potential if we truly decide to stimulate and release it.
So, this weekend we watch as Greece attempts to make sense of their modern predicament. The moral judgement will be strong, almost overpowering, and will cloud any frank assessment of the layer of factors leading to this predicament. Ultimately, lessons will not be learned, and we will limp to another crisis under this flawed, and greedy, economic orthodoxy.