As unfathomable as the European debt crisis can seem, one clear moral narrative has never been far from the surface: the feckless Greeks had it coming. Their explosion of debt-fuelled public spending, their workshy, tax-dodging ways got them where they are and they're just going to have to wear the consequences.
That narrative frequently shouts over the more acute questions of whether the consequences being suffered by ordinary Greek people are morally acceptable, and whether the years of austerity being prescribed for them in return for those bailouts (which sound like handouts but are actually low-interest loans) are in fact the proper medicine.
In a fascinating essay for the Australian journal Overland, Giovanni Tiso (a Wellington-based writer and translator and no stranger to this parish) posits another story. The more common "misleading narrative", he writes:
... works on public opinion because it makes intuitive, even comforting sense, whereas the reality – which even the odd right-wing economist, if prodded, will obligingly describe – is counterintuitive and awkward. It is hard to wrap one’s head around the fact that the lending by the rich European economies was at least as reckless as the borrowing by the poor ones, that the German surplus was at least as damaging – and every bit as politically determined and avoidable – as the deficit of Greece and the other countries offensively labelled as PIGS.
The loose monetary policy run by the European Central Bank to the benefit of its sluggish core economies left the more dynamic but capital-poor economies of the periphery to choke on cheap credit. The doctrine of the ‘moral hazard’ did the rest: once the interest on Greece’s debt spiralled out of control, instead of bailing the country out – which would have carried a comparatively small price tag, since its economy accounts for a mere 2 per cent of the eurozone’s GDP – the core countries chose the cautionary approach, forcing Greece to adopt draconian measures that increased unemployment while benefits, services and public sector salaries were slashed in exchange for some relief for its creditors.
The source of most of the bailout funding is, of course, the German taxpayer, who sits comfortably on the proper side of what Tiso characterises as:
... the moral argument: if every country were as industrious and hard-working as Germany, the entire system could sustain itself indefinitely along a virtuous path.
But this ... conveniently overlooks the imbalances that this conduct causes elsewhere in the system, as well as that the strategy works – to a point – precisely because of these imbalances. If everyone behaved like Germany, overall economic activity would grind to a halt.
Tiso, a Marxist, has some unexpected bedfellows. On The Spectator's website, James Forsyth frets about the erosion of Greek democracy and concludes: "If Greek politicians want to go back to doing what is best for their country, they are going to have to leave the euro."
The media in each of the protagonist nations have their own stories. As the BBC reports:
Rhetoric that would once have been deemed unacceptable is now becoming more mainstream here. A recent demonstration in Athens involved a performance with an actor dressed as Hitler and another as an SS officer pretending to rape a woman representing Greece.One Greek newspaper angrily linked the German government with the Nazis
A daily newspaper printed a mock photo of the German Chancellor Angela Merkel in a swastika armband, prompting fears that such images might tarnish Greece's reputation for hospitality and the country's vital tourism industry.
On television, too, the references are clear. Giorgos Trangas hosts a popular daily show that rails against Germany. The opening credits feature 1930s war videos: on the set around him he has photos of Nazi officers. The Greek broadcasting authorities allow the programme to remain on air, although the station that presents his radio show was recently fined 25,000 euros (£21,000) after Mr Trangas used a pejorative term for Mrs Merkel.
We can muse about how the arrival of volunteer German tax collectors will go down.
The German media are not happy either:
The mass-circulation Bild newspaper made its appeal to parliamentarians with the headline ``Stop! Don't go any further along this wrong path.'' Hans-Werner Sinn of the Munich-based Ifo Institute said a Greek bankruptcy would cost Germany alone 100 billion euros ($134 billion). If the euro countries were to provide comparable aid to other crisis nations in the region, it would cost 6.2 trillion euros, which would lead to the end of the euro. Greece should voluntarily leave the euro zone, Bild said. A whopping 80 percent of Germans opposed another Greek bailout, according to a Bild survey published yesterday.
So where the hell to go with this -- and who ought to be believed amongst a horde of commentators?
That's what we'll be discussing on Media7 this week, with Giovanni Tiso himself and business journaist Rod Oram.
If you'd like to join us for the Media7 recording tomorrow evening, we'll need you to come to the Victoria Street entrance of TVNZ some time between 5.15 and 5.40pm. Try and drop me an email to let me know you're coming
In the meantime, I am most interested in any commentary or information you may wish to offer here.