Greece’s depression is IMF’s idea of ‘progress’

The International Monetary Fund congratulated itself last week for the splendid job it is doing in Greece, declaring the country “is making progress in overcoming deep-seated problems.” With an unemployment rate of 27.2 percent, an economy that has shrunk by at least 20 percent and children going hungry, one has to shudder at the thought of what a lack of success might look like.

Temple of Zeus photo by Andreas Trepte (

Temple of Zeus photo by Andreas Trepte (

The depression in Greece is the logical conclusion of austerity, but while Greece is the first in Europe to arrive it is not alone — the composite eurozone unemployment rate reached a record 12.1 percent in March. The eurozone unemployment rate rose to 24 percent for men and women below the age of 25; the European Union-wide rate is nearly as high.

The IMF’s solution? Eliminate more jobs. In its latest report on Greece, issued on May 3 following its latest inspection visit, the IMF graciously mentioned that Greece’s wealthy don’t pay taxes:

“Very little progress has been made in tackling Greece’s notorious tax evasion. The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earning a salary or a pension.”

But the IMF report quickly followed up by grumbling that:

“[T]he over-staffed public sector has been spared, because of a taboo against dismissals.”

Perhaps you will not fall off your chair in shock, but it is the latter of these two concerns that gets the attention when the IMF gave its verdict on what it expects the Greek government to do:

“A strong recovery will need to be built primarily on deepening structural reforms. … The government’s welcome public commitment to improving the business environment and accelerating privatization now needs to be matched with results.”

Diktats masquerading as democracy

Those bland-sounding words take on deeper meaning when we examine the “structural reforms” already imposed on Greece by the IMF, the European Commission and the European Central Bank, the “troika” that dictates Greek policy. In February 2012, for instance, the Greek government agreed to reduce the already low minimum wage by more than 20 percent, to freeze all public-sector wages until the unemployment rate falls below 10 percent and to deep cuts in pensions.

The Greek minimum wage is €751 per month (equivalent to US$990 or £636). How well could you live on such a sum?

Overall, wages have fallen 40 percent and health care spending has been cut 25 percent. Meanwhile, most of the money released by the troika goes straight back to lenders, not for internal relief. As a result of this austerity, it is no surprise that retail sales in Greece have declined by 30 percent over the past three years and an estimated 150,000 small businesses have closed. Poverty has become so widespread that an estimated 10 percent of Greek’s children go to school hungry.

All this in a country where its biggest and wealthiest industry, shipping, pays no taxes — its tax-free status guaranteed in the constitution. Greece’s wealthy pay little or no taxes, stashing their cash outside the country. Government employees are the people who can’t evade paying their taxes — yet they are the ones scapegoated for economic troubles. (A common pattern in many countries.)

The IMF made no mention of its own role in bringing about this depression in the May 3 report, instead blaming a “lack of confidence” for Greece’s struggles:

“Looking over the period 2010–2012, the much deeper than expected recession was overwhelmingly due to a progressive loss of confidence. … With fiscal adjustment set to remain a drag on GDP growth for several years to come, the key challenge is to generate the improvement in confidence needed for a recovery in investment to begin to more than offset this drag. This cannot happen unless Greece can secure broad domestic support for the program and the political stability that would come with this.”

Yes, if only Greeks would believe that hunger is a sign of progress, everything would be better! In lieu of a sudden spasm of optimism, generating “broad support” for bleeding the country dry to pay back financiers who made reckless gambles might be difficult.

Ideology masquerading as economics

Although it might be tempting to note that doing the same thing over and over while expecting different results is unreasonable, reasonableness is besides the point here: Austerity programs are designed with ideology in mind, not with economics based on the real world. One clue to this is that “structural re-adjustment” programs invariably demand sell-offs of public assets — holding fire sales of state enterprises means private capital can scoop them up at very low prices, and profit nicely from doing so at public expense.

The neoliberal concept is that people exist to serve markets rather than markets existing to serve people. Entire countries have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the North on the South through institutions like the IMF; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to pass the money to financiers, often from their own country. Much of the money Europeans lent to Greece was used to bail out German and French speculators.

The race to the bottom, of which austerity programs and the continual shifting of production to locations with ever lower wages constitute crucial components, represents an intensification of market dominance over human life. It is also a result of a scramble to maintain profits, which have been under continual pressure from the economic crisis.

But neoliberalism is not the product of a cabal “hijacking” economies or governments; it is the natural progression of a system that insists “markets” should be the arbiter of all human problems and the model for social relations and institutions. Capitalist markets are not neutral abstractions perched loftily above the Earth; they are the aggregate interests of the wealthiest industrialists and financiers as expressed through the corporations and other institutions they control.

“Markets” dictate that school children faint at their desk due to hunger while billionaires grab ever more. We can do better than this.

8 comments on “Greece’s depression is IMF’s idea of ‘progress’

  1. Jeff Nguyen says:

    I remember listening to Ralph Nader in 2008. He was incredulous that Hank Paulson first went to Congress with a 4-page proposal to request hundreds of billions of dollars of Treasury (taxpayer) money and expected them to sign off on it because the banks were TBTF. Although, Congress made Paulson write a few more drafts of his masterpiece it was a mere formality to possibly the largest single-moment transfer of wealth (I think) in American history. Nader couldn’t believe the media weren’t shouting from the rooftops to stop the bailouts but the smartest men in the room had already shook hands on the deal.

    I had an epiphany today on why the princes of privatization love the data-driven approach as it relates to such matters as education or entitlement “reform”. Numbers are preferred because a) they’re impersonal and b) they’re easily manipulated to fit an ideology, as you astutely note, or agenda.. That may seem obvious to most but for people like me, with little knowledge of economic theory and practice, it was an “aha!” moment.

    Thank you, sincerely, for making me a smarter blogger and human being.

    • Jeff, considering the high quality of your blog, I am flattered by your generous comments. And as to theoretical knowledge, I find the most important thing are instincts. You have excellent instincts; theory is filling in the details. In my past years when I was an activist I found some of the best folks were people who didn’t know much theory but sure had strong instincts — these were folks who consistently land on the correct side of a question because they understood the difference between right and wrong.

      The people who like numbers —- indeed because they are impersonal and easily manipulated — are often referred to as “technocrats,” as if they are above politics or social struggle. Funny, though, the “technocrats” invariably carry out the agenda of the most powerful as if the numbers impersonally dictate that harsh polices should be made harsher.

  2. Jeff Nguyen says:

    I distracted myself and forgot to even mention Greece. In the midst of the ongoing economic crisis in Greece, public workers have seen their wages cut drastically to pay debts they never created. But when the head of the IMF told Greece they better stop laying around eating feta and drinking ouzo all day and pay their stinking debts, she might as well have been scolding us wayward Americans who had the audacity to hope that we could live in affordable homes, enjoy universal healthcare, and go to decent paying jobs every day.

    Lagarde dared to say what other members of the Über-wealthy capitalist class truly think about their captives when she compared the Greek people to her more deserving children, “I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time.” Ouch, talk about kicking people when they’re down. Meanwhile, the little kids from a little village in Niger wait for Mama Lagarde to come home from a hard day’s work to read them a bedtime story and tuck them in for the night.

    • It’d almost be funny, except that, according to the Organisation for Economic Co-operation and Development, Greeks work the longest hours of any people in the European Union — 43.2 hours per week, as compared to 35.7 hours per week for Germans. People like Christine Lagarde assume that nobody looks at their own statistics. (These are figures from a year ago, when I first researched the question, but there is probably little if any change.) Moreover, the average Greek wage was 73 percent that of the German.

  3. Vassilis says:

    A wondergully detailed post. Hope more people are visiting and reading it. This is another problem: the information channels. In Germany even if people read this, probably they will think it is just excuses. The press and TV has affected greatly the public opinion, in such an extent that the failure of the economy is translated in Greeks’ laziness and thieving. It is not only about the money, but they also turn it into a moral issue that makes whole nations hate the others.

    • Nationalism is wielded as a weapon in Germany, as it is across Europe and the rest of the world. We see it in Greece, too, where the nationalist Right portrays Germans as Nazis and this nationalism is expressed in violent ways by the Golden Dawn. Fortunately, there are strong Left forces in Greece to counter that, just as not all Germans fall for right-wing siren songs.

      There is no national solution to the problems of Greece (or any other country), there are only international solutions. Even if Syriza, other Left formations and the Greek people brought about a new socialism, Greece could not survive as a small island surrounded by a hostile capitalist world. Europe together will have to transition to a better system; internationalism on the basis of building together rather than every one (and every country) for itself. It was a much needed sight to see the co-leader of the German Left Party, Bernd Riexinger, standing with Alexis Tsipras during one of the major demonstrations in Greece last winter.

  4. Alcuin says:

    “But neoliberalism is not the product of a cabal ‘hijacking’ economies or governments; it is the natural progression of a system that insists ‘markets’ should be the arbiter of all human problems and the model for social relations and institutions. Capitalist markets are not neutral abstractions perched loftily above the Earth; they are the aggregate interests of the wealthiest industrialists and financiers as expressed through the corporations and other institutions they control.

    “‘Markets’ dictate that school children faint at their desk due to hunger while billionaires grab ever more. We can do better than this.”

    I would alter this to say that “… capitalist markets are neutral abstractions …” in the eyes of neoliberals. In our eyes, of course, they are not neutral, they “are the aggregate interests of the wealthiest industrialists …”

    But, understand this: individualism and self-interest is what drives markets. For an interesting piece that explores this, read this post at Dawn Paley’s blog.

    In particular, focus on these two paragraphs:

    “MAG Silver has denied its operations have anything to do with the murders. ‘MAG and our Mexican consulting contractor, El Cascabel, had absolutely no involvement in the tragic event,’ Dan MacInnis, the CEO of MAG Silver, wrote in an email to The Dominion. Instead, MacInnis earlier claimed, ‘We are victims broadsided by a long-standing community dispute.'”

    “The police investigation into the murders back up the fact that it was a community dispute that triggered acts of violence ending in the murder of Ismael and Manuela. But it also makes clear that the prospect of well paying jobs MAG Silver brought to Benito Juárez was at the heart of the dispute.”

    I italicized the last sentence to emphasize my point of how capitalism plays on human weakness by appealing to individualism and self-centeredness. Benito Juárez is an ejido, 53,000 acres of land collectively owned and farmed by 400 families.

    Karl Polanyi, in his The Great Transformation explored how the idea of the market was changed by the rise of capitalism. It is only when we, collectively, re-embed the market in society that the abuses of capitalism will start to subside. As I’ve written before, in the immortal words of Pogo, “we have met the enemy and he is us.”

    • A tragic story. I note the contrast between the communal nature of the community — a community located in such a harsh desert climate could not have survived without a high level of cooperation among its members — and the individualism fostered by outside capital that has led to deep divisions and these killings. Such a devolution required only a few people to jump at the supposed high-paying jobs dangled in front of them by the Canadian multi-national mining company.

      Even if such jobs did materialize, they’d be short term, gone as soon as the mine lost its profitability, and the land the community relied on would be ruined. A boom town, based on resource extraction, which becomes a ghost town or a shell of its former healthy condition soon enough. And the “boom” is created through violence, itself enough to tear apart a community. This story is replicated all over the world, again and again.

      Indeed, this story of the village of Benito Juárez is an example of what happens when markets become the arbiter of social relations and the dominate decision-maker in economic matters.

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