The Greek ‘bailout’ neatly embodies the choice that now faces Western societies. In thinking about it I was reminded of Homer’s celebrated difficulty with the mythical sea-monsters, Scylla and Charybidis, summarised thus by Wikipedia:

Greek mythology sited them on opposite sides of the Strait of Messina between Sicily and the Italian mainland. Scylla was rationalized as a rock shoal (described as a six-headed sea monster) on the Italian side of the strait and Charybdis was a whirlpool off the coast of Sicily. They were regarded as a sea hazard located close enough to each other that they posed an inescapable threat to passing sailors; avoiding Charybdis meant passing too close to Scylla and vice versa. According to Homer, Odysseus was forced to choose which monster to confront while passing through the strait; he opted to pass by Scylla and lose only a few sailors, rather than risk the loss of his entire ship in the whirlpool.

(Fuseli’s painting doesn’t quite capture this. Artistic licence, huh!)

OK: how does this play out in our time? Answer, we’re caught between two pernicious economic dogmas: neoliberal austerity from the Anglophone world on the one hand; and, on the other, the German phobia about debt.

So the Greeks are having a repeat lesson in what it’s like to live under German domination. Or, as Paul Mason puts it

It was hard to see last night what the rulers of Europe wanted.

What they’ve arguably got is a global reputational disaster: the crushing of a left-wing government elected on a landslide, the flouting of a 61 per cent referendum result. The EU – a project founded to avoid conflict and deliver social justice – found itself transformed into the conveyor of relentless financial logic and nothing else.

Ordinary people don’t know enough about the financial logic to understand why this was always likely to happen: bonds, haircuts and currency mechanisms are distant concepts. Democracy is not. Everybody on earth with a smartphone understands what happened to democracy last night.

National sovereignty is an illusion in the Eurozone. But this particular penny took some time to drop in the hapless countries which joined the project. I remember well the euphoria which greeted Irish entry into the EU: at last we were a ‘proper’ country. EU membership enabled us to get out from under the shadow of our former colonial master. When it was Ireland’s turn to hold the Presidency for the first time, I was in Dublin for the first Summit. The city was en fete. I was staying in the Westbury, the conference hotel for all the national delegations except the British, who were accommodated in the British Embassy.

Outside the hotel stood the longest line of black limousines ever seen in Ireland. I fell into conversation with one of the drivers of same, who was lounging outside his vehicle waiting for his delegation to emerge from the hotel. I said that I hadn’t known there were so many stretch limos in Ireland. He laughed and said confidentially: “Between you and me, this would not be a good weekend to die in this country”. It transpired that the government had rented every funeral director’s car for the great weekend!

And so Ireland learned to strut the world stage. And then came the Celtic Tiger — an outbreak of madness and greed that still leaves one transfixed — during which my countrymen “lost the run of themselves”, as my old friend Frank McDonald puts it. And then the banks imploded and the Fianna Fail government decided in a panic-stricken weekend that they (or, more accurately, the hapless Irish taxpayers) would underwrite the foreign bondholders of those same banks, thereby saddling every man, woman and child in the country with a debt running into thousands of Euros. But it would all be ok, they thought, because the European Central Bank and the EU would see them right.

And so the ‘bailout’ came, administered by three technocrats from abroad who arrived in Dublin to teach the feckless Irish some neoliberal manners. But even then, the penny didn’t really drop.

What finally did it was the night in November 2011 when it was revealed that the top-secret details of the budget to be revealed the next day by the Finance Minister in the Dáil (the Irish parliament) were, in fact, already being discussed by members of the Bundestag in Berlin.

And then my countrymen finally understood why they had traded national sovereignty for that brief moment in the global sun.

The Greeks are now making the same discovery.

“The stakes are high, and clear and they boil down to this: if we live in a world where very important decisions about employment, credit, insurance, and other vital economic factors are made by algorithms and data that are essentially black-boxed — impermeable to inspection either because of trade secrecy, or because of real secrecy, or just because they’re hidden away — that is essentially an open invitation to regulatory arbitrage around nearly all legal values that we hold dear — be they anti-discrimination, be they die process, be they basic fairness.”

Frank Pasquale, author of The Black Box Society: The Secret Algorithms That Control Money and Information, speaking on 12 May 2015 at an event sponsored by USPIRG Education Fund and the Center for Digital Democracy.

Nice column by Krugman:

Americans work longer hours than their counterparts in just about every other wealthy country; we are known, among those who study such things, as the “no-vacation nation.” According to a 2009 study, full-time U.S. workers put in almost 30 percent more hours over the course of a year than their German counterparts, largely because they had only half as many weeks of paid leave. Not surprisingly, work-life balance is a big problem for many people.

But Jeb Bush — who is still attempting to justify his ludicrous claim that he can double our rate of economic growth — says that Americans “need to work longer hours and through their productivity gain more income for their families.”

Mr. Bush’s aides have tried to spin away his remark, claiming that he was only referring to workers trying to find full-time jobs who remain stuck in part-time employment. It’s obvious from the context, however, that this wasn’t what he was talking about. The real source of his remark was the “nation of takers” dogma that has taken over conservative circles in recent years — the insistence that a large number of Americans, white as well as black, are choosing not to work, because they can live lives of leisure thanks to government programs.

You see this laziness dogma everywhere on the right…

You do indeed. In Britain too, where all the talk is of those mythical folks known as “hard-working families”, presumably to distinguish them from the families who are supposedly scrounging off the state.

Source

Hmmm… Scarifying. But I’m a bit puzzled by the citing of “Berkeley University” as one of the sources. Do they mean the University of California, Berkeley?

From The Economist:

What makes this problem so difficult to solve is that there are paradoxes at the heart of each side’s position. On the creditors’ side, they do not want to see Greek debt relief until reforms have been carried out. This is partly to establish an example for other nations and partly because of the difficulty of selling such a deal to their own voters. But the harder they push the Greeks, the more likely it is that the latter will be forced out of the euro, in which case default will occur anyway. And the EU would be obliged to offer some kind of aid to Greece if it fell out of the euro, on humanitarian and geopolitical grounds. So the harder the EU pushes, the more they end up with the result they don’t want; paradox 1.

On the Greek side, default would eliminate the debt burden and offer the potential, via devaluation, for a return to growth. But if all the competitiveness gains of a return to the drachma were thrown away in higher inflation, then the Greeks would be barely any better off; the risk is they end up as Argentina without the soyabeans. To make euro exit a success, they would need to undertake the kind of structural reforms and fiscal prudence that they are resisting as the price of staying in the euro; paradox number two.