Another lessons for socialists: Beware Greeks bearing debt

Kelly Sloan
Kelly Sloan

It’s unlikely one would ever lack for examples of socialist failure. But should you ever find yourself at such a loss, the one that stands out perhaps most profoundly of late is Greece.

Greece’s problems are many and not small. The little Mediterranean nation has accumulated a debt nearly two times its GDP, has an unemployment rate of 25 percent, a growth rate of less than 1 percent and looming repayment deadlines.

The country is not doing itself any favors, either, to say the least. Last January, Greeks put the radical left coalition party Syriza into power and elevated its leader Alex Tsipras to prime minister.

Let’s take a moment to put this in perspective. We can have honest arguments about whether left-wing political figures like Barack Obama, Hillary Clinton, Ed Milliband, Rachel Notley and others are really committed full-blown socialists dedicated to principles espoused by Marx or just very liberal folks who prefer the use of state resources as a way to implement their ideas as a policy matter without going all Che Guevera. There’s no such ambivalence concerning Tsipras.
A former Communist party member, current vice president of the European Left Party (a coalition of communist, socialist and red-green parties throughout Europe), an atheist who refused to recognize Greek Orthodox traditions when being sworn into office and who reportedly named his son Ernesto in homage to Che, Tsipras is about as committed a socialist as you’ll find.

His election was seen as a symbolic victory for leftists around the world, particularly in Europe. He was held up as the symbol of popular resistance to German President Angela Merkel and the financial “bullies” of the European Commission and European Central Bank. The far left all saw Tsipras as the white knight — a term I presume they would collectively reject as racist and aristocratic — who would reverse recent cuts made to try and pull Greece off life support and demonstrate for all to see the folly of austerity and the wisdom of spending one’s way out of an economic morass with other people’s money.

Unfortunately for Tsipras, those other people are having less and less of it. As Greek officials continue to try and work out some kind of arrangement with the European commission, International Monetary Fund and ECB, Greece’s creditors are growing increasing weary of Greek proposals that essentially call for more cash with fewer conditions and relief from existing debt in exchange for absurdly insufficient and superficial domestic spending reforms.

In many ways, this whole mess is nearly as much of a creation of the European Union as it is of Greek profligacy, although not in the way the anti-austerity crowd sees it. Its very constitution — the collectivization of the continent, superseding national identities and economic policies into a common pool — practically invites the situation. Independent nationhood encourages a degree of responsibility or at the very least doesn’t enable the sort of freeloading we witness with Greece. The signal fault of the welfare state translates to nations just as it does for individuals.

So what is in store? We could find out soon enough. The Greeks are up against a June 30 deadline to repay 1.6 billion Euros back to the IMF — the same day the country’s bailout program expires. Greece also needs to repay 6.5 billion Euros back to the ECB this summer. As the Economist reports, Greece hasn’t the cash to pay for its domestic obligations, never mind the IMF. Absent additional bailout money, a default is all but certain. An extension of the bailout program until March is being bandied about, but that would have to be approved by the parliaments of creditor nations, most profoundly Germany, whose patience is running thin.

A default will most likely mean expulsion from the Euro and the adoption of a much de-valued Drachma. There’s no doubt it will be painful, probably result in emergency food and medicine aid shipments. But the only remaining question on the table seems to be if that is to happen now or later, when Greece is in even deeper.

Tsipras is probably too psychologically committed to his ideology to learn much from all of this and will in all likelihood go down with the ship, blaming Germany, the IMF, capitalism and probably fracking for his country’s woes even as he orchestrates and presides over its final economic demise. For the rest of the world it can be a didactic moment, illustrating yet another failure of socialist policy. Who will take in the lesson remains to be seen.