I suggested a couple of months ago that the economic turmoil in Greece and Venezuela is somewhat akin to a real-life version of Atlas Shrugged.
And I’ve also used that analogy when writing about France and Detroit.
But I’m probably not doing justice to Ayn Rand’s famous novel because Atlas Shrugged is not just about an economy that collapses under the weight of too much government regulation, intervention, and control.
I probably won’t give the right description since I’m a policy wonk rather than philosopher, but Atlas Shrugged is also about the perils of self-sacrifice.
And I couldn’t help but think about that aspect of the book when I read the comments of certain Greek politicians during yesterday’s bailout vote in Athens.
If you scroll down to the 14:40 mark of this timeline from the U.K.-based Telegraph, you’ll find some remarkable comments that sound like they came straight from Ayn Rand’s book.
Greece’s ruling Syriza party has accused David Cameron of being mean over his objections to allowing British taxpayer’s money to be used to help Athens meet upcoming debt payments. …Mr Cameron’s attitude was described as cold-hearted by Nikos Xydakis, a deputy culture minister in Syriza. “Mr Cameron must explain to the European people and 11 million Greeks why he wants them to suffer a social crisis,” Mr Xydakis told The Telegraph. “This is not about politics, this is about human souls.”
Wow. I might agree that David Cameron is “mean,” but I think his cruelty is directed against British taxpayers, not Greek politicians.
But let’s stick with our main topic. Notice how the moochers in Greece are trying to use guilt as a weapon. I’m sure some Ayn Rand experts will correct me if I’m wrong, but the aforementioned comments definitely sound like passages from Atlas Shrugged.
That being said, the Germans apparently have more in common with John Galt than Jim Taggart. Here are some excerpts from a column in the New York Times by Jacob Soll, a professor from the University of Southern California. He recently attended a conference in Germany and found very little sympathy for the Greeks.
…when the German economists spoke…, a completely different tone took over the room. Within the economic theories and numbers came a moral message: The Germans were honest dupes and the Greeks corrupt, unreliable and incompetent. …the Greeks destroyed themselves over the past four years. Now the Greeks deserved what was coming to them. …Debtors who default, they explained, would simply have to suffer…a country like Greece…did not seem to merit empathy. …When the panel split up, German attendees circled me to explain how the Greeks were robbing the Germans. They did not want to be victims anymore.
Wow, who knew the Germans were a bunch of closet Randians!
No wonder the Greek politicians decided to target David Cameron instead.
For what it’s worth, I must have some German blood in my veins because I wasn’t overly sympathetic to Greece in this interview.
I even referred (again) to “looters” and “moochers,” which are terms used in Rand’s book.
I’ll make two comments about the interview.
- My prediction about the vote in Greece was correct. Though I wish I had been wrong because the best long-run outcome (both for the Greek people and the world’s taxpayers) is an end to bailouts.
- I mentioned that there will be more debt-crisis dominoes at some point in the future. I hope I’m wrong, but it’s hard to be optimistic when you look at long-run fiscal estimates from the IMF, BIS, and OECD.
P.S. Lots of what happens in Washington also is disturbingly similar to scenes from Atlas Shrugged, particularly the corrupt Obamacare waiver process.
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Lots of good points, Zorba in particular.
Much of the Eurozone’s dilemma can be explained by behavior economics. Rational thinking has gone out the window. Rather than acknowledging previous errors in judgement, the EU is willing to risk even worse odds that somehow the problem will resolve itself.
This is compounded by the motivations of the decision makers, who want to stay in power and will do anything that buys more time.
I’m all for charity. I personally give a percentage of my income to a variety of charities. I think those who are comfortable have a moral responsibility to help the poor.
But there’s a huge difference between helping people who are poor because of circumstances beyond their control, and helping people who are poor because they are lazy and irresponsible.
There’s a huge difference between me, as a middle-class person, giving money to the poor so they can feed their families, and giving money to another middle-class person who is perfectly capable of meeting his basic needs but wants charity to pay for luxuries.
There’s a huge difference between generous people willingly giving to charity, and someone demanding others give him money.
And there’s a huge difference between charity that helps a person in trouble get back on his feet, and charity that enables someone to live off of others indefinitely.
If someone loses his job because his company went bankrupt because of large-scale economic forces beyond his control, he is worthy of help. But if a year later he hasn’t bothered even looking for another job, his worthiness has run out. Greece has done almost nothing to help themselves for how many years now? As far as I can figure out, their plan is to keep begging for more money forever. Sorry, but my sympathy runs out.
Because Goldman Sachs did not engineer a risk-based transaction where they were taking on either side – they did not lend Greece money counting on the fact that the ECB would stand behind those bonds, they were merely serving as financial intermediaries in a transaction whose sole purpose was to push current Greek debt obligations off-balance-sheet by the logic that they didn’t exist for several more years until the swap came due.
Their use of this particular financial derivative constitutes fraud, as the transaction served no useful benefit and was intentionally crafted solely to hide debt loads in order for Greece to join the EU and receive the loans which are now subject to this bailout.
Long live the productivity of the competent Dutch worker (those left anyway) in the dreary Amsterdam weather who in addition to having to support a slew of mediocre people in his own country, now has to also support the less productive people of the balmy Mediterranean.
So what’s in store for Holland? 4% growth that matches the world average and averts Dutch decline into the middle income countries?
How much more data do the Dutch need to see the future that is awaiting them?
Goldman Sachs, Swiss bankers, Jewish financiers and the other typical pitchfork villains were more or less correct in their intuition and assessment:
That while Greek guarantees that Hellenic Democracy bonds would be repaid were quite shaky, European taxpayers as a whole would guarantee these bonds. This is a guarantee that taxpayers themselves gave, through their unconditional, strong and explicit devotion to the European integration project.
Why accuse Goldman Sachs that they more or less correctly assessed that risk, on behalf of their employees, shareholders and customers.
To be exact, these institutions underestimated a bit the risk/reward curve on Greek bonds. That is why they scrambled to offload their Greek bonds to European Taxpayers when they were given a second chance right after the first Greek bailout. But it was taxpayers who agreed to that, again, through their devotion to the idea that integration, homogenization, harmonization, more regulation and more effort-reward flattening redistribution by a rising EU super-state would bring more motivation, more experimentation, faster growth, and more prosperity. Talking about the epitome of delusion.
Long after the magnitude of initial Greek deficits was revealed, long after repeated explicit and well publicized bailout budgets, European taxpayers are still, in effect, behind lump sum (loans) as well as permanent (Jan Claude Junker “development” funds and the like) wealth transfers from north to south.
When a group of welfare redistributive states join into a new superstate, their voters must be prepared to an additional level of inter-country redistribution. To refuse that is morally dissonant.
Don’t forget to add Goldman Sachs to the list of villains, the money now at the root of this crisis was only lent to Greece under the false terms provided for them by Goldman Sachs’ swap-based debt restructuring that allowed Greece to join the Eurozone by hiding its true debt levels. (While the Greek politicians are also villains in that regard, we’re referring to a different bunch of politicians, as there has been significant political upheavals since that fraud was perpetrated over ten years ago.)
There is also s significant hypocrisy component in Germans too: Socialism for me, but not for thee.
Most Northern European countries are welfare social democracies themselves. In social democracy, you don’t blame the less competent for being so, calling them corrupt unreliable and incompetent robbers. You just pay. Can you imagine calling food stamp recipients in the US such names?
So just like in unified Germany Hannover perpetually helps Dresden without much fanfare, resistance and resentment, so, in a now unifying European super-welfare state, Berlin will help Athens, Rome, Madrid and Paris.
Not doing so is not only morally inconsistent, but these Northern European citizens don’t really have a choice either. Even if we conservatively assume that all Germans are against temporary — and especially permanent — wealth transfers to Greece ( far from truth, a significant majority of German socialists favor giving Greece) the German, Dutch and Finn givers are grossly outnumbered by the Greek, Italian, Spaniard and French takers in a unified Europe. The ratio is roughly 110 vs 220 million citizens. The electoral power ratio is, of course, similar.
So since Germans Dutch and Finns remain committed to the European unification project, they have already lost. Their wallets will be slowly voted away. There is no ifs and buts and throwing tantrums. Unless they plan to make voting unequal within the EU, by having a German Dutch or Finn person’s vote count more than a Greek Italian Spanish or French vote. What’s the chance of that happening?
These Northern European countries have now invested too much (both emotionally and now also materially) into the European unification project to pull out. Their prosperity has crossed the event horizon. Gone is the time when they still had a choice.
With a staggering growth deficit against the world average (1-2% vs 4% world average) these northern European countries were already well on their way towards the middle income country world — all by themselves. These are the countries who will now be forced to take up some extra weight (even more taxes on their citizens) in order to permanently support the poorer nations of the south. It’s hopeless.
Junker, Tusk, Draghi, Disselbloem, European Commission, European Parliament, and the myriad other nascent pan European level bureaucracies. They all have their sights on implementing permanent wealth transfer mechanisms from north to south. Why? They hate Northern Europeans? No. Because this is how you gain power and status in the bureaucratic ecosystem. By being the gatekeeper and allocator of funds. Offices that do not handle funds have little power. Follow the money, as they say.
These very bureaucracies have actually been mad recently at Greeks for imperiling the whole more permanent transfer process by being impatient with large immediate wealth transfers, by electing SIRIZA and already demanding a debt haircut a mere two to five years after the money was disbursed. “Can’t you convince your people to hold back and wait a bit? I had already been hard at work to implement more permanent wealth transfers from Berlin and Amsterdam to Athens and Rome. These things require some time for the giver nations to swallow, and you and your people threaten to blow it all up with your impatience” must have told Junker to Tsipras in one of their many tense moments. So were Renzi Rajoy and Hollande whose citizens can still afford to wait a bit as the German Dutch and Finn populations are eased into more permanently supporting the less competent but more numerous south.
The only solution I see for the milk cows of the European north is if they, themselves, initiate a BundExit and FinnExit. But I don’t see that happening. It’s a slim minority view and the irreversible unification vortex forces are much stronger. It’s like positive charged protons repelling each other resisting to form a nucleus. Once they get close enough, the strong nuclear force takes over and they collapse into a nucleus.
There is a bitter irony in all this for Germany.
The Germans invented the welfare state. It’s now coming back to them as a boomerang.
Already growing at an anemic 2% growth trendline in a world that is growing by 4%, Germans will now be increasingly milked to support the unifying European south. How d you spell hopeless?
America has picked a winner continent to follow. Pity on all the blood and misery they once went through to detach themselves from the coercively collectivist old continent.
Well,
Let’s see,
The German Politicians and economists, the British politicians and economists, and the various other assorted European Union politicians and economists all love to blame the problems on the victim (Greece and Europe, in general), instead of the absolute scoundrels (the IMF, ECB, EU, AND the US FED) who perpetrated this mess and further worsened it through corrupt derivatives and debt-swaps (where the banksters make the hefty profits).
So,
Greece is at fault for all of the debt, even though the Greek government got to actually use only 3% of the total outlays, while the banksters gave their fellow banks billions of Euros (much like our own “bail-outs” in the USA, just recently) which account for most of the 275 Billion Euros supposedly “lent” to the Greek government. Will we EVER learn ?!? Meanwhile, the banksters are just hyucking it up left and right about how all of us are a bunch of suckers!
Too bad the Greek politicians who voted for all this mess, are just as corrupt as ours in the USA. Neither side ever listens to even the majority of the people when they say “NO!”