Archive for May, 2011

The Continuous Neo-liberal assault on Greece.

Reprinted by author’s permission.

Professor Mekonen Haddis

The Continuous Neo-liberal assault on Greece.


The conscious deregulation of the economy that started during the Reagan administration in the U.S. reached its climax during President George W. Bush’s tenure and has brought the global economic chaos the world is in at the moment. Their bankrupt economic theory of the market policing itself, has proven to be as hollow as their dreams of making trillions of dollars without manufacturing anything. (Capitalism without ethics, June, 2009 PSS.WP).

Sadly, Greek is another glaring example of the failure of neo-liberalism. Developing countries beware. Neo-liberalism is here to destroy you, not to save you. And those politicians that still praise the virtues of neo-liberalism, as Ashley St.Claire would say, they are either dim-witted or have a personal agenda that would personally benefit them at the expense of the interest of their countries.

Neo-liberalism is what Susan Strange calls “Casino Capitalism”. She is one of the first to have for seen the dangers of anarcho-capitalism.  She has linked “casino-capitalism”, in to a number of trends among which are: government’s deregulation of the economy, (based on the fallacy that, the market and the banks would regulate themselves), and commercial banks turning in to investment banks. Susan Strange’s work is an essential contribution in de bunking the dominant doctrine of neo-liberalism.

When Wall Street was bailed out by U.S. tax payers, the sacrifice was paid by the American worker. After the bailout, while the bankers are back amassing millions while the average American citizen is faced with high unemployment and thousands being evicted from their homes. The same scenario is being played out in Greece. The financial deal worked out is only to save the banks. The Greek workers like their American brethren are being squeezed out.

In order to comply with the EU and IMF’s “rescue” plan, the Greek government will cut public-sector workers’ pay by 20%, raise the retirement age, increase sales tax to 23%, increase the price of tobacco products, alcohol and gas by 10%, increase taxes on property and businesses, etc. etc. Even if all this drastic measures are instituted according to plan, the actions taken actually would increase Greece’s debt and shrink its economy by 4%. How about a big applause to neo-liberalism?

According to Paul Krugman, ”European leaders offered emergency loans to nations in crisis, but only in exchange for promises to impose savage austerity programs, mainly consisting of huge spending cuts. Objections that these programs would be self-defeating — not only would they impose large direct pain, but they also would, by worsening the economic slump, reduce revenues — were waved away. Austerity would actually be expansionary, it was claimed, because it would improve confidence”.

Recently, additional austerity measures were announced in Athens. These additional cuts mean that the Greek economy will shrink further. If the unemployment is about 16% of the workforce, it is a sure sign that Greece cannot grow its way out of its economic quandary. It might not be long that the Greek citizens might force their government to default, and may be, drop the EURO.



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