Austerity – the new normal

Facebooktwittergoogle_plusredditpinterestlinkedinmail
posadas56_1
José Guadelupe Posada: 20th century Calavera

Greece – is it really about debt?

In January 2015 Greek voters rejected the austerity policies imposed on them for their previous governments’ sin of accumulating billions of euros of debts. Democracy, whose defence is so often evoked as the reason for wars and restrictions of civil liberties, did not prove so dear to European leaders’ hearts when it resulted in the election of a left-wing government in the country of its birth.

The Syriza government has proved not quite as far left as some predicted, ready to negotiate, its ministers assuring their counterparts they don’t want to leave the euro, Finance Minister Yanis Varoufakis telling the world that he wants to save Europe from itself.

But Europe’s leaders, the “moderates” of mainstream-media labelling, have insisted it is austerity or nothing.

After Varoufakis visited the European Central Bank in February, the ECB responded to his conciliatory tone by effectively cutting off Greek banks’ access to short-term loans, doing all it could to bring speedy confrontation.

In March the European Commission opposed the government’s “humanitarian crisis bill”, telling it that helping the poor, the aged and the homeless would be “inconsistent with the commitments made”, as would its proposal to facilitate collection of the country’s massive tax arrears by allowing them to be paid in instalments.

Greek tax evasion is estimated to have been worth 20bn euros a year and has been going on for many decades, so pursuing it should provide a tidy sum for the government – France collected 1.8bn euros in 2014 and expects a further 2.2bn euros in 2015 after a number of tax evaders ‘fessed up, motivated both by the fear of exposure thanks to the Swissleaks revelations and a promise of clemency to those who came forward. It could have been far more since tax collectors complained that they did not have enough staff to deal with all the cases in reasonable time.

But collecting tax dodgers’ cash appears to be a low priority for the ECB, the European Commission and the International Monetary Fund.

The creditors’ conditions “are political”, comments Roman Godin in La Tribune, “the acceptance of ‘reforms’ of the labour market and pensions, which are not urgent economically speaking but which politically ‘cancel out’ the essential points of Syriza’s programme and message”.

Who really believes that Greece can clear its debts if government income is slashed by austerity policies that have led to a 26% fall in production, 26% unemployment and a 33% fall in wages, it is obliged to take out more loans with interest rates attached and, on top of that, it is discouraged from chasing up tax income it is already entitled to?

Anyone would think that for the EU and IMF leaders balancing budgets was less important than destroying what’s left of the welfare state!

French-bashing – the hidden agenda

In France we hear an awful lot about the need to reduce the debt – in fact, it has dictated the Socialist government’s economic policy since its election.

Following the French media is like having a friend who is given to self-flagellating criticism but takes violent exception if you agree with them. On the one hand French commentators get prickly about “French-bashing” (yes, that’s a real Franglais word now), on the other editorialists, analysts, politicians and business leaders insist that the country is locked in a spiral of decline with the working and middle classes frolicking in the sun of unaffordable privilege while employers, big and small, are weighed down by the twin burdens of bureaucracy and taxation.  Adding its voice to the chorus of cutters, the European Commission has ordered the government to slash a budget deficit of 4.3 per cent of GDP in 2014 to 3.0 per cent in 2017, although France has gained no less than three extensions, unlike the poor Greeks.

The Socialist government has obeyed orders, drawing up plans to cut 50 billion euros from public spending over the next three years, on top of previous cuts and rises in VAT.

First among France’s autoflagellants is the main bosses’ organisation, the Medef. Of course, it is not really indulging in self-criticism as much as criticism of the state insofar as it is perceived to be indulging the lower orders. The Medef and its cothinkers latch onto what the French annoyingly call “Anglo-Saxon” critiques of the French economy, defending France from the French-basheurs with about as little enthusiasm as their forerunners defended la patrie at the end of the 1930s. But then patriotism, like taxes, is for the little people.

International comparisons don’t always bear out the image of the French being especially idle or particularly privileged, especially when one takes into account productivity, which in some sectors was actually boosted by bosses compensating for the 35-hour week by investing or changing working practices.

But the really puzzling question, for me at least, is how it is that France can’t afford to pay for improvements in social conditions conceded since the end of World War II when GDP, despite declining in the post-2008 crisis, has not just risen but soared in the past 100 years.

GDP per capita:

graph1

French total GDP in 1950 was 15.5bn euros. In 1990 it was 1 058.6bn and in 2013 it was 2 113.7bn.

Inflation has taken a chunk out of that, of course, but, if I’ve worked the online calculator correctly, 1950’s GDP was 284bn and 1990’s was 1,566bn in 2013 prices. http://france-inflation.com/calculateur_inflation.php. So we are more productive and vastly wealthier than we were 50 years ago, especially if you bear in mind that wealth has not only been created but also accumulated over the years.

True, public spending has risen – from 40% of GDP in 1947 to 56% in 2011. But, although the current crisis has cut government income and increased expenditure by raising unemployment, this is not a result of the government throwing money at the disadvantaged, in fact, according to social campaigners le Collectif pour un audit citoyen de la dette publique (CAC), government spending  has actually fallen two points of GDP over the last 30 years.

Where does the deficit come from?

CAC finds three main causes:

  • Tax cuts – tax breaks, mainly for businesses and top income brackets, have cost the state 488bn euros, reducing its income by five points of GDP, over 30 years;
  • Interest payments – borrowing on financial markets, whose rates have fluctuated violently, has proved 589bn euros more expensive than borrowing from households or banks at a 2.0% interest rate;
  • Tax evasion – if wealthy tax dodgers with secret accounts in tax havens had paid their share the debt would have been 424bn euros lower in 2012, CAC estimates.

CAC cites author Gabriel Zucman’s estimate that tax evasion cost France 17bn euros in 2013. Since then SwissLeaks has shown that HSBC alone helped 3,000 customers hide more than 5.7bn euros in tax havens.

A symptom of France’s unbearable tax burden, perhaps?

Not really, in the tax avoidance stakes the country comes behind Switzerland, the UK, Venezuela and the US, none of whom have higher income tax levels than France – Bolivarist Venezuela actually having the lowest at 34%.

In the space of a few months a total of 180.6bn euros went through HSBC’s Geneva branch to be salted away in tax havens. The money came from all over the world with no apparent correlation between the top rate of income tax and rich people’s inclination to tell the truth to the taxman. The blunt truth is that no matter how much you cut tax, the rich – whether they’re arms traffickers, comedians, politicians, surgeons or heirs to family fortunes – will never be satisfied.

On top of which, they’re  good negotiators – it’s a lot of what bosses do for a living – so they’re unlikely to say “Thanks, guys, that’s enough!”

“As long as you’re winning, keep playing,” comments Luc Peillon in Libération newspaper, when reviewing yet another set of demands put forward by the Medef last year.

Having already won “a historic reduction in labour costs” of 40 billion euros during the life of François Hollande’s government, the bosses’ union drew up a new shopping list that included cutting two public holidays, more exemptions for businesses on taxes and social security contributions, creating a loophole in the minimum wage, extending Sunday working and that old chestnut ending the 35-hour week, all under the pretence that it wants to create jobs.

After examining the Medef’s claim that their proposals would create up to 600,000 jobs, Peillon found that the real figure would be about 30,000. Except it wouldn’t. That last proposal would probably destroy jobs by expanding overtime working rather than creating new employment.

This medicine doesn’t work … have some more!

Given that right-wing parties the world over continually advocate “reducing the tax burden” and supposedly left-wing parties habitually cave in to the demand, you’d think that bribing the bosses to invest has a proven track record of job creation.

Except it hasn’t, has it?

Despite all those billions of give-backs, France now has record unemployment and it has risen even as Hollande’s government signed deal after deal that swapped real tax cuts for hypothetical new jobs.

But in France, as in the rest of the world, the pressure for more tax cuts goes on.  The wealthy are cancelling their subscription to the state, while still calling on its services when they prove useful.

So where has the money gone?

Into investors’ pockets. Dividends have risen from 12-13% of French companies’ operating income in 1980 to 30% in 2013, according to state statistics unit Insee.

graph2

In 2013 the amount of dividends paid out soared by 200bn euros, a documentary by Edouard Perrin on France 2 TV showed.

And whoops! There goes investment (it’s the grey line at the bottom of the graph below profit margins and self-financing rates from 1984 onwards):

graph3

Sums paid in dividends in France were half those invested in 1980. They are 2.5 times more today.

And it’s not just in France. All over the rich world companies are stuffing their shareholders’ pockets as if there were no tomorrow.

“Global dividends soared 10.5% to $1.167 trillion in 2014, a new record,” the Henderson Global Dividend Index (HGDI) reports with considerable satisfaction. “Underlying dividend growth – which adjusts for currency movements, special dividends, the timing of big payments and index changes – was still robust at 8.8%.”

Commenting on the international trend, investment fund boss Larry Fink is shown in Perrin’s documentary, Cash Investigation, warning of a threat to companies’ long-term survival if they carry on as they are now.

Here’s how investments has fared in the US and the UK:

graph4

The pressure to pay out not only means cutting investment in plant but also in training, one of French industry’s real weaknesses. While right-wing economists compare France unfavourably to Germany on many economic fronts, they rarely mention one crucial difference – in 2012 Germany spent 90bn euros on research and development while France could only rustle up 51bn euros.

Maybe French employers should be getting tax breaks for research. Well, actually, they already are. It’s CIR,  the purple line in the graph, produced by the campaign Sciences en marche and it shows that they have pocketed nearly six billion euros this year. The blue line shows the number of jobs created in research. Yes, it’s actually falling as the payouts rise. What a scam!

graph5

And, as Cash Investigation shows with stories of employee suicides, boot-camp-style training programmes and factory closures, human capital is squeezed to boost the bottom line.

This search for immediate financial gratification is all part of the tendency to growing inequality, noted by Occupy campaigners, Russell Brand, Oxfam, Thomas Piketty (I’m on page 183 – apparently better than most ebook readers who don’t seem to have got much past page 26 – how far have you got?) … anyone with eyes to see, really.

According to Piketty, the trend in Europe and America is a reversal of a trend that lasted from 1770 to 1990.

The ideological justification for this, the self-serving greed-is-good rhetoric of the political right, has, as can be seen in the ex-troika’s dealings with Greece, become the dogma of the global elite, whether represented by the “Socialist” Dominique Strauss-Kahn or the Sarkozy-worshipper Christine Lagarde.

Today we see the same tendency to the reduction of public spending, stigmatisation of the poor and their increased impoverishment, rising inequality and a rise in the share taken by profit all over Europe and the US.

All this is accompanied by an ideological war on taxation – coopting the middle and working classes into the destruction of social solidarity – and social engineering – privatisation of social housing and the encouragement of home ownership, employee-shareholder schemes and other forms of non-salary pay, hierarchies in the workplace and career structures that pit workers against each other, all of which have the effect of undermining the concept of the collective.

But an ideology only becomes dominant if it suits those who call the world’s political tune.

The rich are reverting to type because they no longer fear revolution

The limited income redistribution that took place in the 19th and 20th centuries was no more an ideological decision than is its current reversal.

Nor were today’s “democratic values”, living standards and social welfare systems handed down by an enlightened elite, reared on a benign Western cultural tradition, as claimed by the political successors of the men who ordered the troops out at Peterloo, had union organisers murdered in the US, butchered the Paris communards and Lyon’s Canut insurrectionists and embarked on the “civilising mission” of colonialism.

Every social and political advance was bitterly resisted, usually with the same brutality that reappeared in the Thatcher government’s showdown with the British miners in 1984.

The modern social welfare state was the product of class struggle, its precursors created primarily by trade unions and other working-class organisations and adapted to capitalism’s needs when it proved necessary to take the edge of the class struggle.

But, according to Piketty’s graph, all this went into reverse in 1990. Why would that be?

To start with, and I know I’m not the first to say this, the labour movement in Europe and the US isn’t what it used to be.

I live in what used to be known as the ceinture rouge, the red belt around Paris, a bastion of the French Communist Party, whose political and trade union base was to be found in big factories like Renault Billancourt, now closed, its site now apparently destined to become an “isle of all the arts”. The factories are no more, the Communist Party has about 70,000 paid-up members, compared to 800,000 in 1946, and the unions, while still pretty shouty in that famous French way, are divided and weakened.

The British unions are similarly weakened and the Labour Party has had its class content surgically removed – no longer one half of a two-party system that reflected the struggle between capital and labour but a competitor in a political game show with an ever-expanding number of players.

Both in Europe and the US the unions have seen their power greatly diminished. The nature of employment in the most advanced economies has deprived them of the means to inflict serious financial damage on major employers with a few exceptions. The conditions that Marx said made the proletariat the gravediggers of capitalism – the collectivism that arose from the industrial process – have been substantially changed in these countries both by accident and design.

In the US today, according to Piketty, 18% of the workforce is employed in manufacturing and 80% in services, while in France the figures are 21% and 76%. Even if the big shift has been the decline in agricultural employment, manufacturing employment stood at 33% in both the US and France in 1950 and services at 50% and 35% respectively.

Of course, the working class has not been abolished. The “knowledge economy” is a fantasy dreamt up by people who apparently haven’t noticed that they are sitting in glass, concrete and steel offices, typing on computers manufactured from steel, plastic and rare earths. But the proletariat does to a large extent seem to have moved east and, even there, is more dispersed and more at the mercy of the movement of globalised capital than its predecessor of a century ago.

Here’s the trends on a world scale, according to MSS Research:

graph6

And more and more labour is going to be replaced by computerised technology, as John Lanchester indicates in The London Review of Books.  He cites an Oxford University study that estimates that 47% of US jobs are “potentially automatable” . So it’s bye-bye telemarketers, insurance underwriters, mathematical technicians, sewers (hand) and title examiners, abstractors and searchers. It will be mainly low-wage, low-skilled jobs that will go, the study finds.

“So the poor will be hurt, the middle will do slightly better than it has been doing, and the rich – surprise! – will be fine,” comments Lanchester.

Given that Le Monde newspaper recently used a computer programme to produce some of its coverage of departmental election results and that Lanchester himself reproduces an article written entirely by computer, I find his prognosis a trifle optimistic so far as my own trade is concerned and the list of skills that are likely to vanish indicates that the middle is likely to be increasingly squeezed worldwide.

Of course,  the replacement of human labour by machines, the squeezing of wages and the destruction of the welfare state will all vastly reduce markets and be against the long-term interests of capitalism as a system. But those markets were for the most part created by processes that the capitalists themselves resisted, both individually and collectively, and are being destroyed by the immediate concern for the bottom line that is the motor force of private enterprise.

Piketty attributes some of the 20th century’s redistribution of wealth to the effects of two world wars and the 1918 flu epidemic but I doubt if any of us are hoping for similar cataclysms to create labour shortages and disperse inherited wealth.

In my view the key constraint on capital’s unrestrained greed in the 20th century – the principal reason why the welfare state and the social-democratic compromise was conceded – is overlooked or understated by most commentators.

It was fear of revolution.

And, although its full implications are taking time to filter into the bourgeois brain, that fear is no more.

From 1918 to 1989 an alternative economic system to capitalism existed. It turned out not to lead to the liberation of humanity, to put it mildly, but, ironically, it did oblige capitalism to render itself more acceptable.  The US’s propagandists even enrolled abstract expressionism and avant-garde theatre in their efforts to portray the West as the home of freedom but, above all, some of the massive wealth that was being created was invested in providing the mass of the people in the rich, metropolitan democracies with higher living standards than their Russian, east European or Chinese counterparts.

Those days are over. With the collapse of the Soviet bloc and China’s conversion to capitalism there’s no need to do that any more – hence austerity as dogma.

Although the 2008 crash brought an end to the post-1989 ideological euphoria, it has not stopped the austerity onslaught.

And why should it?

Consciously or unconsciously, the ruling elite does not feel that its hold on power is under threat, either ideologically or materially.

So maybe Marx’s theory of increasing misery – of all his predictions the one that seemed to be most definitively disproved by the reality of the 20th century – was not so daft after all.

I hope I’m wrong. If I am, please prove it.

Facebooktwittergoogle_plusredditpinterestlinkedinmail
Facebooktwittergoogle_pluslinkedinrssyoutube

8 thoughts on “Austerity – the new normal

  1. Dear Raving (since this is my second message, I take the liberty of first-name address),

    This is an excellent blog, seriously considering serious issues. It is a tad on the dense side, so I’m going to fire off my comments as I re-read various sections.

    I want to know why you would suspect the EU and the IMF of wanting to kill off what remains of the welfare state. Perhaps the international lenders (of our money) realistically judge that Syriza lacks the political courage to go and collect the 20 billion in back taxes?

    You can always tell me to go away. Otherwise I’ll send in questions as they arise.

    PS. Give my regards to Jade at Little Black Dress

    1. Very interesting analysis – thought provoking. My thoughts on it.
      You draw attention to the massive shift in mass manufacturing from West to East which I think is a very significant development.
      I don’t think a direct war between China and USA is likely because of the enormous destructive consequences it would have for both and for the world. A trade war and a scramble for energy sources and raw materials is on the cards with the possibility of proxy wars in Africa, Asia and Latin America. Certainly US imperialism since the collapse of the Soviet Union and Eastern Europe bloc has been fully prepared to use its force to further its economic and political interests – former Yugoslavia, Afghanistan, Iraq, Libya – though UK and USA did draw back from intervention in Syria after backlash from people over further intervention.
      There has also been a weakening of the Trade Unions – certainly in UK – both in terms of membership levels and combativity. Most unions restrict themselves to protest action or legal action rather than having a strategy to win gains or defend conditions. There are some exceptions eg RMT, FBU in UK.
      As such the working class and much of the middle classes face massive attacks as you have described with weakened line of defence.
      However there is another side to the coin in that following banking crisis in 2008 along with MPs expenses scandal and now establishment cover ups over child abuse – there is a healthy scepticism towards the establishment. Anti establishment, anti politician and anti banker attitudes are common place to a much greater extent than previously particularly amomgst young people.
      Anti capitalism has been given credence as an idea by the Occupy movement. And the notion of revolution can be discussed following Russell Brand’s intervention into politics.
      The paradox is of course that such ideas are poularised at a time when the organisations to take demands forward are at a low ebb.
      Nevertheless there are strong signs that as people are pushed further under the name of austerity they are searching for a way out. Examples are the election of Syriza in Greece, the growth of Podemos in Spain, the success of the Anti Austerity Alliance in Ireland- particularly in leading non payment of water charges -, the election of a Socialist in Seattle and the campaign in USA for $15 Now, the magnificent defence by Kurds against ISIS.
      As you point out further austerity will be imposed so more and more people will be affected. To this we should add the strong possibility of a further banking collapse at some point in the not so distant future. Despite hand wringing in 2008 by politicians nothing significant has changed. Money is in the banking system rather than the real economy where people make and build things. As things deteriorate further more people will search for solutions.
      Marx is often criticised because in effect he did not foretell the future. History shows that there are many factors which are difficult to entirely predict.
      Lenin realised the importance of the subjective factor – leadership and the revolutionary party – to carry through the transformation in society that Marx envisaged. Neither really could have forseen the huge mind numbing mind bending effect of the mass media which exerts such powerful influence in favour of the capitalist status quo. Though Orwell did seem to see that coming!
      Frustratingly although Marx laid bare the nature of society and how it develops people can go down any number of cul de sacs. The influence of religious fundementalist ideas over some despite the evidence of science and technology to the contrary is just one example of this. Racism, nationalism and other creeds which rupture class unity are examples of such false ideology.
      So I guess I am saying that whilst we can see trends now and possibilities ahead that the future is not inevitable in a mechanical determinist way. Marx’s Theses on Feuerbach I think give a good guide to how conscious human intervention shapes society as well as the material conditions.
      We have a capitalist world which would surely be declared collectively insane if ever a group of advanced aliens were ever to find us.
      At this point in history we are bristling with nuclear weapons with the power to destroy the human race and we are walking wide eyed and fully conscious (but pretending to sleep walk) into an environmental disaster. And this is the case because the working class and the 99% have not yet ended capitalism which is now patently incapable of taking human society forward.
      The rational thing to do is to nurture the green shoots where people are searching for a way out of this mess which they will surely be increasingly compelled by their situation to do and to develop the idea that collective action is powerful and that a better world is possible if we reorganise society on socialist lines. What history definitely shows is that events do not progress at an even pace and that at certain times rapid progress and potential revolutionary situations can develop. It is important that we are ready to advance these opportunities when they occur.
      To (mis)quote Marx – Philosophers have interpreted the world – the point is to change it. Come in Capitalism your time’s up!

      1. Malcolm, I agree that there has been a remarkable collapse of confidence in the banks, mainstream politics and even capitalism as a system since 2008. There was a huge ideological shift to the right after the collapse of the Soviet Union -the market economy was regarded as the natural order of things, the term “capitalism” was hardly ever used and for most people socialism had been proved not to work. Now even the Financial Times – which I remember publishing a book review that more or less said that Mussolini wasn’t such a bad bloke because he was anti-communist but not ideologically anti-Semitic – talks about capitalism, treats anti-capitalist movements as more than just fringe nutters and publishes critiques of free-market economics.

        But, to my mind, there are two problems.

        The first is that, to my knowledge, no-one on the left has properly analysed why the Soviet bloc collapsed – which nobody predicted, unless you count that great thinker Ronald Reagan – and what that means for the collectivist project. It’s not good enough to just repeat the analysis you had beforehand when that analysis failed to understand that a state-owned economy could collapse and revert to private ownership. I think the left has to face up to the problem that collectivism may be good at solidarity but it is not so good at creativity (to be a bit simplistic). So, although people are pissed off with the banks etc, they don’t have confidence in the nationalisation of the commanding heights of the economy as a solution and that isn’t what Syriza or Podemos are proposing (see Yanis Varoufakis’s erratic Marxism http://www.theguardian.com/news/2015/feb/18/yanis-varoufakis-how-i-became-an-erratic-marxist).

        The second is that, although people may want an alternative, they have no means of enforcing it. The “99%” is atomised (which is why former fascists are morphing into a different kind of far-right – I’ll say more about this in a later blog post). Big demonstrations, elections, riots are, in the final analysis, no more than moral pressure because the rich control the economy – in an increasingly transnational way – and can therefore impose their will and they no longer fear serious disruption of business by a powerful labour movement or expropriation, as they did for most of the 20th century.

        There were other motives for the creation of some aspects of the welfare state – drains were laid because the rich found that cholera did not respect the class divide, it became necessary to educate the workforce … But most improvements in living standards – in incomes, working conditions and a social safety net – were resisted until the labour movement became sufficiently strong to impose them and/or the threat of revolution became reality in Russia.

        People invest to make money … as much money as possible. Taxes, higher wages and improved conditions at work eat into profits. During the Cold War the state and the class struggle imposed such concessions because the capitalist class as a whole feared that, if it didn’t give a bit, it might lose everything. (It had the unforeseen spin-off of vastly expanding markets and creating a substantial middle class but that was pretty much by accident, so far as I can see.) Now the wealthy see no serious challenge to their power and, as I think all those graphs show, they want maximum return on their investments now (we all do, by the way, all those of us who subscribe to a pension fund or have a savings account) and that means stopping paying out on fripperies like health care for all, keeping the unemployed in food etc.

        That’s why there’s now an ideological war on taxation, another subject for a later blog posting, to add to the long-standing unideological campaign of tax avoidance.

        To go back to Michael’s comment, there is no conspiracy (probably) to destroy the welfare state. There’s a consensus, which is much more dangerous, that the rich must be pampered at the expense of the less well-off. The argument in favour of this policy is that it creates jobs. I think the famous graphs show that this is not the case. I can’t believe that the politicians and economists who advocate the policy haven’t seen the evidence, leading to me to feel a certain scepticism as regards their motives.

    2. Dear Michael,
      Your comment is very welcome and I hope you will continue to comment in your inimitable style.
      I don’t know whether everybody at the EU and the IMF actively wants to kil off what remains of the welfare state. I believe they have an ideological commitment to austerity policies that will have that result. The reason that ideology is so influential is that, as I go on to say in the article, the wealthy no longer wish to go on shelling out for policies that they tolerated because of the strength of the labour movement and the threat of revolution but now feel under no constraint to support.
      The former head of the IMF, Dominique Strauss-Kahnn was a millionaire committed to conventional economic solutions, such as Structural Adjustment Programmes, and the current one, Christine Lagarde, is a right-wing Sarkozyste with the same outlook.
      Even the IMF, however, is less extreme than the EU. It has timidly suggested that the European economy needs a bit of reflation and that austerity is preventing that happening, which obvious fact led Syriza to hope that Greece could win some allies in opposing austerity. But no dice. Hollande, the Spanish and the Portuguese ratted on them, leaving them unable to help pensioners, the unemployed and families who have been poisoned by the EU’s medicine.
      Syriza is, as you know, a left-wing party. So the EU and the IMF might doubt that it lacks the political will to carry out austerity policies, I don’t see why they would doubt their will to pursue rich tax dodgers.
      I don’t believe anyone really thinks they’ll ever get all their money back, either through austerity-driven welfare cuts or through tax collection. That is why I doubt their good faith in Greece.
      If they were serious about getting their money back they would get Germany to pay back the 476 million reichsmarks the Nazis forced the Greek central bank to hand over at the end of the war, worth $14bn today or more than $95bn if you count 3% interest over the ensuing years.

  2. Dear Tony,

    Many thanks for your reply.

    Without wishing to focus the austerity debate exclusively on Greece, allow me to point out that the problem for Syriza is not “rich tax dodgers” but everybody. The Greek attitude to VAT, for example, is something every tourist has experienced, with retail staff at practically all levels from the corner store to the high-street emporium happy to explain that the cash price and the credit card price differ by 12, 15 or 22 per cent, depending on the relevant V AT level . In this, Greece may simply be living the psychological aftermath of years of military rule, when non-payment of tax was a gesture of revolt.

    The fact is that IMF/EU-imposed austerity worked very well in the Republic of Ireland.

    1. Michael; Yes, do let’s move on from Greece, which is only a preamble to my main argument. On tax dodger, I note that I only used the term “rich tax dodgers” in relation to Syriza and political will and not in the article itself. True enough, lots of people dodged tax but I think we can assume that the biggest returns would come from pursuing the wealthiest dodgers. I understand civil servants pay tax at source – although admittedly many apparently had undeclared jobs. The reward for many of them was to be sacked as part of the austerity programme.

  3. Do you mind if I quote a couple of your posts as long as I provide credit and sources back to
    your blog? My website is in the exact same niche as yours and my users would truly benefit from some of
    the information you present here. Please let me know if this ok with you.
    Cheers!

Comments are closed.