Syriza Wins, Now Comes the Hard Part

In the end there was nothing to be worried about. Greeks were deaf to the fear-mongering of New Democracy. Syriza won big. According to Liz Alderman and Jim Yardley, "After Victory at Greek Polls, Leftist Politician Forms Coalition Government":

With nearly all the votes counted, Mr. Tsipras’s Syriza party had won 36.3 percent of votes and secured 149 seats in the Greek Parliament, short of the 151 that he needed to secure an outright majority. 

New Democracy, led by the defeated incumbent prime minister, Antonis Samaras, took 27.8 percent of the votes. The neo-facist Golden Dawn party, whose popularity has increased amid economic hardship, won 6.3 percent of votes, coming in third. 

Syriza has become the first anti-austerity party to take power in a eurozone country and to shatter the two-party establishment that has dominated Greek politics for four decades.

(The former governing socialist party Pasok trailed fascist Golden Dawn. What does that tell you about the health of the political status quo?)

Alexis Tsipras, leader of the Coalition of the Radical Left (Syriza), promptly formed a governing coalition with Independent Greeks, a right-wing anti-austerity party that won 4.7 percent of the vote. This is a good sign, proof that Syriza has a plan and that plan is first and last based on renegotiation of the bloodsucking, murderous troika bailout agreement.

Greece in a nutshell is a laboratory of neoliberal orthodoxy. The idea being tested, that idea that austerity -- government spending cuts during a recession -- is stimulative, that the private sector will react positively (what Paul Krugman has termed the "confidence fairy") and invest more, has proven to be a spectacular failure. The Greek economy has shriveled and depression-level unemployment is now endemic. Greece requires ever-more loans to pay off the prior bailout loans when they come due. It is a sadistic fantasy to think that austerity will ever lead to a way out of this vicious circle.

Today Paul Krugman outlines all of this in "Ending Greece’s Nightmare":

The Greek government is collecting a substantially higher share of G.D.P. in taxes than it used to, but G.D.P. has fallen so quickly that the overall tax take is down. Furthermore, the plunge in G.D.P. has caused a key fiscal indicator, the ratio of debt to G.D.P., to keep rising even though debt growth has slowed and Greece received some modest debt relief in 2012.

Why were the original projections so wildly overoptimistic? As I said, because supposedly hardheaded officials were in reality engaged in fantasy economics. Both the European Commission and the European Central Bank decided to believe in the confidence fairy — that is, to claim that the direct job-destroying effects of spending cuts would be more than made up for by a surge in private-sector optimism. The I.M.F. was more cautious, but it nonetheless grossly underestimated the damage austerity would do. 

And here’s the thing: If the troika had been truly realistic, it would have acknowledged that it was demanding the impossible. Two years after the Greek program began, the I.M.F. looked for historical examples where Greek-type programs, attempts to pay down debt through austerity without major debt relief or inflation, had been successful. It didn’t find any. 

So now that Mr. Tsipras has won, and won big, European officials would be well advised to skip the lectures calling on him to act responsibly and to go along with their program. The fact is they have no credibility; the program they imposed on Greece never made sense. It had no chance of working. 

If anything, the problem with Syriza’s plans may be that they’re not radical enough. Debt relief and an easing of austerity would reduce the economic pain, but it’s doubtful whether they are sufficient to produce a strong recovery. On the other hand, it’s not clear what more any Greek government can do unless it’s prepared to abandon the euro, and the Greek public isn’t ready for that. 

Still, in calling for a major change, Mr. Tsipras is being far more realistic than officials who want the beatings to continue until morale improves. The rest of Europe should give him a chance to end his country’s nightmare.

It is good to see Krugman come down forcefully on the side of Syriza; he has shown such a pro-establishment, Russophobic fervor of late, I was a little worried.

But his feeling that Syriza's prescription will be too modest to produce the kind of recovery necessary to pull Greece out of its long-running recession is seconded over at Naked Capitalism. Yves Smith has a long post today, "How Much Success is Syriza Likely to Have in Ending Austerity?," that is a must-read if only to get a handle on the timeline Tsipras is dealing with: "The current Greek bailout expires at the end of February. Greece has €10 billion of debt repayments due over the summer and has €7 billion of aid that is on hold unless and until it negotiates a new bailout deal."

Smith goes on to explains that Finland is dead set against any extension, but that the Germans and the Eurogroup led by Jeroen Dijsselbloem will engage Syriza in lengthy negotiations, which will allow Tsipras to walk back the expectations of the Greek electorate, possibly by allowing for some increased social spending.

This sounds about right to me. The neoliberals who lead the troika are not going to budge significantly. The only thing that might get them moving in a direction away from austerity is if they believed Tsipras was sincere in moving Greece out of the eurozone. But that is not Syriza's nor Podemos' position. They want to remain part of the eurozone.

The only hope one is left with after reading Smith's piece is that Syriza's victory yesterday is the front end of anti-austerity/anti-neoliberal political train that is hurtling down the European track. In other words, a revolution in party politics:

While the election results in Greece have sent shockwaves through European technocratic elites and have rattled investors, it is not clear how successful Syriza will be in getting big enough changes implemented in Eurozone policies and its own bailout terms to end the humanitarian crisis, rather than just create the sort of bounce off the bottom growth that analysts like to depict as progress. Indeed, once you walk though the likely bargaining positions of the various parties, there is little reason to be optimistic on Syriza’s behalf. 

Bear in mind that Syriza has yet to make any official statement as to what its negotiating position with the Troika will be. Both presumed prime minister Alex Tsiprias and one of his finance minister candidates, Yanis Varoufakis, articulated bolder positions a year ago, when they were further from power. In the runup to to the election, Syriza has tried to depict itself as an anti-austerity, yet pro Eurozone party. As Jamie Galbraith described it, via Mark Thoma: 

"The Syriza program is a pro-European program. It is, and I think Europe and Europeans, people are committed to the European project, can consider it a great stroke of luck that there has arisen in Greece, and consequently, partly consequently and subsequently, in Spain, as well as in the present government of Italy, a pro-European set of parties, whose objective is change, constructive change, to make the European project viable."

The nut of that problem, as we will see, is that while may be a very estimable-sounding position, it may not be as pragmatic as it appears. Greece likely has better odds of winning concessions if it is less reasonable, since the Germans and the even more implacable Fins are convinced that the periphery countries are immoral beggars who deserve to be ground into the dust if they cannot or will not pay their debts. Greece is unlikely to be able to shake the perception in the North that they have the upper hand and can force Greece to heel, giving at most only fairly minor concessions. 

Greece’s best hope is if it there is an upsurge in popularity of other anti-austerity and anti-Eurozone parties in the rest of Europe. And they are more likely to rally support in the rest of the Eurozone if they take bold positions rather than careful, studied ones. And even then, that may not be enough for them to resolve the deep-seated problems they face. It isn’t simply that they face a very difficult challenge politically vis-a-vis the Troika, but that even if they get most of what they want, their policies do not look likely to generate enough demand to pull Greece out of its ditch.

Now comes the hard part, a message that Pablo Iglesias, leader of Spain's surging anti-austerity Podemos, delivered in a stirring speech to an election rally in Athens on Thursday:

Winning the elections is far from winning power. That’s why we must bring everyone who is committed to change and decency together around our shared task, which is nothing more than turning the Universal Declaration of Human Rights into a manual for government. Our aim today, unfortunately, is not the withering away of the state, or the disappearance of prisons, or that Earth become a paradise. But we do aspire, as I said, to make it so that all children go to public schools clean and well-fed; that all the elderly receive a pension and be taken care of in the best hospitals; that any young person—independently of who their parents are—be able to go to college; that nobody have their heat turned off in the winter because they can’t pay their bill; that no bank be allowed to leave a family in the street without alternative housing; that everyone be able to work in decent conditions without having to accept shameful wages; that the production of information in newspapers and on television not be a privilege of multi-millionaires; that a country not have to kneel down before foreign speculators. In one word: that a society be able to provide the basic material conditions that make dignity and happiness possible.

These modest objectives that today seem so radical simply represent democracy. Tomorrow is ours, brothers and sisters!

I am hopeful that we are now at the beginning of something new and transformative, if only because the dominant neoliberal paradigm is so bankrupt.