By Nathan Tankus, a writer from New York City. Follow him on twitter at @NathanTankus
Wednesday I attended a debate between Yanis Varoufakis and Hans Werner Sinn. I will not summarize the debate (I’m told the video will be up next week), but instead give my reading of the debate and wider impressions of attitudes in Germany.
Relitigating Varoufakis’s Relitigation of Past Bailouts
What was most striking about Varoufakis’s posture was how he seemed to learn nothing from his experience as finance minister. Despite the repeated failures surrounding arguing over process and attempting to change the bailout the previous Greek government had already agreed to, he was still adamant about going over these points again. Further, he discussed his negotiations not as someone representing a country in a weak bargaining position, but as a doctor attempting to deliver medicine. It has been said many times but it bears repeating: he has acted and still acts like an economist diagnosing and fixing Europe rather than a representative of Greece negotiating on Greece’s behalf.
Varoufakis’s economic analysis remained as good as ever, but the issue has (for the most part) not been his economic analysis. The issue is how he conceived of his position as finance minister. He doesn’t seem inclined to pursue elected office again (he explicitly called his speaking tour “doing politics”) but it’s unclear if that is voluntary or a consequence of how poorly popular unity did.
The Mania and Rhetoric of Competition in Germany
From outside of Germany it has been difficult to judge what the attitude of the “ordinary” German is. Do the articles coming out of Germany accurately represent people’s views or is there a disconnect between media obsessions and the ideas people hold? I’m in no position to make that judgment overall but one issue stood out starkly to me: the language of competition. Based on my experience here the notion of competition seems to have seeped very deeply into mainstream discourse. ordinary people conceive of the Eurozone’s problems as one of an uncompetitive south stuck with a competitive north.
You could see this in a question asked of Varoufakis towards the end of the night. Essentially the question was whether recently discovered oil deposits in the Mediterranean could be explored and turn Greece into “Norway.” Rather than shoot down this insane question (my German friends tell me he was doing everything he could to not be “divisive” and seem “reasonable”), he doubled down on it and suggested that not only should Greece develop oil in the Mediterranean but Greece should start cooperating with Turkey on this project. The inconsistency with his earlier stance of using his “modest proposal” to develop green technology around Europe went unmentioned. He acknowledged this was “unpopular” in Greece but didn’t comment further than that (such as mentioning the horrendous Ankara bombings). The logic of competition is so deep seated that I felt like the only person who saw a problem at all.
In talking about these issues with Germans and hearing ordinary people ask questions in public you get the image of ordinary Germans scouring maps, researching Greek islands and furtively “analyzing” Greek (as well as other “southern” countries) industries looking for any resource that could be extracted and sacrificed on the altar of Europe. In reality of course most people don’t spend their time on this sort of thing but I wouldn’t be surprised if most families had one relative who had figured out a unique “solution” to the Greek problem that didn’t require “German” money. Any policy other than extracting more blood from stones seems to be seen as “papering” over the “crucial” problem.
The idea that member states in a monetary union need to be in trade balance (let alone the idea that the current account says anything about “competitiveness”) is a bizarre one to the uninitiated. However, Germans had similar debates to today about post-reunification in the early 1990s (Sinn referenced the east-west split in this debate) and don’t seem to find anything strange about it. From an American perspective a monetary union seems permanently hobbled by statistics on member states trade balances. Americans of course have no idea what the trade balances of individual states are. More importantly it’s not an issue most Americans have even thought about. In this way we see how statistics produce consciousness. In speaking with ordinary Germans I’ve come to contemplate whether the United States could survive accurate data on the current account positions of individual states. I’m not sure and I certainly don’t want to risk a definitive answer to that question.
IT Issues and Grexit One More Time
In response to Sinn arguing that Grexit was the best option for Greece (it’s unclear whether Schäuble’s ghost haunts him or he is the ghost that haunts Schäuble), Varoufakis laid out two objections.
The first objection consisted of recounting some findings of his “group” working in “the office next” to him. Apparently they “discovered” how difficult it would be to redenominate contracts.
The second objection was that it would take “twelve months” to transition to the drachma from the moment he decided to do it. He said this was mostly because of technical issues related to physical banknotes. He went on to claim that if the Euro was “purely digital” then the currency could be changed with a “touch of a button.”
As Yves, I, Clive and Louis Proyect wrote over the summer, this idea is completely insane (for a refresher on the financial IT issues of a Grexit see here [http://www.nakedcapitalism.com/2015/06/the-operational-issues-of-a-grexit-part-two-organizational-capacity-capital-controls-and-bootstrapping-a-new-monetary-system.html], here [http://www.nakedcapitalism.com/2015/07/more-on-the-it-implications-of-a-grexit.html] and here [http://www.nakedcapitalism.com/2015/07/bank-it-grexit-and-systemic-risk.html] among many others). What’s more interesting is what could possibly motivate this claim. Did his “Plan B” team not have an IT expert? Or does he know better and for some political reason he wants to represent Grexit as more viable than it is despite his public opposition to Grexit? I will leave the question of whether this statement is derived from ignorance or lies up to the reader.
Does Europe Need Democracy or a King?
Varoufakis has in the past and currently says that his goal was and is to “democratize” Europe. However, in relating specific frustrations from his experience as finance minister his objection seemed less about a lack of democracy than a lack of formal hierarchies. For example he told a story of doing “a deal” with a high ranking IMF official over sales taxes, having a drink with him and flying to Athens to convince his colleagues to agree. When his negotiators went to Brussels to finalize the agreement that he made with that IMF official, it was not on the table. When he next saw that official, the official sheepishly changed the subject to labor law.
It’s obvious why this experience would frustrate Varoufakis but it was not an issue of democracy. A world in which he could make an agreement over drinks with one individual in the IMF, even high ranking, is a world missing democracy. It may be frustrating for him and “counterproductive,” but that individual official’s inability to “represent” Europe is in some sense a triumph of democracy. He also cited Kissinger’s famous quote “Who do I call if I want to call Europe”? By no stretch of the imagination was Kissinger complaining about Europe’s “lack of democracy.”
From hearing Varoufakis talk you get the sense that he wanted one single individual that he could “do a deal with” through essentially force of personality. He even said he felt he could have done a deal with Schäuble and implied the biggest barrier to that was that Merkel didn’t share Schäuble’s views. Would Europe be more democratic if Varoufakis had that single person he could convince? I’m skeptical. That is not to say that Europe doesn’t need radical reform to its governance structure. Just that a more formal set of European-wide political institutions would not necessarily be more amenable to Greece’s plight. The attempt to conflate a lack of formal institutions with a lack of democracy is dangerous. It is even more dangerous to conflate the lack of either with hostility to Greece.