From Truth and Satire:

Every single mainstream media has the following narrative for the economic crisis in Greece: the government spent too much money and went broke; the generous banks gave them money, but Greece still can’t pay the bills because it mismanaged the money that was given. It sounds quite reasonable, right?

Except that it is a big fat lie … not only about Greece, but about other European countries such as Spain, Portugal, Italy and Ireland who are all experiencing various degrees of austerity. It was also the same big, fat lie that was used by banks and corporations to exploit many Latin American, Asian and African countries for many decades.

Greece did not fail on its own. It was made to fail.

Consider a recent article in the New York Times by Neil Irwin. The title says it all: “Now Europe Must Decide Whether to Make an Example of Greece.” Those lazy Greeks,” Irwin’s title suggests, “need to be taught a lesson. “

Here’s an excerpt, my emphasis:

The choice for leaders of Germany, France and the rest of Europe will look something like this:

If they tolerate the Greek government’s demands, they will be setting a bad example for every other country that might wish to challenge the strictures of the European Union, telling voters in Portugal and Spain and Italy that if they make enough fuss, and elect extremist parties they too will get a much sweeter deal. It would send the signal that a country can borrow all it likes, walk away from those debts and make the rest of Europe pay the bill, as long as it is intransigent enough. 

Notice Irwin’s use of the word, “tolerate,” as if the Greek government is a bratty, demanding child. He says a challenge to power cannot be allowed—have to nip that in the bud before it spreads to other “lazy” countries. Irwin calls anti-establishment, left political parties, like Greece’s Syriza, extremist. Syriza is “extreme, ” I guess, because it chooses the needs of ordinary people over making banks and hedge funds whole. Finally, he characterizes the Greek people as insufferable deadbeats.

Irwin’s “good vs. bad, white hat/black hat” narrative satisfies the embarrassingly uninformed and gullible American public, and protects the people, banks and institutions that caused the biggest global wealth heist in history.

“Bad Greeks!” Irwin is saying, “They’re getting what they deserve for spending way beyond their means.“ Being an unrepentant bank groupie, I’m sure he believes that. In 2013, Irwin wrote The Alchemists: Three Central Bankers and a World on Fire, a book on how three central bankers dealt with the 2008 financial meltdown. One Amazon reviewer described it as “Pathetic drooling over something that is essentially an anti-democratic institution. The book is littered with fawning details of how some central banker was travelling in a limousine when he received a call about markets being on fire. Or how Draghi was eating smoked goat cheese (or whatever is it that elites eat) when the Greece crisis erupted and then he had to do something on his mahogany table.”

The book earned the endorsement of the Peterson Institute for International Economics, an organization whose sole mission is to cut Social Security, Medicaid and Medicare, and lower taxes on the wealthy. If you didn’t get it from reading Irwin’s article, his book tells you where he stands psychologically and politically. He is typical of the sycophants who populate mainstream media.

My point in critiquing Irwin’s article is to encourage readers, especially those who call themselves “progressive,” to pay attention to the underlying perspective of those who speak or write in mainstream news outlets. What are their values? With whose interests do they identify?

Given the serial mendacity of the NYT, it’s important to look elsewhere to understand world events, and, in this case, what caused the crisis in Greece. Look for writers and journalists who identify with the struggles of the majority population, and who have a clear-eyed view of the rampant corruption in government, banks, and the private sector around the world. Look for writers who, at minimum, are not in awe of the wealthy and the powerful.

For starters, you might try Conn Hallinan’s “Europe’s Debt: Lies & Myths. Hallinan does a great job of countering Irwin’s myths by placing Greece’s plight in historical context. Here’s an excerpt, my emphasis:

Myths are dangerous precisely because they rely more on cultural memory and prejudice than facts, and behind the current crisis between Greece and the European Union (EU) lays a fable that bears little relationship to why Athens and a number of other countries in the 28-member organization find themselves in deep distress.

The tale is a variation of Aesop’s allegory of the industrious ant and the lazy, fun-loving grasshopper, with the “northern countries”—Germany, the Netherlands, Britain, Finland—playing the role of the ant, and Greece, Spain, Portugal, and Ireland the part of the grasshopper.

The ants are sober and virtuous—lead by the frugal Swanbian house frau, German Chancellor Angela Merkel—the grasshoppers are spendthrift, corrupt lay-abouts who have spent themselves into trouble and now must pay the piper.

The problem is that this myth bears almost no relationship to the actual roots of the crisis or what the solutions might be. And it perpetuates a fable that the debt is the fault of individual countries rather than a serious crisis at the very heart of the EU.
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In Greece’s case corruption was at the heart of the crisis, but not the popular version about armies of public workers and tax dodging oligarchs. There are rich tax dodgers aplenty in Greece, but Germany, Sweden, and many other European countries spend more of their GDP on services than does Athens. Greece spends 44.6 percent of its GDP on its citizens, less than the EU average and below Germany’s 46 percent and Sweden’s 55 percent.

And as for lazy: Greeks work 600 hours more a year than Germans. According to economist Mark Blyth, author of Austerity: The History of a Dangerous Idea, Greek public spending through the 2000s is “really on track and quite average in comparison to everyone else’s,” and the so-called flood of “public sector jobs” consisted of “ 14,000 over two years.” All the talk of the profligate Greek government is “a lot of nonsense” and just “political cover for the fact that what we’ve done is bail out some of the richest people in European society and put the cost on some of the poorest.”

There was a “score” in Greece. However, it had nothing to do with free spending; it was a scheme dreamed up by Greek politicians, bankers, and the American finance corporation, Goldman Sachs.

Greece’s application for EU membership in 1999 was rejected because its budget deficit in relation to its GDP was over 3 percent, the cutoff line for joining. That’s where Goldman Sachs came in. For a fee rumored to be $200 million (some say three times that), the multinational giant essentially cooked the books to make Greece look like it cleared the bar. Then Greece’s political and economic establishment hid the scheme until the 2008 crash shattered the illusion.

It was the busy little ants, not the fiddling grasshoppers that brought on the European debt crisis.

American, German, French, and Dutch banks had to know that they were creating an unstable real estate bubble—a 500 percent jump in housing prices is the very definition of the beast—but kept right on lending because they were making out like bandits.

When the bubble popped and Europe went into recession, Greece was forced to apply for a “bailout” from the Troika [The European Central Bank, the European Commission and the International Monetary Fund]. In exchange for 172 billon Euros, the Greek government instituted an austerity program that saw economic activity decline 25 percent, unemployment rise to 27 Percent (and over 50 percent for young Greeks). The cutbacks slashed pensions, wages, and social services, and drove 44 percent of the population into poverty.

Virtually all of the “bailout”—89 percent—went to the banks that gambled in the 1999 to 2007 real estate casino. What the Greek—as well as Spaniards, Portuguese, and Irish—got was misery.

The post Myths and lies about Greece appeared first on Occasional Planet.

One of the few conservative ideas that has sufficient appeal for progressives to embrace is that you can’t solve problems just by throwing money at them. The parting of the waters comes when conservatives can’t accept the value of money in meeting the most basic of economic needs such as unemployment insurance or infrastructure safety.

Perhaps because I’ve spent most of my life in education, I am somewhat skeptical of the idea that, by providing more money for schools, we will have a more educated populace. Look at the chart below. I saw it first in former President Bill Clinton’s book, Back to Work: Why We Need Smart Government for a Strong Economy.

High school graduation rates

No data is provided for Australia, Austria, Belgium, Brazil, Netherlands, and the Russian Federation.

Source: Education at a Glance 2010: OECD indicators. www.oecd.org/edu/eag2010

President Clinton’s logic is premised on the principle that a smart government will result in a strong economy. This is based on the assumption that smart government comes from good schools. We know whether or not we have good schools based on certain measurements. One of those is the high-school graduation rate. Public opinion is with him; we’re constantly told how important it is for students to stay in school.

It should be no surprise that, as indicated in the chart above, Germany has outstanding schools and perhaps the world’s healthiest economy. Education is valued and an astonishing 99.5% of students complete high school. However, the validity of the theory comes to a screeching halt with the country that has the third highest percentage of high school graduates, Greece. The birthplace of modern democracy has a graduation rate of 96.2%, clearly the envy of virtually every other country in the world.

The problem is that the high-school  graduation rate does not guarantee as  strong an economy as President Clinton suggests. The twenty-seven nation European Union is struggling to reverse its current economic downturn. We frequently hear of a doomsday scenario in which the European economy collapses due to more debt than it can service. This scares economists, investors, and other so-called financial experts in Europe. On bad days, the fear leaps over the Atlantic, while Americans are asleep, after which they wake up to a bearish stock market. The momentum crosses the Pacific and flummoxes the Asian markets. It may continue the next day in Europe, or due to some unexpected or inexplicable reason, the trend stops and then is reversed.

Key to Europe’s economic problems is debt,  and in no country is it more of a problem than Greece. The public debt of Greece is $436 billion; 143% of its Gross Domestic Product. The interest on Greece’s long-term debt is 18%. No other EU country has a rate over 12%. Debt is not Greece’s only problem. In 2010, its GDP dropped 4.5%; a figure that represents a growth rate slower than 210 other countries.

A big contributor to Greece’s public debt is the failure of individuals and corporations to pay the taxes they owe. This raises an obvious question: if the citizens of Greece have the third highest high school graduation rate of any country, then why are they not smart enough to know to pay their taxes?

All that the 96.2% graduation rate tells us is that almost all high school students completed the secondary schooling. It doesn’t tell us anything about what the students knew, about what they learned while in school, or about what was lacking in their education.

Far be it for me to disagree with President Clinton about the importance of a strong educational system to ensure smart government and,  in turn,  a strong economy. It’s just that a high school graduation rate is arbitrary and potentially misleading. Think about college graduation rates from Division 1 NCAA schools. Coaches like to brag when their roster has a high graduation rate. What does that mean? It means that a relatively high percentage of students playing sports graduate from college. It doesn’t mean anything about what they learned, or what they didn’t learn. It doesn’t tell us anything about what courses they took. It doesn’t tell us whether professors inflated their grades because they were athletes.

If Greece, or any other country, is to have a strong economy, it needs a workforce that is skilled and committed to working hard and working smart. We all know that there are students who graduate from high school without being very skilled and without working either hard or smartly. Graduation rates or test scores will not tell you if someone can help a country increase its Gross Domestic Product in a way that improves the quality of life (i.e. fighting poverty rather than fighting discretionary wars). It will not tell you if citizens have the strength of character and commitment to the general good to willingly pay taxes, to support programs that promote the general welfare, and to provide necessary oversight and caution to ensure quality control.

We live in a world in which we can try to quantify virtually anything and everything. It would serve us well to remember the old adage, “There are three ways to not tell the truth: lies, damned lies, and statistics.” When it comes to using statistics, it might be helpful to remember the words of advice from Sgt. Phil Esterhaus of Hill Street Blues, when he dismissed his officers to take to the streets, “Let’s be careful out there.” Even Bill Clinton has reason to believe that.

The post Education doesn’t always lead to strong economy: Ask Greece appeared first on Occasional Planet.