From the TUC

Greece and a New Social Deal for Europe

08 Mar 2010, by Guest in Economics, International

The old joke “what’s a Greek urn?” has a new and depressing rejoinder: “a lot less than they did before the speculators arrived”. Throughout Greece, wages, pensions and services that ordinary people rely on are being slashed, and higher sales taxes are hitting their pockets, in an effort to compensate for the greed and speculation of a few ‘Lords of Finance’.

At the ETUC, we’re increasingly concerned that Greece seems to be alone to face a renewed wave of financial market speculation, as heavily leveraged speculators take advantage of Greece’s debt crisis, exacerbating the country’s situation for a heavy profit. The European Council, the European Central Bank and the European Commission are giving an entirely wrong message: The speculators are to be left alone, whilst workers and governments are being pressed to cut wages, social benefits and public services.

Europe needs to come together right now and take collective action against the speculators. If the EU can’t organise the solidarity between its member states and its workers, then the crisis won’t stop in Greece. Financial markets will use their power to single out individual countries, moving on as certain states fall. Member state after member state will be forced to cut wages, benefits and jobs. Portugal, Spain, Italy, Ireland – this could spread both quickly and widely, with everyone in Europe feeling the repercussions. Without real action, and action aimed at fundamentally changing the system, the whole idea of a Social Europe is in grave danger.

This is why we’re demanding a New Social Deal for Europe. The EU needs to see a financial transaction tax, a common Euro bond, a European rating agency and a European Central Bank, which also supports public policy and public finances (not just the banking sector). In the European workplace, collective bargaining needs to be strengthened. Competitive wage cuts and wage freezes must not come to replace the competitive devaluations of the period before the single currency.

The way forward has to be through recovery plans agreed with Europe’s social partners, in which the rich and comfortable accept that they need to take a fair share of responsibility for the situation, and it is not just the wider populace who should be left to carry the burdens of the recession, in the form of unemployment, pay and pension cuts.

GUEST POST: John Monks is the General Secretary of the European Trade Union Confederation, a position he has held since 2003. The ETUC represents workers and their national affiliates at the European level, with 82 affiliated trade union centres in 36 European countries. Before being elected to this role, he was General Secretary of the Trades Union Congress in the UK. He is also Vice-President of European Movement International, and chairman of the People’s History Museum in Manchester.

3 Responses to Greece and a New Social Deal for Europe

  1. Second view: blaming the surplus nations too much? « Freethinking Economist
    Mar 11th 2010, 12:41 pm

    […] Wolf’s point is that trade balances have to sum to zero, and so Germany having a suplus mean Greece having a deficit.  Running a surplus is the only way to save and grow at the same time, and countries with big debts need to do that.  (I am simplifying attrociously).  NonGermany can’t grow through private consumption or even investment, because these exceed the private incomes and we have reached the limit beyond which the gap can be financed (and no, not just because of wicked speculators, Mr Monks). […]

  2. Banning CDS – a veritable linkfest and stout opinion « Freethinking Economist
    Mar 12th 2010, 10:42 am

    […] This is not chronological.   But the intention is to refute the knee-jerk TUCist view: […]

  3. Mekonen Haddis
    May 6th 2010, 10:30 pm

    Neo-Liberalism, and the Greek tragedy.

    May 6, 2010 by

    Neo-liberalism, and the Greek tragedy.

    The country that gave the world the three most important tragedians, Aeschylus, Sophocles and Euripides is facing a major economic tragedy. While economists the world over have differing views on the root cause of Greece’s economic problem, as a non economist, I have been immensely concerned with anarcho-capitalism, (an economic system that destroys government regulation of the economy, and creates economic anarchy within the global economic system).

    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.

    Recently, the EU and the IMF have agreed to extend $147 billion dollars rescue under a three year agreement. This “rescue” plan actually is intended to rescue French and German banks that are holding a large share of Greece’s bonds. Moreover, the “rescue” is meant to temporarily stop a widening debt crisis in Europe which might include Portugal, Spain and Italy. In all this, the Greeks will be burdened with more debt, and are required to take harsh budget cuts.

    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?

    Focusing only on dollars and cents, what usually is left out is any discussion of the impact of neo-liberalism’s creation of political instabilities around the globe. The main crime of neo-liberalism is its unparalleled focus on greed some would say debauchery and social injustice.

    I only hope, the violence in Greece would quickly recede before it destroys a country that is the root of European civilization.

    Professor Mekonen Haddis.