A decade ago, looking at the state of the union the Bush administration, it seems to me that it was the European Union, and Germany in particular, had replaced the USA as the last, best hope of earth. As recently as five years ago, I posted an article on Germany as an Economic Role Model.
Germany had seemingly created an economy based not on cutting costs, but on creating value, investing in people and worker participation in decision-making. The Germans had learned how how to hold their own in international trade and still enjoy high wages, generous social benefits and excellent public services, without sacrificing civil liberties.
Or so I thought at the time. But the Greek debt crisis shows Germany as much in the grip of a financial oligarchy as the USA was.
The best way to help Greece’s creditors is to promote Greece’s economic recovery, so at least a portion of the debt can be repaid. The austerity measures being imposed by the European Central Bank, European Commission and International Monetary Fund are driving Greece deeper into economic depression. They are being imposed as a punishment and a deterrent.
The German leaders also have made the mistake of allowing central banks, rather than the public, to determine economic policy. The problem with this is that bankers have different priorities than the public.
Broadly speaking, bankers want zero inflation and debts to be repaid in full. All other things being equal, these are desirable goals, but not at the cost of rising unemployment, falling wages and non-functioning government services.
Unfortunately the European Central Bank is in charge of European monetary policy, and the public has nothing to say about its policies. It is governed by a committee consisting of 19 national central banks and a six-member executive board appointed by the European Council. I looked up “accountability” on the bank’s web site, and found that this consists of regularly issuing reports.
The best way to enforce accountability for the Greek debt crisis would be to investigate the Greek public officials and their banker advisers who created it, and determined whether they should be charged with malfeasance. Instead the banks have been bailed out, and the public officials escape blame—much the same as in the 2008 financial crisis in the United States.