Greece Emerges from Economic Crisis with Increased Inequality
Greece is "coming out of the crisis with a more polarized society, with an opened gap between the rich and the poor," says economic scholar John Milios
Greece is "coming out of the crisis with a more polarized society, with an opened gap between the rich and the poor," says economic scholar John Milios
DIMITRI LASCARIS: This is Dimitri Lascaris reporting from Korinthos, Greece. We’ve returned to Greece for the fourth time in the last three years in order to continue our coverage of the Greek economic crisis. This year we’re examining the current performance of the Greek economy and suggestions emerging from the Greek government that Greece has begun to emerge from the economic crisis.
We’re privileged to be joined today by Professor John Milios. Professor Milios is a social scientist and a Marxian economic scholar. He is a Professor of Political Economy and the History of Economic Thought at the National Technical University of Athens. He’s the author of several scholarly books and the director of the quarterly journal of economic theory, Theseis. And he was the Chief Economic Advisor of Syriza, the government of Syriza until March 2015. Thank you so much for joining us.
JOHN MILIOS: The party of Syriza.
DIMITRI LASCARIS: The party of Syriza.
JOHN MILIOS: Okay.
DIMITRI LASCARIS: Thank you for correcting me. And it’s good to be with you today.
JOHN MILIOS: I’m very glad to be with you.
DIMITRI LASCARIS: So I’d like to start, Professor Milios, by talking to you about the current macro-economic performance of Greece. For the last two quarters, for which there are statistics available, Greece has experienced economic growth, albeit weak economic growth. I suppose that in the circumstances of the economic crisis where Greece has seen a crushing decline in its GDP, any economic growth, is relatively positive. We’re starting to hear, as I mentioned in the introduction, suggestions from the government that these are signs that Greece has begun to emerge from the economic crisis. How would you respond to those suggestions?
JOHN MILIOS: Well, talking in general, I would say that there are no permanent crises. Allow me to tell you that this is a quotation by Karl Marx. “There are no permanent crises.” So it’s true that the crisis is somehow beyond the critical point, but we have to discuss what this means for the majority of the people. And what we mean, if we say that we have some positive signs of growth.
The overall result, the average, is this positive index, for example of the GDP growth, but we are coming out of the crisis with a more polarized society, with an opened gap between the rich and the poor, with a continuing humanitarian crisis for European standards of course. We do not have people who starve, but we have people who are unemployed, we have a higher rate of unemployment, and we have a lot of people who although they work, they work in very precarious conditions, and what they gain from their work does not suffice for them to live properly. And they have to be supported by institutions or by their family or by friends and so on.
So Greece is a different society, is an unequal society, and we have the elite, that is the oligarchy, which has strengthened its position very much through the crisis. Because I have to tell you that austerity, which was the enemy of Syriza, that the main slogan of Syriza was “to end austerity,” is not a false policy for the oligarchy. Because what is the living standard of the majority of the people of the population, is the cost of these people, and during the crisis they are very anxious to lower all costs, and labor cost comes first.
So the crisis of Greek capitalism is coming to an end, but the crisis of the majority of the people is deteriorating, and this is a problem, and this is also something that the Greek left has to deal with.
DIMITRI LASCARIS: I want to talk to you specifically about the unemployment rate. In July 2013 I believe it was in the range of 28%. Astonishing. This is actually above the level of unemployment that existed during the United States in the Great Depression I believe.
Now it’s down to 21%, still the highest in the Eurozone by a significant margin, but it’s come down 25% from July 2013. That too is a statistic which the current government invokes to suggest that they’re making progress. The other day, Yanis Varoufakis said, “Well that’s really creating a false impression, because this is largely attributable to the departure of unemployed youths from Greece.” What do you think accounts for this drop in unemployment? Do you think that this is indicative of an improvement in the circumstances of the ordinary Greek citizen?
JOHN MILIOS: Well, some sectors of the economy are expanding. Tourism succeeded very high growth rate. So it’s something that should be expected, that rate of unemployment would decrease. However, we have another structure of employment, and this statistical reduction of unemployment is to a large extent due to the fact that part-time employment has risen very much. And also we have other forms of precarious employment. For example, the lending of employees for some hours a week from one company to another and so on. So we have a very different labor market as we had compared to that before the crisis.
The end effect of it is to produce statistical results which show reduction of unemployment. I have also to tell you that we have a very extensive, very big black market. That is, people who are being employed as part timers for two are three hours a day, and they actually work for seven or even ten hours, without being paid over work and so on.
So it’s a jungle, the labor market right now. And we have to be critical of the final statistical outcome that unemployment is going down. Of course it is going down, but under conditions which are very unfavorable for ordinary wage earners.
DIMITRI LASCARIS: Let’s talk about the oligarchy. You mentioned the oligarchy at the outset. This was a major plank of the Syriza platform in 2014 in the months leading up to its first government. Even the language coming out of some members of Syriza was quite aggressive, they were saying they were going to crush the oligarchy.
Since the Syriza government has now had nearly three years in power, in your opinion have they taken any meaningful measures to constrain the power of the oligarchy?
JOHN MILIOS: Not at all, not at all. I can also tell you that before the elections, since the summer of 2014, the language of Syriza had changed. Instead of talking about crushing the oligarchy or redistributing power and wealth to the benefit of the social majority, they started talking about growth in general. And part of the growth is the profits of the oligarchy.
I can tell you at this point that one of the most crucial slogans of Syriza, that is a very important chapter in Syriza’s program, was to raise the minimum wage from 583 Euros a month to 751 Euros, as it was before the crisis.
DIMITRI LASCARIS: That was part of the Thessaloniki platform.
JOHN MILIOS: Yes, but also before the Thessaloniki, long before the Thessaloniki, we were talking about the generation of 750. Meaning that even 750 is a very low wage for a person who has just finished university or other studies and is entering the labor market.
And of course, we had the prime minister after the election of January 2015, talk about a long lasting process, which was going to involve the ILO, to see how it could be achieved gradually to raise the minimum wage from 580 to 750, as if it was a very difficult problem to do.
It’s indicative of the fact that during the last months or the last year before the election, Syriza was shifting from a party wanting to represent the interests of the working class, to an ordinary progressive party, let’s say a traditional social democratic party, who speaks about the common interests of the oligarchy and the wage earners and everyone as Greeks against the Germans or the European Union, or I don’t know who comes from abroad. And so all together we will see what is best. And of course, what in the end is best is the interest of the entrepreneurial classes and first of all of the big capital, the oligarchy.
DIMITRI LASCARIS: You know, the timing or your departure as chief economic advisor to the Syriza party is interesting. It was in March of 2015, but at least conventionally speaking, people view the capitulation as having happened in July after the referendum, and in fact that’s when the Finance Minster Yanis Varoufakis resigned. If I might ask, what prompted you to cease to play that role in March of 2015? From your perspective, was that something that you decided to do because you saw the writing on the wall, you knew where things were heading, and you couldn’t associate yourself with it anymore?
JOHN MILIOS: Yes, I knew what was going to happen, or approximately what was going to happen before the elections. That’s why I wasn’t a candidate, and I refused the offers of the prime minister to choose between two ministerial offices. The prime minister, the day after the elections, offered me two ministries to choose which one I prefer and I refused. I also refused to be an MP, a member of the parliament.
DIMITRI LASCARIS: Which ministries were those?
JOHN MILIOS: The minister of navigation and of tourism. Okay. But, I stayed a member of Syriza and I tried to do my best in order to show to my comrades and to leftist people, to the voters of Syriza, to the Greek society, that there should be a different course and that things were not going very well.
However, I regarded the agreement of the 20th of February, signed by Varoufakis, a memorandum, or the memorandum. Because they signed an agreement to comply with everything that was in the European Program, of the former government, without taking any money. Having the European Institutions, that is the Troika, owing money, several billion of Euros to the Greek government, and they continued to pay money to the institutions, to the Troika. Although the whole plan was that you receive the money to the Troika, to give it back to the institutions to which you owe, that is the ECB and the IMF.
So they didn’t receive the money, but they were still paying by taking everything that was available in universities, in their hospitals, in the municipalities and so on. So this was not a policy that was able to achieve anything. It was clear to me after the 20th of February, that they were going to sign the final memorandum, because they didn’t have any weapons anymore.
DIMITRI LASCARIS: So what do you think precipitated … I appreciate I’m maybe asking you to speculate here, but what do you think precipitated the resignation of Minister Varoufakis? If in effect, the government had already signed on to the program under his tenure, what was the whole point of resigning after the referendum?
JOHN MILIOS: I’m not sure that I can answer this question because the policies of Varoufakis were very volatile. On the one hand, he was making extreme declarations in the direction that during the crisis there are no class differences and we are all together to save the country and so on. On the other hand, he was suggesting that something different should be made as regards the debt obligations of the country.
So I cannot answer for sure. I can suggest that he had a hope that a change of course could have happened in the last minute. For example, there were many people, not only him, who hoped that after the referendum, which was a major historical event for this country, Cyprus and the government would stop negotiating and would say that we start from the beginning, because we have …
DIMITRI LASCARIS: The mandate.
JOHN MILIOS: The mandate of the big majority of the Greek people that we shall change course. However, before that they have produced a text paper of 47 pages, the so called 47 pages draft, which was the proposition of the Greek government to the intuitions, to the Troika. And if someone read this document very carefully he or she would come to the conclusion that this Greek propositions were not very different from the final result.
So what I suggest is that the government hoped that the result of the referendum would be more beneficial for them, that is something like 50/50. So as to say that, “Although we came to power with 36 or 37%, now we are 50%. But society is divided, there is no clear result, so we have to follow the course that we have already found.”
This is my suggestion why the whole thing happened the way it happened. Because we saw the next day, Cyprus being ready to conclude the final agreement with Troika. And also before that, to make an agreement with opposition parties, that is the conservatives and the neoliberal centrum, so that all together accept the new agreement.
So maybe everything was already prepared long before, that is months before the final agreement. And the way everything happened was scheduled as to convince people that a big fight is taking place in that Greece resists, and that Athens is the new Stalingrad or I don’t know what. I am not saying that as a new idea. This is how Mason, the well-known British journalist, started a speech in Athens, “Hello new Stalingrad.” Okay. Maybe this was everything a communication issue.
DIMITRI LASCARIS: I’d like to just ask you to prognosticate about the future based upon everything you’ve seen and heard. What do you think will ultimately happen with this radically unsustainable debt that Greece has assumed? At the time of the capitulation, one could certainly call it that in July of 2015, one of the things that members of the government were saying was, “Well we have this commitment for debt relief. We’re going to get debt relief, maybe not tomorrow, but it’s coming.” And here we are now, approaching the end of 2017 and there has not been any meaningful debt relief measures adopted. Do you think ultimately that there’s going to be a negotiated solution to the unsustainable debt? Or do you think Greece is simply going to have to default?
JOHN MILIOS: No, no. Nobody will allow default in the Eurozone. That was the actual weapon that the government had. If the government stopped paying transfers to the Troika after the January 2015 election, then everything could have happened differently. Because it’s impossible for the ECB to allow a default in the Euro area. And also an exit from the Euro area would mean the final end of the Euro area, because the Italian or the Spanish interest rates are going to climb to unprecedented heights, and this is going to make everything explode.
So I think that before the debt becomes a real problem, because now the debt is not a problem as it is going to be in two years’ time when Greece should have to pay enormous interest rates, and also repayments of all debt. Now Greece does not pay such amount of money. Before the time comes, there is going to be restructuring of the debt in a way that the debt will continue to be. It means imposing austerity policies. That is, we are not going to have any radical solution of the debt problem, but they are going to postpone conditionally the date of repayment so that Greece should have to follow, even after the program has finished, should have to follow the same austerity policies in order to have the agreement go on, that is the postponement of payments.
So the debt is going to be there, but it’s going to be restructured in a way so that no default takes place.
DIMITRI LASCARIS: Well we’ll certainly be watching closely to see if your prognostication is correct Professor Milios. We thank you very much for joining us today.
JOHN MILIOS: I thank you also very much.
DIMITRI LASCARIS: And this has been Dimitri Lascaris for the Real News from Korinthos Greece.