The news has been very boring these last few months with the only notable thing to talk about is the SSDD of the threat of tighter money from the Fed, its lack of justification and so forth. Then all of a sudden stuff that’s worth the pen starts happening all at once.
The No camp is celebrating victory tonight in the Greek referendum on whether to accept bailout terms. Mid-week last week, Scott Sumner had come out in favor of the Yes camp. I don’t always understand his methods of nuance, but it seemed as if getting rid of Syriza was the primary reason to for the Yes vote, on top of the fact that the Greek economy was beginning to adjust to the new realities and a No would probably introduce an unnecessary negative shock.
I see his points. They are valid and prudent points. But I took sides with the No’s. And I did so because of the larger picture of Greece being shackled to an unreformed, racket of a monetary system as probably the worst of the evils in the EZ political dynamics involving Greece. Not to mention that I no longer look at things with 2d philosophical glasses, left or right – everything is really just different shades of gray.
I can’t really defend the one instance of purported social extremism by Syriza that has been brought to the discussion, the instance of rehiring all of the public TV personnel. Except I can say that I do not personally know what the intention behind that was. The fact is that Greece has upward of 25% unemployment that has persisted for years. And because the government has zero control over monetary factors and the bailout for reform package made the tight money situation worse, I can imagine it was to provide some relief to people who need to feed their families. I am not saying rehiring all those people was the right thing. But it was the thing within the sphere of control of Athens. It cannot be stressed enough that the current construct of the EZ monetary policy is chalk full of perverse incentives, and this is just one illustration of a policy a government might adopt in order to alleviate human suffering when it cannot devalue. And the suggestion that this was wrong came from a source that has also suggested that extended UI is bad because it might add as much as 0.5% to the U-6… when tight money adds – how much? Just something worth considering.
Milton Friedman once said something like politics, parties and ideologues are what they are, and one often cannot wait until the next election for the right things to be done. And so it needs to be made politically profitable for the wrong people to do the right things. Syriza can change. In fact that is the one thing directly in control by the current government in Greece – themselves. Never mind Brussels which certainly is not the path of least resistance, has zero accountability to Greek citizens and obviously feels little responsibility toward their quality of life. Greece needed monetary support in order to make the reforms palatable and they did not get it. And nobody likes to see the kind of suffering that persistent 25% unemployment causes. Syriza will change when it is politically profitable for them to do so. I don’t see them as a static force that turns Greece into Argentina or Venezuela. But then, I could be wrong. Only time will tell.
PS: Coming up I have media reports about the opaqueness of the election for Philly Fed Pres. People like me who think there’s tons of corruption going on in the regional branches will really like this exposure. If you want to read up on it rather than wait for my post, I found the story on Reuters in the Politics section.