Greece and Europe are in a confrontation over democracy

You wouldn’t think so given a week of awkward handshakes, public contradictions, sternly worded demands to fall into line, and galling bankers’ ultimatums to destroy an economy, but Greece and Europe agree on most things:

Europe: You must reform your economy.
Greece: We plan to reform and modernise our economy even more than has been already accomplished. However we want growth oriented changes, not ones that are just destructive.

Europe: You must reduce graft and waste.
Greece: Our finance minister travels economy. He fired the ministry “consultants” and re-hired the outsourced cleaning ladies. Down to earth is the new normal.

Europe: You must collect taxes properly.
Greece: We’re the first Greek government determined to do that, including going after the big fish. Intrnational help would be appreciated. But sending German in tax inspectors at this time would be unwise.

Europe: You must pay your debts.
Greece: We have the interest of all European taxpayers in mind so please hear our case. During the bubble years your banks lent recklessly to Greece while our government committed financial fraud. We’re sorry. Then your governments transferred private investment losses onto the shoulders of European taxpayers. At the same time the Troika imposed austerity that crushed our economy by 25% and raised debt to GDP from 115% to 170%. European governments mismanaged the crisis and lied to you that you were helping Greece.

Right now we need to end the most damaging aspects of austerity so that we can have growth, and then agree a debt service schedule that this small economy can sustain. Greece is already making a surplus and paying back money to Europe. You are not “financing Greece”, we’re paying you back. We want to make that repayment slower, 1.5% of GDP instead of 4.5%, so that it’s possible to have an economic recovery.

Your central banks won’t get back the full value of the debt at commercial rates. You’ll get less in total or less interest or over a much longer time. However these are by now paper losses in the books of central banks. We’re trying to bury a loss of around €150 billion at a time when the ECB is crating €1.1 trillion of new money on the books of the same banks. That means there’s no need for Europeans to lose money or pay higher taxes over this, and if your politicians make you take this loss it’s their choice.

Europe: You must privatise everything.
Greece: If that’s not letting go of a profitable asset at fire sale prices, sure. Right now the income stream from public enterprises is worth more than the sale price.

Europe: You must stay in the Euro.
Greece: We want to stay in the Euro but the ECB is kicking us out.

Why then all the bluster? Greece’s new government is a popular government. The good kind. We don’t want to see the other one. With the exception of Merkel, the people they face are mostly technocrats. I don’t understand German politics, but from outside it seems clear that capital rules politics and is spinning a morality tale for the people.

Where Greece and Europe don’t agree is where people (in Greece and elsewhere, even Germany) want one thing and narrow capital interests want another:

Europe: You must continue with Austerity.
Greece: We won’t continue with this policy that destroys wealth and evidently doesn’t work.

Europe: You must take this money from our taxpayers.
Greece: We have no right to take any more money from your taxpayers.

Europe: You must do as the previous governments.
Greece: Have you heard of democracy? We have a strong popular mandate for change.

Europe: We have agreements with Greece, not a government.
Greece: It’s like marriage. If you offer solidarity we’ll do the same, and by coercion no.

Europe: You must comply with the Troika inspectors.
Greece: We were elected to end this humiliation. We’re committed to reforms but we’re not a debt colony.

Europe: We have rules here.
Greece: We’re bankrupt, party as a result of bad rules. We’ll follow the rules we can, and if we can’t you may throw us out.

Europe: You’re one country versus 18.
Greece: Have you noticed that the Eurozone is increasingly a club people want to leave? How much democratic opposition to these failed policies will it take to change them?

And that’s really the the point of disagreement this past week, and probably next week or until Greece’s democratic flare is resolved. Greece is arguing for a democratic Europe that works for its people. The establishment is arguing for a largely undemocratic status quo that doesn’t work, or works only for large industrial capital.

It’s been a while since Greece had a government that actually represents the interests of the people. Maybe more than two thousand years. If the other governments in Europe were similar, or Europe could be jolted into reviving democracy, we would find many more parallels than differences and the crisis would be quickly over.

Conceptions of democracy

There are two conceptions of democracy. In one, it’s a product. You buy a governance product from a firm (called a party) and it lasts four years. People want to see shiny marketing for the product they buy and be reassured that it’s good. They care about isolated scandals the way they care about food scares, but otherwise they don’t want to be involved in the making of politics any more than they’d want to see the back offices of hotels or the workings of airlines. The parties, government agencies, and the administration guard their internals as any business would, and people who expose the works to the public are troublemakers.

Since everyone has to buy the same governance for a particular term, democracy as  product tends to be bland. Good marketing is to conform to broad and shallow expectations, and trail them slightly. It’s risky to overshoot. People who want special features feel neglected by the available offerings. Market discipline ought to curb self interest by the firms (parties) and their officers (politicians) but since a duopoly or oligopoly inevitably arises corruption and capture are problems. Democracy as product gradually leads to less government, as governance is one product among many and people buy more and more of their life from private firms instead of the state.

The other conception of democracy is collective management and we’re not used to it in most countries. Maybe the Swiss know a thing. Citizens are not customers of the state but owners-employees (partners). You have to decide what the sate including you will do, not what “The Government” will do for you. People have to care about the workings of the state and take time to understand them. For that kind of democracy, aside from extremely narrow military and banking operatons, full transparency is essential. The people who operate in secret are the traitors. In this relationship of people and the state, a bigger state is good because owning and controlling the major things in your life is better than buying them as a consumer.

Participating citizens will still want to delegate their democratic duties to people who are more expert, more engaged, and at times more passionate about causes. But there’s no need for broad constituencies or elections that make representation blunt. Each citizen can in theory pick their own ideal representative, and change their nomination at any time. This is well within reach of a digital society. Superstar representatives will have many followers, finge representatives whose program is marketable will have some followers, and “undecided” citizens will decide if only passively the way they’d pick insurance. The main issue with this democracy, if any, is that it might work and yield unsavoury results such as racism that lots of people want.

These conceptions of democracy are radically different. I think the participatory one is better. Current politicians won’t do it, but the technology is here to create it to the point that it’s an irresistible reality begging to be adopted.

The August 2011 UK riots

The first observation about the riots is that they’re a failure of government. Any government whose people revolt has failed in some way. It hasn’t failed totally or everywhere but it is responsible for a failure – a significant one in this case. The first thing that Cameron has to do is bow down to Britain and admit failure. That’s true from any political perspective. Whether you’re a fluffy nurturing liberal or a tough personal responsibility conservative, Cameron’s government has failed to govern effectively.

Calling the looters criminals is self-serving hypocrisy to avoid admitting failure. All kinds of people commit crimes, but the category “criminal” is rarely helpful for the purpose of explanation. A “criminal” is someone who has freedom of choice and chooses to do something harmful for self-serving reasons. Say Bernie Maddoff, he was a “criminal”. A madman, terrorist, or rioter cannot be explained away as a “criminal”. You may wish to treat them harshly, but you have to ask further questions if you want to explain their behaviour. You should ask these questions so that you can reach and stop other people who may be on the same path. We don’t analyse “criminals” because we’ve accepted that greed, materialism, and selfishness are normal – we just expect people to control them. We do analyse abusers, extremists, and rioters because there may be something useful society could do to change their motives.

To dismiss rioters as “criminals” is to assume that their motivation has been to acquire trainers or PlayStations without paying, and that there has been a remarkably unlikely concentration of these “criminals” in poor UK suburbs over a particular week. Or else it is to assume that the anger, or whatever, they were feeling is normal, that it’s normal they would want to burn stores and break things, but they should just control themselves like normal people. These are not helpful explanations, so let’s please not call them criminals.

So, after admitting and apologising for failure, Cameron needs to start failing less. Then the question opens, what kind of failure was this?

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Why WikiLeaks is important

The WikiLeaks intelligence documents have started appearing in the papers. There’s no earth-shattering revelation, yet this disclosure to the public is extremely important because it brings to light our two alternative conceptions of democracy. In the classic idea of democracy, the one you learn at school and the one reflected in the structure of electoral institutions, participatory democracy is the ideal and representation is merely a device to make democracy practical at large scale. In classic democracy, the public is at all times the source of authority and arbiter of decisions. Openness is essential, and the role of the media is to keep the representatives in line with the wishes of the public. In classic democracy there is no question that the information recently released by WikiLeaks should be routinely open. While that might make the work of government at times inconvenient, this type of democracy is the safest and least oppressive form of government we have so far discovered.

The alternative view of democracy, now prevalent de facto, is the democracy of the management firm. The state is governed like a large public firm. Political parties are management consultancies bidding for contracts to run the firm for a number of years. Elections are the general meeting, where citizens vote one share but large investors (businesses) vote according to their share of the economy. The role of the media, if it’s not the firm’s own newsletter, is to carry advertising. In this kind of democracy, the management firm, once hired, is allowed and expected to work behind closed doors. Their performance is judged only by aggregates, such as economic growth. Citizens are certainly not routinely informed, and have no say unless some investor lobby (large business interest) feels that the management performs poorly and calls for an early general meeting. If that is the democracy we have, WikiLeaks is wholly irresponsible and out of place.

Which type of democracy do you think we should have?