Posted tagged ‘europe’

Will America Rise from its “Comatose” State?

December 5, 2016

In view of Trump’s Victory at The Elections, I’m republishing the following discussion between me and an American for the readers of this blog.  

By Con George-Kotzabasis

A reply to a very clever American Open Salon

The Global Credit Crunch and the Crisis of Legitimacy

By RCMoya612

RCMoya, after your excellent and resplendent analysis I feel, if I captiously quibble about few points, like a bat squeaking in the dark. First, inequality might have “continued its forward march” but I would argue that it did so on a higher level of general economic prosperity in America following the up till now unassailable historical paradigm of capitalism and free markets that has made the poor ‘richer’ in relative terms, as Amartya Sen has contended.

Secondly, America’s “hectoring and ignoring” has its counterpart in Europe and in other continents whose countries were strong allies of the US during the Cold War but with the collapse of the Soviet Union have reappropriated their independence both geopolitically and culturally and expressing this in their own hectoring and ignoring against America, thus continuing the irreversible law of the political and cultural competition of nation-states.

Thirdly, I would argue that as long as America continues to be the centripetal force attracting the “best and the brightest” to its shores and not stifling the Schumpeterian spirit of entrepreneurship and “creative destruction”, it will be able to rise again even from the ashes of a comatose state and will continue to be in the foreseeable future the paramount power in world affairs.

And fourthly, the rejection by Congress of the funding plan that would have a better chance than none to prevent the economy from collapsing was inevitable in the present political climate where reason cannot compete with populist emotionalism and when a swirl of weak politicians, like Nancy Pelosi, and, indeed, Barak Obama, are its ‘slaves’. Only by cleaning out these wimpish politicians from positions of power will the political narrative reassert its legitimacy.

RCMoya says


October 01, 2008 07:26 AM

Thanks for the points. Interesting thoughts.First, I’d be careful in praising the ‘unassailable historical paradigm’ of capitalism and free markets. That has never really been the case elsewhere in world–including Japan and Europe, and definitely not in the third world–and yet that has not stopped those countries from reaping the benefits of a globalised economy. Simply put, capitalism may have been successful–it is–but it is not the case that completely ‘free markets’ have played a central role in the enrichment of advanced economies. That was probably the result of a misleading analysis (an altogether too cheery one at that) of Adam Smith’s ‘invisible hand’–which has monumentally failed more than once since the 1980s.

Second, Europe may have been an American vassal in the early parts of the Cold War–and yet still managed to create economic structures that were different from the United States. Britain, France and Germany have had distinct economic approaches–and that’s to say nothing of more interventionist Scandinavia–and in all of these countries (save for the UK) the post-war years were considered an extraordinary period of growth.You’re probably right that we’re now re-entering a period of political and cultural competition between states. I think this is a good thing, though it’ll take some time for Europeans to get used to the idea of a weaker America.Your third point is probably concedable…though only to a point. The ‘best and the brightest’ only go to America because of its perceived economic vitality. Take that away and there’d be less of a reason to head over. Also, buying into the ‘Americans are so entrepreneurial’ myth is rather problematic–because some European states, for example, have a greater slice of the economic pie coming from small and medium-sized business owners than America, land of the corporate shopper, has. Maybe it’s the contrary situation at present: maybe Europeans have ‘stifled’ entrepreneurialism here…and in any case releasing it would help, not hurt it.

I’d warn that nothing lasts forever, that nothing is ever guaranteed; if America’s financial system DOES go under even further America’s future role as a power would be substantially jeopardised.Your last point starts off well…until you reveal your partisanship. The Democrats certainly don’t have a monopoly on forceful politicking, to their detriment. I would argue that their greatest weakness is in their ‘social democracy light’-style of policies.Yet, all the perceived ‘strength’ in the world hasn’t made the belligerence of the Reagan-Bush-Republican era any more palatable to the world–and, in fact, has in the longer-term probably weakened America considerably.Strength alone cannot substitute for pragmatism, intelligence and good policy.

Kotzabasis says

OK, but you have to answer the intruding historical questions under what economic system Japan and Europe developed and which was the motor of the globalised economy? One would be silly to say that capitalism is an ‘absolute monarch’ and free markets are the ‘Sun King’ of economic development. But we are talking here about basics and not the sometimes necessary state intervention which has been merely, if you allow me to use this metaphor, a changing of an occasional punctured wheel (excepting the present situation) of an omnibus that has been running quite well for a long time on all rough terrains.

And you have to be consistent with your own logic, if you accept the reality of a globalized economy, as you do, which was the offspring of a long gestation starting in the 1980s, how can you imply at the same time that this globalized economy was begotten by the “monumental” failure of the 1980s? The question of Europe is what cemented more the “economic structures” of Europe. Was it the working spirit of capitalism or the working spirit of socialism? And if a mixture of both is your obvious answer, I’ve to remind you that mixtures are not equal and on the scales of economic development capitalism continues to ‘tilt the scales’ in its own favour contra socialism, and that also applied to your economic model in Europe. Perceptions do not have a long life and for more than a hundred years now America continues to attract the best and the brightest on its shores. So its economic vitality must have more solid grounds than perceptions. Again you are inconsistent with your own logic; if the best and the brightest are in America, as you concede, then your “Americans are so entrepreneurial” cannot be a “myth”.

Needless to say “nothing lasts forever and… ever guaranteed” since man’s fate is to live and cope in a world of uncertainty.Lastly, I’m surprised that you consider my judgments on person’s characters, in this case of Pelosi and Obama, and on political parties as being partisan. Under your criterion only a person who made no judgments would be absolutely impartial. The facts are that the Democrats have cut their sails to the populist wind and are running their campaign on the emotional hate and animadversions many Americans have for the Bush administration and by association the Republicans. “Pragmatism, intelligence and good policy are the offspring of strong genes.

Marxistoid Economists Consider Bankrupt Left as Saviour of Greece

July 24, 2013

Fair is foul, and foul is fair, /Hover through the fog and filthy air (Witches of Macbeth chanting their cursing ditty)

By Con George-Kotzabasis— July 04, 2013

In their article published in the New York Times  on June 23, under the title “Only the Left Can Save Greece”, the two politically ‘pinkish’ economists teaching at the University of Texas at Austin, James Galbraith (the son of the famous John Galbraith) and Yannis Varoufakis, argue that neither America nor Europe should fear an ascension to power of the Left wing party of Syriza in Greece on the contrary, they should applaud it, as a government of the left would reverse the defective policies of the European Union that have been so destructive to the Greek polity and to its people as well as to many other European countries.

The two economists were shocked at the closure of the Hellenic Broadcasting Corporation (ERT) and denounced the Samaras government for its authoritarian and undemocratic action, of depriving Greeks of a public service of information and entertainment that was invaluable to them. The government however closed the public broadcaster temporarily and planned to replace this cesspool of administrative corruption, opacity, and cronyism, for which each Greek household had to pay a levy of 50 Euros per year, with a new public broadcaster not run by the government but by personnel chosen on meritocratic criteria and professionalism that would upgrade the service provided to Greek viewers and at a cheaper price.  Galbraith and Varoufakis, in their support of this corrupt and inefficiently run public entity  and demand of its reopening, found a kindred political ally in the leader of the Marxist party of Syriza, Alexis Tsipras, who had committed himself to re-open with all its personnel intact if he became prime minister. Tsipras’ crocodile tears for the public broadcaster, which in the recent past had condemned as being the mouthpiece of the extreme right, exposed his blatant political opportunism in this U-turn from hate to love for ERT. But they found him also to be an invaluable ally to their economic proposals of how to lift Greece out of the crisis. .

Galbraith’s and Varoufakis’ solution to the crisis springs from the growing of a hundred blooming flowers in the luxuriantly prodigal Keynesian garden. Their package of Keynesian remedies consist of “a kind of European equivalent of America’s post-crisis Troubled Asset Relief program; an investment and job program; and a European initiative to meet the social and human crisis by  strengthening  unemployment insurance, basic pensions, deposit insurance, and the expansion of core public institutions like education and health.” Notice, that all of these remedies are to be financed by  government and taxes from private enterprises. How then government can finance all these things when its coffers are empty and depend on European loans to pay for primal services such as schools, hospitals, and public servants, and when private enterprise has no incentive to function or remain in an unstructured economy that has been for many years inimical to it? And the two economists do not make  a pip about the necessity of private foreign and domestic investments that are the only economically sustainable and viable investments that can initiate growth and economic development that are the sine qua non that will pull Greece out of the crisis. And that these investments can only be made under the incentive  of structural economic reforms that are favorable to private enterprise, and strict fiscal policies that perforce can only be accomplished by hard measures which are inevitably painful to the general populace.

Since neither the political color nor the gray matter of Galbraith and Varoufakis were able to convince serious politicians and economists in the Euro zone, or Greece, of the correctness of their Keynesian mirage as a solvent to the European and Greek crisis, they found in the fiasco leadership of Syriza, of Tsipras, the intellectual salvation of their by now withered flowers of their Keynesian remedy. (This speaks volumes about the value of their proposals in that they found their support and cerebral salvation in the intellectual and moral bankruptcy of the Greek left.) Tsipras bereft of any tenable economic policies, and rationalizing this vacuity in policy making by populist rhetorical denunciations of the policies of the Samaras government, eagerly embraced the policies of Galbraith and Varoufakis, which ideologically are cognate to his own as a ne plus ultra government interventionist himself, thus giving to his own policies some sort of academic prestige from this ‘south of the border’ economists that he is unable to get from more serious experts in the profession. (But beggars cannot choose.)

Indeed, the policies of Tsipras have their source in a variegated coterie of Marxists getting their inspiration from the flashing pan of Marxism, as the rising sun of the latter has long ago disappeared from the astral constellation of the universe, never to rise again. Tsipras, as a true believer of the great man, Karl Marx, attended the Marxist organised Subversive Festival of Zagreb in Croatia last March, which was likewise attended by both Galbraith and Varoufakis. Indeed, the former announced with pride his attendance of the Festival, in a lecture he gave to socialists in the German Parliament last week, where the gladiators of the great imperator Karl Marx had gathered together from all over the world and rushed into the arena of the Amphitheatre of Zagreb, with nets in one hand and swords in the other, to fight and slay the wild animals of capitalism, which their predecessors in the socialist camp, even better armed with technological weapons, had failed to slay. Moreover, Tsipras was an aficionado of Chavez and had visited Venezuela last year with the hope of getting financial help  from its president with an implied commitment of making Greece a protectorate of Venezuela, if not the European Venezuela. And yet Galbraith and Varoufakis in their political naiveté write in their article in the New York Times that the Americans have nothing to fear from a Syriza government.

Galbraith and Varoufakis, like the witches of Macbeth cursing the Samaras’ government as foul, undemocratic and authoritarian, slavishly implementing the dictates of the European Union, and as economically incompetent, are predicting its downfall while stirring the pot of their quackish remedies which nobody will ‘buy’ other than Tsipras. Meanwhile, Samaras wisely, assiduously, and decisively is transforming Greece within the short span of one year by an unprecedented series of structural reforms that are increasing competition–Greece is in the 22 position internationally for the first time–reducing the bureaucracy, especially its inefficient part that was an obstacle to investments, and planning to make it more efficient on meritocratic standards, changing the economic milieu by making it friendly to business and investments, and leashing the arbitrary and ruinous power of unions which for many years had prevented foreign investments in the country. Moreover by his virtuoso performance in the negotiations with the European Union and the IMF, Samaras  has blunted some of the austerity measures that have been a major factor in obstructing the re-igniting of the economy and artfully polishing these measures that will put Greece on the track of development. He was able to convince the leaders of the EU to provide Greece with extra funds for employment programs that will materialize by the beginning of 2014, more resources from the European Bank of Investments so they can be ploughed into small and medium sized businesses. He has started building Autobahns that have created 25,000 new jobs and he has enticed the economically hard thinking Chinese government to invest 350,000 million Euros in the port of Piraeus thus making it the entrepot of commerce between south-east Asia and Europe. ( The European Council announced that the port of Piraeus will be named as the capital port of Europe for 2015.) Also the Chinese are interested in making more investments in the infrastructure of the country, especially in its railway network by which they will transport their goods into Europe. But the most important and greatest achievement of the Samaras’ government up to this moment has been the building, through Greece, of the conduit by the Trans Adriatic Pipeline (TAP) that will convey natural gas from Azerbaijan to the heart of Europe. TAP will invest the huge amount of 1.5 billion in Greece and will generate 12,000 jobs by 2014 in the country. This, according to one authority in the energy industry, has been the personal accomplishment of Samaras who in his visit of Azerbaijan and meeting with the Prime Minister of the country three weeks ago, convinced the latter that it would be more efficient and economically cheaper to build the conduit through Greece instead of through Bulgaria and Romania, a project which the international consortium backing it was favorable to win, and lost it only, with the intervention of Samaras. Furthermore, this enormous investment, behind which one of its investors is the global gigantic company BHPBilliton, engenders confidence to other investors that Greece is about to pull itself out of the crisis, and hence, encourages and attracts more investments into the country and thus will increase employment which is one of the major challenges of the government.

The government under the statesmanship of Samaras is determined to pull Greece out of the crisis and not to squander the sacrifices Greeks had to make for the economic, political, and cultural Renaissance of the country. The great, fair achievements of the Samaras government, in an unprecedented short span of time, are depicted and cursed as foul by the two Marxistoid economists, James Galbraith and Yannis Varoufakis. Ignominy, loss of intellectual honor, is of no concern to them.

I rest on my oars:Your turn now 

A Response to Professor Varoufakis’s Thesis that Greek Crisis is not Home-made

October 31, 2012

By Con George-Kotzabasis

Professor Varoufakis, we have crossed swords before several times on your website but no blood was spilt. Your thesis delivered with panache was highly interesting, provocative, fascinating, and alluring, but from a negative point of view. Like an exotically seductive woman flaunting dissolutely her charms but refuses to be seduced. You likewise refuse to see or acknowledge that your proposition is made-up from a selectivity of facts and by leaving other facts out you let your guard down as these neglected facts will release the Aeolian winds to demolish your argument in one wind gust. The fact is that  there are many countries within  Europe that are not in crisis, such as Sweden, Denmark, Holland, Luxemburg, Austria, and Finland, not to mention others. My question therefore is why the European and global crisis did not also embroil these countries in it as well, as it did with Greece and other southern European countries? Why the general predatory capitalist practices of the dominant countries of the Eurozone affected only some countries of the EU and not others?

The reality is that government dirigisme and its ill-fated profligacy of over spending on borrowed funds was the cause of the crisis that engulfed those countries of the south, and especially Greece, within the whirlpool of sovereign debt. The virus of the malaise did not have exogenous origins, as you wrongly suggest, but originated from the mal-practices of socialist governments and followed inevitably by conservative ones—how else could they have a chance to be elected in government?—with their fatal predilection for big government, and Greece was the example par excellence.

But as we all know a crisis is a developmental process and during its course the remedies applied to it particularly when they are wrong can exacerbate it instead of curing it. And as you correctly point out austerity without economic growth, especially in conditions of continued recession, is a recipe of disaster, as the statesman Antonis Samaras also pointed out two years ago. But it is a grave mistake to confuse the cause with the remedy and to build one’s case on the wrongness of the cures, as encapsulated in some of the policies of the two Memoranda imposed by the European lenders upon Greece, as the cause of the crisis in Greece.

In my judgement therefore your thesis that the crisis in Greece has exogenous origins and not endogenous ones is totally wrong and highly misleading. You are peddling shoddy goods wrapt-up in the dignified robes of academe hoping to make an easy but intellectually disrespectful sale. And the strength of your argument can be measured by the kind of opponents you have had in your debates up till now. None of them were real opponents and all of them were fellow travellers sailing with the compass of your ideological position. I remember when you met a real opponent to your thesis you banned him from your website, and I was rather surprised at the time that with your Kazantzakian character you would have debarred someone expressing opposing views to your own. But it is easy to be right when you hear only your own voice.

Also, your recycling theory from countries with surpluses to countries with deficits is in my opinion fundamentally flawed. What prudent investor would invest on a seat in the Titanic? Most of these countries that have incurred those bottomless deficits were and are economically uncompetitive and this was the primal reason why they were embroiled in this abysmal “balance of payments crisis,” as the eminent financial commentator Martin Woolf argues.

The crisis is profoundly complex to be fixed by tailor-made academic economic nostrums as your Modest Proposal suggests. It will be resolved by the method of science, i.e., by trial and error, and that is why, moreover, will not be without pain for the majority of people, after the grave and fatal errors committed by their past governments. The Schumpetarian principle of “creative destruction” will be the pivotal characteristic in this process of economic restructuring, and statesmen of the calibre of Antonis Samaras will play a decisive role toward its resolution.