4 July 2011 — The Real News Network
David Harvey: Greece should call Europe’s bluff
David Harvey, a leading theorist in the field of urban studies whom Library Journal called “one of the most influential geographers of the later twentieth century,” earned his Ph.D. from Cambridge University, was formerly professor of geography at Johns Hopkins , a Miliband Fellow at the London School of Economics, and Halford Mackinder Professor of Geography at Oxford. His reflections on the importance of space and place (and more recently “nature”) have attracted considerable attention across the humanities and social sciences. His highly influential books include The New Imperialism; Paris, Capital of Modernity; Social Justice and the City; Limits to Capital; The Urbanization of Capital; The Condition of Postmodernity; Justice, Nature, and the Geography of Difference; Spaces of Hope; and Spaces of Capital: Towards a Critical Geography. His numerous awards include the Outstanding Contributor Award of the Association of American Geographers and the 2002 Centenary Medal of the Royal Scottish Geographical Society for his “outstanding contribution to the field of geographical enquiry and to anthropology.” He holds honorary degrees from the universities of Buenos Aires, Roskilde in Denmark, Uppsala in Sweden, and Ohio State University.
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in New York. On Wednesday, June 29 in Greece, the Greek Parliament passed a series of austerity measures as thousands of people outside the Parliament buildings protested against exactly that. Wall Street Journal was rather happy, saying that investors around the globe thought this was a good short-term fix. But was there any choice for the Greek people other than accepting these austerity measures? And was defaulting as bad for the Greek people as their prime minister said it would be? Now joining us to talk about all of this is David Harvey. David is a distinguished professor at City University of New York, director of the Center for Place, Culture and Politics, and author of numerous books, including The Enigma of Capital and the Crises of Capitalism. Thanks for joining us.
DAVID HARVEY, DISTINGUISHED PROFESSOR, CUNY: Thank you.
JAY: Alright. So did the Greek people have any choices here?
HARVEY: Yeah, I think they did. I think they should have defaulted, simple as that, and they should have done it earlier rather than later.
JAY: What would have been the consequences if they had?
HARVEY: Well, the consequences are going to be awful whichever way you look at it. What they’re doing right now is awful. There’s going to be no economic growth in Greece for about the next 10, 15 years, the standard of living’s going to decline, and at the end of that, they’re still going to have to default. So the only question is when they’re going to have to default.
JAY: Okay. So the contrary argument is: they don’t default, they’re able to get loans because they have more loans, and because the government gets out of the way there’s now more capital freed up for investment, and so on and so on. So what’s wrong with all that? And growth will emerge.
HARVEY: They’ve got more loans, but on the other hand, the standard of living is going down, the demand is going down, the jobs are disappearing, and entrepreneurial people are leaving the country in droves. So, you know, the future of Greece is very, very dismal the way things are right now, as is the same case in Ireland, where, you know, they’ve been through this and they haven’t revived growth at all. So you’re not going to get any revival of growth. And, actually, I don’t think the real question is what can the Greeks do. The real question is why is it that Europe is not actually responding in a much more responsible kind of way.
JAY: When it comes to this issue of demand, which means higher wages so people can actually buy stuff, which in theory grows the economy, when you look at the document that came out of the Toronto G-20, it seemed that the leaders of the world understood that when it came to China.
JAY: There they said, oh, there should be higher wages, oh, there there should be more social safety net, oh, there you should increase demand. Well, if they understand that for China, how can they not understand that, if you do this in Greece, you aren’t—how are you ever going to be in a situation to really pay off debts?
HARVEY: Because what’s going on both in Europe and in the United States is a political project, not an economic necessity. And the political project is about feathering the nests of the very, very rich at the expense of the very poor. The Republican Party in this country has done this—in this country has done it several times before. You run up the debt and then say, savage all the social programs. That’s what Reagan did. That’s what Bush has done. And what do we see? Tremendous increases in inequality. So it’s a class project to actually gain more and more class power for the very ultra-rich at the expense of the mass of the people.
JAY: I can kind of understand it if I was a multibillionaire in the United States, I can kind of understand the logic, because even if there’s not much demand here and the economy continues to have, you know, real rates of 18 to 20 percent unemployment, I’m still making enough money here, and boy, can I ever make money elsewhere in the world right now, so who really cares what happens here anyway. But if I’m a European banker or politician, do I really want such a—I hate to use the word, but to turn Greece into a complete basket case economically? But that seems to be what they’re doing.
HARVEY: Yes. But, actually, since the euro was introduced, the amount of German trade with Greece has shot up. And, essentially, German industry has destroyed all Greek industry over the last, you know, 15 years, that sort of period.
JAY: The great German export story.
HARVEY: Yes. And, of course, Germany’s doing very well right now. Partly, again, it’s exporting to China, and China’s doing what you’re saying, it’s growing. So there you have a situation where Germany’s doing okay. Now, what would be a responsible thing to do on the part of the Germans would be to do what the United States did to Germany when it defaulted after World War II. I mean, basically, the United States bailed Germany out. Free.
JAY: Not with demands for massive austerity measures.
HARVEY: No, no. Not at all, not at all. Exactly the opposite, in fact. And it actually built German growth. What the Germans should do is the same as the United States did to them way back then. And, actually, a very interesting article just came out in Der Spiegel pointing this out, that actually the country that’s defaulted more times in the last century than any other is Germany, and each time they got bailed out, and particularly when—with the US bailout after World War II.
JAY: Now, we interviewed, you know, a progressive Greek economist, and he was saying that there’s a section of the Greek left which was not in favor of default, that even though they thought this whole thing was terrible and they didn’t agree with the austerity measures as presented, that default would be so destructive to the Greek people that you couldn’t default; there was just too much suffering [crosstalk] default comes.
HARVEY: Well, it’s a downward spiral. Downward spiral. You know.
JAY: But they must know this.
HARVEY: Well, they do, but it’s a downward spiral for the economy, but it’s an upward spiral for the very rich. I don’t know if you’ve seen the data recently. In this last recession, over the last two or three years, the rich have improved their position.
JAY: In Greece. Certainly here.
HARVEY: Well, throughout the whole world, actually. And in Greece, of course, the very rich people in Europe have got all their money out in Europe anyway. They haven’t got it in Greece anymore. So they’re doing fine.
JAY: So from the point of view of the Germans and the German bankers and the European politicians, what’s their long-term vision of Greece? I mean, to have this kind of important country within Europe, not one of the biggest economies, but still an important country, to go into such deep recession for a decade, which seems to be the only possibility here, they seem okay with that. Is it partly just they won’t let a country default and get away with it, they have to just kind of prove to everyone, you can’t get away with not paying off your debts?
HARVEY: Well, the big holders of Greek debt are the French and the German banks. And so, if the Greeks did default, then those are the—those banks may well go under, and then Greek—then the German government or the French government would have to bail out their banks. So you can see the game that’s being played here. You rescue the banks all of the time, and then, you know, let the people take the hit [crosstalk]
JAY: And the other big issue is the collection of taxes.
HARVEY: Yes. Yes. And there’s no question that the upper classes have not been paying taxes [crosstalk]
JAY: And in the austerity measures that have been forced on Greece, how much of those measures includes you’d better collect taxes from the rich? I haven’t heard too much [crosstalk]
HARVEY: No, you don’t hear too much. But it’s the same, you know, almost everywhere you go. You don’t hear too much at all about, you know, what’s going to be done for the very affluent and the very rich and those who can afford it. And, of course, in Greece it’s very difficult to catch them, ’cause, like I say, most of their money is in Europe anyway, and who knows exactly where they’ve got it. So it’s very hard to track them down. So it’s just—you know, it’s the civil servants and it’s the pension funds and unionized employees who are going to lose all of their assets.
JAY: And then the other accusation or charge is that the Greek people, especially unionized workers, that their pensions and the age at which they retire and things like that are simply more than the country can afford.
HARVEY: Well, those are the kinds of stories that get told around in Europe. If you start to compare country by country, it varies a lot. They’re not markedly, you know, better than, say, the French and so on.
JAY: The counterargument would be that France is more productive, it can afford it, and the Greeks can’t.
HARVEY: Yes. But, again, the German system is quite generous, and particularly over unemployment benefits and so on it’s very, very, very generous.
JAY: How much does this push by Europe on Greece have to do with the elites of Europe telling their own working classes, you are not going to defy these austerity measures, and look what happens to the Greeks, and don’t think we’re going to give in to you, whether it’s in London, in Paris, or somewhere else?
HARVEY: Oh, absolutely I think that’s, you know, very much what it’s about. I mean, it’s also true in the United States as well that it’s disciplining labor, disciplining particularly the public sector employees that you see a strike on in London today, and we’ve seen what happened in Madison, Wisconsin [incompr.] right wing right [incompr.] across Europe and right across North America [crosstalk]
JAY: Yeah, we saw this at the Toronto G-20. This was ascending on the global stage, ’cause all the leaders were there. Canada gets to say, well, here’s what we’ll do when protesters don’t like these policies.
JAY: Well, I guess rationality is not something we’re seeing anywhere in the globe when it comes to these kinds of pushes.
HARVEY: Right. No.
JAY: Thanks for joining us.
JAY: Thank you for joining us on The Real News Network.
End of Transcript
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