Losing it

Are Greeks entitled to sympathy?

They may beat their chests on Syntagma square and throw themselves from the tops of high buildings, but to the global leaders in Washington or Brussels, the Greeks have no special entitlement to sympathy. Indeed, for the head of the International Monetary Fund, nothing about the plight of Greece provokes anything like her bottomless pity for the starving children of sub-Saharan Niger. “I have them in my mind all the time. Because I think they need even more help than the people in Athens.”

One might quibble that the source of this unflattering remark, Christine Lagarde, worked first as a global lawyer and then as a top economic official, neither of which professions necessarily exercise one’s finer moral senses. But on this issue, she has a point. What business do we have caring for the impoverished well-to-do when it is easier, and more ethically efficient, to ignore those who drop a bar or two on the middle of the ladder of riches? Instead, head straight for the bottom, where unstinting time and effort can be devoted to lifting up the truly destitute.

Two ripostes, however, come to mind when considering the comments made by Lagarde in her interview with The Guardian a week ago — an article that, believe it or not, was received by Athenians with the grace of an audience braying at the steps of the guillotine. The first would be to wonder how this excruciating pity and sorrow of the global elite has failed to translate into anything like a genuine commitment to ease the lot of the poorest: for every Gleneagles deal to double aid to Africa, made in 2005, there is a trade bloc on farm products, or some oil-drenched indulgence for a Third World dictator.

Second, even if Lagarde is right, we must still acknowledge and account for the morbid fascination that is generated by the slippage of those who were once rich, but who have since become exiles from the kingdom of material comfort and outcasts from the VIP lounge of life insurance. Moral philosophy can say what it likes. This is a source of endless fascination, theorizing, mystification, and occasional redemption (see for example Brazil, or, over a much longer historical cycle, China).

Of course, Argentina here plays an outstanding cameo role, providing an example not just of a fall from the top division of world prosperity, but also a potted re-run of the same rise and fall in the 1990s, and possibly nowadays a repeat of the same experience for viewers who arrived late last time. There are endless anecdotes to chew over. The image in Claudia Piñeiro’s novel on the disintegration of President Carlos Menem’s convertible idyll, Las viudas de los jueves, of an executive fired from his multinational post while the brochure for a holiday in Hawaii falls out of his briefcase is particularly telling.

It now appears that global economic life has seized the history of Argentina, and mass produced it for roll-out in a number of unsuspecting countries. Greece’s economy has now shrunk by a quarter, and no end to its contraction is in sight. Spain, as we learnt last week, has been so shaken by the bad loan crisis in its financial system that its net capital flight in the month of March reached 66 billion euros, a figure that is simple off the historical graph. Naturally, all the EU’s attention now bears down on Madrid, where the combination of mass unemployment, deepening austerity and impending bank collapse will either break the common currency, or hasten it to a new and untested format.

One solution being offered is raw and simple. “Will we Spaniards finally understand that we have been living on a cloud? That the welfare state which the left wants to maintain at all costs (when the only welfare it creates is Cuban or Soviet) was in reality a delusion,” asked the columnist José María Carrascal in the conservative daily ABC this week. “Spain is a poor country whose only natural wealth is the sun, which a lot of others have that too.”

Carrascal, as befits the Spanish right, goes on to insist the government proceed with its cherished plan to dismantle, rationalize and cheapen the land. And on one score, he is indubitably right. In terms of unit labour costs, the basic measure of how much is paid to get something made or done, all the suffering peripheral countries saw their competitiveness sunk by higher wages in the euro’s first decade, as compared to the pay restraint exercised in Germany.

From the premise of costs, it is a short step to diagnosing these countries’ problems as that of lazy, overpaid employees and profligate states. But perhaps, before the cost-cutters run amok and sweep away all middle managers and free schools, it is sensible to venture a bit further. Greece and Portugal are certainly weak, inefficient economies; they should never have entered the euro. Spain and Ireland, on the other hand, and as many orthodox economists agree, are paying with stringent public austerity for an outlandish boom and bust in private property finance.

How this happened has really very little to do with how much it costs to employ a gardener. Instead, it stems from a grandiose project, the euro, bringing in absurdly cheap money to artificially inflating countries. It is a complex story of mass hysteria about home ownership, unnatural economic confidence, cunning financial vehicles for concealing risk and a set of political leaders who could not say no to the materialistic euphoria of their constituents.

Maybe, as Lagarde observes, there is a not a lot in this hubris to feel compassionate about. Countries make mistakes, and move up and down the ladder. Their fault, however, was not living beyond their means. It was that they were blindly given the money to think this was normal.