Tip:
Highlight text to annotate it
X
PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Washington.
In September 2011, at a time when the sovereign debt raiders, as some people call them, were
focusing on Italy as their next target, the European Central Bank sent a letter--supposed
to be secret, but it was leaked. And in this letter it gave very direct instructions, you
could say, to then prime minister Berlusconi about privatization, lowering pensions, changing
hiring and firing, regulations and laws--all things one would think should be the outcome
of the political process within Italy. So what is this about banks telling countries
how to govern themselves?
Now joining us to talk about this process in Europe, and also how this shows up in the
United States, is Gerry Epstein. Gerry is the codirector of the PERI institute in Amherst,
Massachusetts, but today he joins us from New York. Thank you for joining us, Gerry.
GERALD EPSTEIN: Thanks for having me, Paul.
JAY: So talk a bit about the significance of what happened last September, the memorandum,
and what's happened since in terms of these quote-unquote "technocrats" becoming the leaders
in Italy and Greece, and the role of the banks in this process.
EPSTEIN: Yeah. We have this trend now where instead of democratically elected governments
controlling these countries, so-called technocrats, the central bankers, are coming in, taking
over as the prime ministers of governments in Italy, in Greece. In Italy we have Monti,
and in Greece we have Papademos. These are supposed to be neutral arbiters of economic
policy, but in fact are mostly doing the bidding of the large banks. And the other European
countries, especially Germany, they want austerity.
And what's amazing to me about is they're going way beyond any kind of narrow policies
with respect to debt repayment, monetary policy. They're going into the deep core of social
and economic policy in many of these countries. And that letter from the central bank, the
European Central Bank, that you described went to the highly contested issues that have
plagued Italy for many years about labor laws, privatization, and many others.
JAY: Well, let's look at some of the things that they're demanding in this memorandum
and more generally, putting pressure on these governments and others. And, of course, the
United States, we see very similar things, where state governments have been elected
through a supposed democratic process--I suppose people have a lot of questions about just
how democratic is, for a lot of reasons, including how much money can get thrown at these elections
now--but somewhat similar policies being demanded. So, first of all, there's this issue of privatizations,
which seems to be one of the main objectives during this crisis, to get privatizations
through. So what does that look like in Europe?
EPSTEIN: Yeah. In Italy, the letter from the European Central Bank to the Berlusconi government
said, you have to pursue privatization of public services. And this includes water,
privatization of water. And, in fact, just months before, there had been a referendum
in Italy about privatization of water, and the voters had rejected it. And now the so-called
independent technocratic European Central Bank is coming in and telling them to overthrow
what the people have decided and engage in privatization.
Another important goal of these kinds of so-called technocratic policies is to gut labor protection
laws. In Italy there are strong protections for--in terms of hiring and firing. And what
they're trying to impose are these so-called labor flexibility, with the idea that this
is going to generate more economic growth and more employment. But as David Howell from
the New School for Social Research, Dean Baker, and others have shown, labor flexibility does
not lead to more employment and more economic growth; it just leads to lower wages and higher
profits.
JAY: The other thing that seems to be very much in target or focused on is pensions in
all countries, the idea, I guess, of lowering pension age and qualifications. Why is that
such a big issue in Europe?
EPSTEIN: Well, it's such a big issue in Europe because that's--for two reasons. One is it's
a big liability of the government, and so there is a big--a high degree of budget impact
on that. But the second is trying to undermine the power of labor and forcing workers into
the hands of the banks. So if you reduce public pensions, not only do you make it so that
workers have to take any job they can get to support themselves and work longer, but
it also gives more room for private pension plans. And as we know from the debate over
privatizing Social Security here in the United States, that's been one of the long-term goals
of finance. Indeed, the general push of all of these policies is to gut the welfare state
as much as policy and return all of these kinds of protections to profit-making opportunities
for banks and other private companies.
JAY: Is part of what's happening here--if you look at sort of the underlying economic
forces at play here, I mean, one part of it is--and we've talked about this on The Real
News quite a bit--the willingness and desire of various elites and financial elites to
take advantage of the crisis to undo social policy, New Deal type things in the U.S.,
welfare safety net in Europe, and all that, and take advantage of sort of the weaker hand
of labor and people during this crisis is one thing. But is there also another part
of this, which is there's just so much capital with nowhere to go, that because of this unequal
distribution of wealth and income, this massive amount of capital in very few hands, and the
real economy not a great place to invest in, so what you need to do is pick apart what's--there
is of the public sector as a place for this capital to go to? Is that part of what's going
on here?
EPSTEIN: Yeah, I think that's a good--I think that's an important aspect. They're trying
to destroy all of the publicly provided markets to find new markets in, particularly, a period
of slow growth. And in a particular a period when they're actually pushing austerity, the
size of the overall pie isn't going to grow much, so they have to chip away at previously
protected parts of it.
Part of what is so evil about this whole approach is the transformation, the distortion of language
that is part of it, the use of the term technocrat to hide the fact that Trichet, that Monti,
Draghi, all of these people have very, very close ties to the big banks. Most of them
worked at one time or another for Goldman Sachs or other big financial firms. We have
the same kind of thing, of course, in the United States, where we had Larry Summers,
who works for the financial sector and makes millions of dollars doing so, being put forward
as a quote-unquote "technocrat". We have the Federal Reserve that has engaged, as you know,
in all kinds of backdoor bailouts of the financial sector again seen as sort of a technocratic
solution, but we see the revolving door between the Federal Reserve and the private financial
sector, using the term fiscal consolidation for gutting public services and generating
unemployment. All of this is Orwellian language, which is meant to obscure what is really going
on, which is the takeover of democratic control, which, as you said, is already undermined
by money, and putting it firmly in the hands of the financial sector.
JAY: Yeah. I love this term, technocrat, because it gives this sense that there's this objective
problem with an objective set of policies, and the whole society needs to take its medicine,
but politicians are too vulnerable to public opinion, so you need some technocrats that
are just going to pragmatically do what needs to be done, as if all of this is above interest
and has nothing to do with the financial sector. I mean, you're right. It's pure Orwell.
EPSTEIN: And in The Financial Times, there was an article recently talking about the
profile of Papademos, the prime--the technocratic prime minister there, saying that he was heading
up a caretaker government, you know, as if the Greek people are a bunch of infants and
they have to--we have to wait till they can grow up and exercise their democratic rights.
Part of the frustrating thing is that these kinds of elite pushes to control these democratic
systems are possible because the left is so divided in the European countries, and divided
here in the United States as well, of course. Part of the left in Italy, for example, didn't
protest when this letter came out, because they were so focused on just trying to get
rid of Berlusconi, and they've accepted Monti as a prime minister because they were just
so happy to get rid of Berlusconi. So I think there's a great need for the left forces in
all of our countries to really unite to oppose these kinds of policies. We have to break
this whole lock-hold of anti-democratic structures that have been built up by the elites under
neoliberal policies over the last 20 years, so that once we have more democratic elections
and vision, we actually have the ability to implement them.
JAY: So I guess at the moment the issue is if people want to take this up, they need
to hit the streets.
EPSTEIN: Not a bad idea.
JAY: Thanks for joining us, Gerry.
JAY: Thank you for joining us on The Real News Network.