A just solution to the disaster enveloping Greece would involve a massive write-down of Greek debt. That is not going to happen, so in the upcoming referendum the Greek people are faced with a choice between two horrible alternatives. A refusal of the terms demanded by the Troika (European Union, which means mostly Germany; the International Monetary Fund, and The European Central Bank) would risk economic chaos if not total collapse in the very near future. Acceptance would mean continuation of depression conditions for the indefinite future along with a humiliating, explicit cession of national sovereignty.
Who’s to blame for this mess? It is true that responsibility for the origins of the crisis belongs with Greek governments of both left and right, as Kevin Drum explains:
They borrowed way too much when their economy was booming; they refused to modernize their infamously porous tax collection, especially toward the rich; they lied through their teeth about their finances for years; and governments of both right and left have doggedly supported an insanely bloated public sector….
But even with all these transgressions, the Greek fiscal situation was far from disastrous. The conversion of “medium-sized fiscal failings” into a nightmare resulted from a complex of factors, among them: the straitjacket of a common currency, the Euro, which prevented Greece and other countries from using monetary policy for economic adjustment; the greed and selfishness of Europe’s economic hegemon, Germany; and above all, the dogmatic attachment of the powers that be, again under German leadership, to austerity economic policies that seek to cure the patient by making him sicker. The best short piece that I’ve seen for understanding the arc of the crisis is by Joseph Stiglitz, who faults the Troika for refusing to accept responsibility for the disaster it has inflicted on Greece, and instead persists in a stance that is unnecessarily, deliberately punitive:
…[I]t’s not about the money. It’s about using “deadlines” to force Greece to knuckle under, and to accept the unacceptable – not only austerity measures, but other regressive and punitive policies.
In short, it’s blackmail–the blackmail of a whole country.
But sometimes blackmail victims see no alternative to yielding to the blackmailer’s demands. So, what should the Greek people do in the upcoming referendum? Stiglitz and Paul Krugman have both suggested that a “no” vote would be the lesser of the two evils. I wouldn’t presume to make that choice for the Greeks. I do hope they vote no, because in doing so they would render a valuable service to a cause that is far larger than Greece. The cause would be resistance to Neanderthal economic policies that have denied not just Greece, but most of Europe a really healthy recovery from the 2008 financial crisis. As Krugman puts it, a “yes” vote
…would empower and encourage the architects of European failure. The creditors will have demonstrated their strength, their ability to humiliate anyone who challenges demands for austerity without end.
But I wouldn’t blame anyone for choosing not to become martyrs. The Greeks could judge that their immediate survival is too urgently at risk to think about the longer term, much less the broader cause.