Greece & Germany: Things tend to get worse before they get more worse

Cutting your nose off to incentivise your face to implement much needed structural reforms.

The young man stood up.
“Mrs. Bylaxis came in this morning,” he said. “She said the proverb you did for her last week has stopped working.”
Didactylos scratched his head.
“Which one was that?” he said.
“You gave her ‘It's always darkest before dawn.’ ”
“Nothing wrong with that. Damn good philosophy.”
“She said she didn’t feel any better. Anyway, she said she'd stayed up all night because of her bad leg and it was actually quite light just before dawn, so it wasn’t true. And her leg still dropped off. So I gave her part exchange on ‘Still, it does you good to laugh.’ ”

Terry Pratchett – Small Gods

Noah Smith points out that there’s an oft overlooked argument in favour of austerity. It’s a stupid one, but that doesn’t mean we shouldn’t take it seriously. The claim is that stimulus will work, but that is bad because it will delay “necessary” reform. This idea has a long heritage and it’s always been a good idea to mock it. I’ll try to provide some constructive examples against it.

First of all, let me say, I am a dedicated can kicker. Karl Smith is right: do you realise that everyone you know someday will die? The future is uncertain, so simply making a bad thing happen later is valuable because we might not be here. Problems sometimes solve themselves, and erstwhile solutions sometimes become problems. Pretending to have the foresight necessary to know when to say “you now must suffer now so that they then do not” is insulting.

I also think the idea is bad on its own terms. Crap policy begets crap policy for a number of reasons: most mundanely, I’d posit a correlation between following good short-term and good long-term policy. If a government is adopting crippling austerity now, it is more likely, not less, that they’ll be adopting bad long term policies.

But most importantly, this “butter tomorrow, sawdust today” policy has been tried before and sown disaster. Here are a few examples:

  • Hayek thought the depression would force down wages by brute force and trigger the end of unionised workers. He thus resisted efforts to end it. The result? Starvation! Smoot-Hawley! Nazis! Bet he felt pretty silly about that one.
  • He's in good company. Lenin in the 1900s argued that mitigation of the worker’s condition would delay the inevitable revolution and that nothing should be done to mitigate it. He actually got that one right. This time it was the Tsarist industrialists who must have felt silly (as much as dead people feel silly).
  • The little depression seriously derailed efforts to tackle climate change. Short-term suffering crowds out the long-term thinking needed to make policy effectively. Extending austerity makes it harder to talk about long-term sensible sacrifices because you’ve less to sacrifice.
  • As Ben Friedman argues “History suggests that, in the past, a rising standard of living has promoted tolerance for others, commitment to economic opportunity, and democracy. But stagnating incomes due to inequality can lead to the opposite outcomes.” Suffering makes people worse human beings and worse human beings make worse long-term policy.

To underline the point: the worst case scenario is Nazis. It is such a bad idea you can legitimately say “no because Nazi.” I can think of at least one positive counterexample too, also from Germany. As Scott Sumner points out, their labour market reforms of the mid-2000s took place against the most benign global and domestic macroeconomic circumstances imaginable. They were so successful that German unemployment continued to sink lower even as Europe was mired in depression.

Coincidentally, just as Noah Smith laid out the argument hypothetically, Steven Pearlstein comes along and positively endorses it. Only austerity and suffering can save Greece apparently. By embracing  short term suffering interest-groups can be defeated and illogical and burdensome regulations can be removed. Only brave short-term sacrifice can engender long term growth.

So how is Steven’s strategy paying off? Yep, same as last time, fucking Nazis again.

Even so, Greece is one of the few countries which spent the late 20th century moving from a middle-income to a high-income country. A round of applause please before you lecture them. Their politics and economy are dysfunctional and that will make them poorer, but it doesn’t need them to be in a depression. Being poor is bad, but being unemployed is evil.

Of course if unemployment is an evil, using unemployment as a punishment for being poorer than optimal is really evil. If the Greek economy is dysfunctional they should have higher inflation and lower real incomes, not suffer a manufactured unemployment crisis. It’s not just stupid and evil, it’s perverse.

It is a bad idea that policy should be actively destructive in the short-term to act as a bargaining tool or cudgel to implement a certain pet project. Suffering is bad, it makes us worse people and worse people make worse policy. If your leg does fall off, laughing isn’t the worst thing you could do; you could listen to these bozos.

This piece was originally posted on Left Outside, and is republished here with permission.

Members of Greek neo-Nazi party Golden Dawn sing the country's national anthem. Photograph: Getty Images
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No, Christopher Hitchens did not convert to Christianity on his deathbed

From Mother Theresa to Princess Diana, for Hitchens, there were no sacred cows. He certainly would not have wanted to become one. 

The suggestion that atheist writer Christopher Hitchens converted on his deathbed was inevitable. When the evangelical Christian Larry Taunton appeared on Newsnight last week to discuss his new book, he suggested that “the Hitch” was “contemplating conversion” in his final days. The collective sigh from his fans was palpable.

That particular claim is uncontroversial. Of course Hitchens “contemplated” Christianity – to say so simply suggests he had an open mind. However, the book goes further, and claims that Hitchens began to doubt his convictions in his final days. Taunton writes that: “Publicly, he had to play the part, to pose, as a confident atheist. In private, he was entering forbidden territory, crossing enemy lines, exploring what he had ignored or misrepresented for so long.” The book is littered with similar insinuations that he was, so to speak, losing his faith. His close friends, those he wasn’t paid to spend time with as he was with Taunton, deny this completely.

Naturally, the book has sparked a host of rumours and junk articles that suggest he converted. Not one to let a cheap shot slide or leave an insinuation untouched, Hitchens was forward-thinking enough to not only predict these accusations, but deliver a perfect pre-buttal. When Anderson Cooper asked him, a short while before his death, whether he had reconsidered “hedging his bets”, he responded:

“If that comes it will be when I’m very ill, when I’m half demented either by drugs or by pain when I won’t have control over what I say. I mention this in case you ever hear a rumour later on, because these things happen and the faithful love to spread these rumours.”

If that isn’t enough, however, his wife has made clear in the strongest possible terms that talk of a softening on Christianity and a deathbed conversion is entirely untrue. “That never happened. He lived by his principles until the end. To be honest, the subject of God didn’t come up.”

The spreading of fallacious rumours of deathbed conversions by the religious is predictable because there is so much historical precedent for it. Many of history’s most famous atheists have suffered this fate, so, in a sense, Hitch has now been inducted into this hall of infamy alongside the likes of Darwin, Thomas Paine, and David Hume. In God is not Great, he wrote that “the mere fact that such deathbed ‘repentances’ were sought by the godly, let alone subsequently fabricated, speaks volumes of the bad faith of the faith-based.”

Now, not for the first time, Hitchens has fallen foul of this bad faith. After all, what can be more abhorrent than baying for a man to abandon his lifelong principles when he is at his most vulnerable, and spreading callous lies when he can no longer respond? It speaks for the complete lack of confidence these people must have in their beliefs that they strike when the individual is at their least lucid and most desperate.

Hitchens felt the bitter end of the religious stick when he was dying as well, and he responded with typical wit and good humour. He was told that it was “God’s curse that he would have cancer near his throat because that was the organ (he) used to blaspheme.” His response? “Well, I’ve used many other organs to blaspheme as well if it comes to that.” One suspects that he would have rubbished recent talk in a similarly sardonic fashion.

Likewise, for a man who was not afraid of a provocative title himself (see: The Missionary Position, No One Left to Lie to) it would be reasonable to think he’d accept his own life as fair game. From Mother Theresa to Princess Diana, for Hitchens, there were no sacred cows. He certainly would not have wanted to become one.

Fortunately, we are blessed with the wonders of the internet, and Hitchens can respond to these claims as Thomas Paine and David Hume could not – from the grave. His prediction and preparation for this speaks of an intellect like no other. In a posthumous debate he still wins out.