In what may seem a surprising comparison, I’m going to briefly compare the track records of US President Barack Obama and Greek Prime Minister George Papandreou, and hypothesise why, in both practical and electoral terms, both are failing in terms of public policy. Bear with me before closing this blog in disbelief!
In the United States, headlines today start with Republican candidate Scott Brown’s upset victory in the special election to fill Ted Kennedy’s Massachussetts Senate seat. The final vote tally is a 52%-47% victory over Democratic candidate Martha Coakley. The New York Times (GOP Senate Victory Stuns Democrats) explains that this was due to a mix of factors, including unusually heavy turnout in the suburbs and among independent voters, which favoured Brown.
The immediate implication raised in most coverage is that health care reform is dead. Although the bill passed in the Senate, it has still not passed in the House, and most commentators are suggesting that either there has to be a very rapid passage if the bill has any chance to survive.
There is a striking quote in the NY Times article:
“I’m hoping that it gives a message to the country,” said Marlene Connolly, 73, of North Andover, a lifelong Democrat who said she cast her first vote for a Republican on Tuesday. “I think if Massachusetts puts Brown in, it’s a message of ‘that’s enough.’ Let’s stop the giveaways and let’s get jobs going.”
In Greece, headlines are dominated by its latest thrashing about in the Economics and Finance Council meeting in Brussels, where Minister of Finance George Papaconstantinou presented its Stability and Growth Plan to reduce the budget deficit. Greece is dying the death of a thousand cuts, as every day a new investment bank or ratings agency casts doubt on the government’s ability to implement its plan. George Papandreou’s strategy of leaving any serious measures until 2010 and inflating the deficit in 2009 (as well as his heart-wringing exposé of corruption in Greece and fake national statistics during the EU Council of Ministers) has seriously backfired.
Greece’s headlines are also dominated by events of a different sort. On Monday and Tuesday, the central council of Municipalities had its annual meeting, which was used by the government to reveal its “Kallikrates” plan for restructuring the public administration of municipalities, prefectures and regions. This forum was used by all parties to denounce a range of other policy initiatives, such as PASOK’s plan on citizenship reform. At the same time, farmers are blocking roads across Greece, preventing the passage of goods or people.
This post does not seek to equalise Barak Obama’s policy initiatives with those of George Papandreou’s. But I am struck by one simple fact: both political leaders give the appearance of ignoring or being totally insensitive to the core concerns of most voters today.
As I stated in my blog post on November 5th 2009 (Campaigning versus Governing),
We can take a quick look at the national stage and understand what this presages for the Democratic incumbents of the White House, Senate and House of Representatives:
• Far too much political energy is being focused on healthcare, climate change and a range of other initiatives which, though worthy, do not readily translate into a change in the daily life of most regular voters.
• Most regular voters continue to be affected by declining (or stable negative) economic conditions: unemployment; negative or nascent demand; employer cutbacks in compensation and working weeks; etc. There is precious little coming out of Washington dealing with these issues.
• Most politically-informed voters of the independent mindset (which includes as much as 40% of the voting public according to some polls), are upset by the fundamental inability or unwillingness of the Obama administration to address the mounting deficit. In addition to the deficit, the impact on the public debt of health care (where the final debt amount is still unknown, or challenged), as well as foreign wars, is deleterious.
• Finally, most voters are increasingly concerned about the wars in Afghanistan and Iraq. While we have accepted the “loss” and withdrawal of Iraq, it’s impact is mitigated by the fact that this commitment is over. On the other hand, there is mounting concern over the US direction in Afghanistan. Most voters see that we have been caught in Afghanistan for over 8 years with little to show in terms of results. The financial costs are rising; more casualties or fatalities are coming home, and the Afghans have just elected a corrupt president who apparently won the election on the strength of over 1 million tainted votes, while the US Secretary of State offered some inane platitudes.
All this adds up to one message: the Obama Administration has lost track. It is dealing with complex issues in domestic and foreign policy which have little to do with the everyday economic concerns of most American families.
Perhaps it is a political tactic, or perhaps politicians think they are payed by the number of laws they pass, but government policy in the United States and Greece appears to be dealing with everything except what counts right now. And that is, quite simply, the economy. Remember Bill Clinton’s zinger in the 1992 election? “It’s the economy, stupid.”
Voters are fed up. They are fed up with political elites taking months to pass what may be very necessary legislation, but which does nothing to solve the pressing issues of unemployment, public and personal debt, and the pervasive fear that the future will be worse. They are fed up with “caviar socialism” deputies packing public sector jobs or extending public subsidies to a few favoured supporters. And most of all, they are fed up with the hypocrisy and platitudes that politicians and the national news media pass off as wisdom.
I’ve given the examples of climate change, Iraq/Afghanistan, unemployment, and the deficit for the United States. Let’s look at a few examples in Greece:
• The country is being terrorised on a daily basis by the steady news of Greece’s impending bankruptcy and some vague foreign conspiracy to downgrade Greek debt. Unfortunately, the average voter here has no idea what this means, but he instinctively trusts his politicians to do the wrong thing. So, while a voter understands “higher taxes”, he cannot understand what this money will be spent on, or how the situation will improve, and he resents having to pay for the mistakes of the political elite.
• Greece’s official unemployment rate has nearly hit 10%, and underemployment probably brings that level to 17-20%. Most Greek employers are low-productivity, labour-intensive organisations with a significant share of employment compensation paid off the books. Unemployment among the young is astronomic, at rates of up to 25%. Women have among the lowest employment rates in the European Union: only 55% of all women of working age are classified as employable, i.e. of good health and interested in participating in the workforce.
• The employment and revenue-generating mainstays of the Greek economy—tourism, construction, catering and food processing—are in extended declines due to the shortfall of foreign demand (due to the economic crisis). By all indications, 2010 will be as bad as 2009 in this regard.
• Although the government has given a EUR 28 bln support package to banks, and although banks have benefited from ECB credit window loans of at least EUR 40 bln, it’s still impossible to get a personal bank loan at below 7%, and it’s usually 10%. So banks are getting capital at about 1%, and lending onward at 10%.
• Petty and serious crime is growing. A friend of mine had her nephew trapped in a Jumbo outlet (a childrens’ toy store) while two gunmen fired Kalashnikovs at a money transfer truck outside, killing one of the guards. News headlines are dominated by rapes, stabbings, shooting, drug use, etc. The climate of economic uncertainty increases and aggravates the feeling of personal insecurity.
• Terrorist attacks are increasing. In addition to the regular, accustomed bombings of foreign car dealerships and banks, the inanely-named “Cells of Fire” and other Che Guevara wannabes have bombed the monument of the tomb of the unknown soldier outside Parliament, the offices of Minister of Economics Louka Katseli, and a number of other targets.
In the midst of this very real crisis, it seems that our elected government is fiddling. It is inconceivable, for instance, how George Papandreou can launch the reform of public administration (Kallikrates), which is estimated to cost EUR 4.2 bln to implement, and which will not result in any reduction of public sector employment, in this time of economic crisis. It is rank foolishness to begin debating a law on citizenship (which can have only one conclusion in a Parliament where PASOK has 160 deputies), given the tremendous and visible increase in illegal immigration which we see at every traffic light in Greece.
We have a government which, rather than taking the obvious measures to combat the economic crisis—a real reduction in public expenditure and a real crack-down in tax evasion and illegal economic activity—is thrashing this way and that, spending its energy (and our money) on non-essential distractions.
What is doubly ironic is that the large majority of Greek citizens want to see the government crack down on tax evasion, and on the petty illegality which defines public life in this country. We are tired of paying EUR 50 for a 20-minute consultation with a doctor or orthodontist, who we know damned well isn’t paying a cent in taxes. We are tired of hearing about grand government initiatives, when at every traffic light there are usually three desperate people of SE Asian descent, offering to wash your windshield, sell you an pack of hankerchiefs, or begging for your money. We are tired of Nigerians selling fake Louis Vuitton bags on Ermou Street or in Kifissia. We are tired of grand infrastructure initiatives being blocked by rather stupid farmers with a vast sense of entitlement.
I’m going to conclude by repeating the words from my November 5th post:
If I have one message for the Obama administration, and politicians everywhere, it would be to prioritise on the economy and the economic issues which affect the majority of Americans. No one, not the hardest union worker, nor the most independent professional, nor the most well-paid CEO, is happy with either the state of the economy, or the state of public debt.
There have to be two types of measures:
a. Short-term measures to stimulate employment and raise real wages, and
b. Long-term measures to cut public debt.
Structural interventions, such as healthcare, education and renewable energy, should be addressed only once the economy has returned to a sustained growth track, and there is a clear understanding of how the debt will be reduced (and how policy in other domains will be funded).
Everything else should be prioritised against these two fundamental objectives. While our political classes may think we have the luxury of spending time and money as if there were no tomorrow, most taxpayers think otherwise.