The Death of Democracy in a Byzantine Labyrinth


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    Harris&Ewing Agriculture Department, Cow jumps over moon 1920 It’s taken a while, but Nicole Foss is now coming back to the Automatic Earth for real.
    [See the full post at: The Death of Democracy in a Byzantine Labyrinth]


    Holy jumping Jehoshaphat Nicole! 🙂

    You are among the top 5 most lucid and finely reasoned thinkers/writers I know of on the planet; and ranking the 5 would be silly. You consistently MAKE SENSE when 99.9% of all others DO NOT.

    But jeepers. I’m too old to try drinking from a fire hydrant!! 🙂


    Beautifully put, Nicole. Welcome back! 🙂
    Money is like a game with enthralled players. Once a player sees how the game works and wins every time, the player loses interest. When societies fully understand money, money will no longer be needed.


    And best informed; I forgot that bit. 🙂


    Michael Hudson: “It’s not so much Germany versus Greece, as the papers say. It’s really the war of the banks against labor. And it’s a continuation of Thatcherism and neoliberalism. The problem isn’t simply that the troika wants Greece to balance the budget; it wanted Greece to balance the budget by lowering wages and by imposing austerity on the labor force. But instead, the terms in which Varoufakis has suggested balancing the budget are to impose austerity on the financial class, on the tycoons, on the tax dodgers.

    And he said, okay, instead of lowering pensions to the workers, instead of shrinking the domestic market, instead of pursuing a self-defeating austerity, we’re going to raise two and a half billion from the powerful Greek tycoons. We’re going to collect the back taxes that they have. We’re going to crack down on illegal smuggling of oil and the other networks and on the real estate owners that have been avoiding taxes, because the Greek upper classes have become notorious for tax dodging.

    Well, this has infuriated the banks, because it turns out the finance ministers of Europe are not all in favor of balancing the budget if it has to be balanced by taxing the rich, because the banks know that whatever taxes the rich are able to avoid ends up being paid to the banks. So now the gloves are off and the class war is sort of back. Originally, Varoufakis thought he was negotiating with the troika, that is, with the IMF, the ECB, and the Euro Council.

    But instead they said, no, no, you’re negotiating with the finance ministers. And the finance ministers in Europe are very much like Tim Geithner in the United States. They’re lobbyists for the big banks. And the finance minister said, how can we screw up this and make sure that we treat Greece as an object lesson, pretty much like America treated Cuba in 1960?”
    Class war anyone? Only a few people have the courage to state the truth. Thanks Nicole.

    Ceteris Paribus

    A tour de force! Thanks for putting it all together like this.


    I really like Nicole’s approach to the issues in Greece. She reduces the terms of her argument to describing the really basic dynamics which would play out somewhere else if it wasn’t for Greece now. It’s all about the emergent properties of empire, the movement of resources from a politically weaker periphery to the centres. It’s an inevitable outcome of an unstable system based on the initial conditions of the empire model.

    I want to know what system (or initial conditions) would be more robust in terms of preserving dignity for as many people as possible. My tentative guess would be that easy “free” trade would have to be reduced in order to prevent the collection of wealth by centres, and democracy would have to be changed in it’s granularity so that the representatives can be made accountable to the electorate. I think that means small sovereign states. Finally, we’d have to live on renewable resources. Of course, we’ll get to this macro state one way or another, because of resource contsraints and environmental degradation, but will anyone be left? I hope so. Can we explain this all to the free market adherents? I don’t think they understand thermodynamics, or do they not care about anyone including their children?

    Dr. Diablo

    One thing that comes to mind, both with Nicole and the pattern-arc above, is that the vulnerability of Greece has a lot to do with their lack of self-sufficiency. Nor is this an accident, in my opinion. If the U.S. makes no shoes, but China can’t feed itself, then either nation can be cut off the way Greece has and brought to heel. One of the advantages of globalization is that it demands a maximum of international money-agents, and therefore a maximum of profits, with a built-in stranglehold. If Greece were largely self-sufficient, there would be far fewer imports and it would be far harder and take far longer to cripple them. We see this with nations who have already adjusted, like Cuba, Russia, and Iran.

    But let’s phrase this more positively: how do we eliminate the vulnerability to banking and globalism, of being politically choked or economically murdered? By preferring local and self-sufficient patterns and solutions to those that are distant and have intermediaries. At this point, those additional intermediaries are adding to cost, so the higher apparent cost of local work can be offset by the savings from cutting out intermediaries. As a welcome addition, living in a robust, varied, and unique local culture makes for a far better life experience, every day.

    Now can we get to employing our neighbors and helping each others’ dreams instead of fueling untrustworthy men far away?

    Nicole Foss

    Very true CWLF, solutions will be small-scale, but the collapse of our current large-scale polities is going to be very disruptive, to put it mildly. The population that comes out the other side of the crunch period is going to be much smaller, and I don’t much like to think about how that’s going to happen. It’ll be like hitting a reset button. The resource limits will prevent us from growing to this truly dysfunctional scale again. Not that humanity can’t be horrible to each other at smaller scale of course, but at least our global destructiveness would be more limited.

    Nicole Foss

    Dr Diablo, this is an important point – as we scale up, we go for greater regional specialization, along the lines of comparative advantage. This leaves us very vulnerable though if the larger structure breaks down. It leaves the component parts unable to look after themselves. This happen in the Soviet Union, where regional specialization was the norm. Whole cities existed because of one factory and the factory owner was responsible for the whole local population. When the USSR collapsed and factories closed, local populations were left up a creek without a paddle. They couldn’t even move elsewhere because they weren’t allowed to, at least initially. For those stuck in the arctic, reliant on old clapped out district heating plants, but with no access to fuel or spare parts, it was a vey brutal readjustment.

    Nicole Foss

    Countries need to be self-sufficient again. It’s called import substitution, and it’s the opposite of going for comparative advantage. Instead of buying the cheapest thing from wherever, make it locally as best you can, especially the essentials. Even if that means its more expensive and not so good, at least you have something when the larger system breaks down and imports are no longer possible.

    Nicole Foss

    Thanks Greenpa 🙂 I do enjoy waeving threads together to make a big picture like this. It takes me a while to do all the reading and pull it all together, so I can’t write a post like this too often, but it’s what I most like to do when I get the chance. It’s this kind of analysis that’s most missing in the current narrative – the joined-up-thinking integrated narrative 🙂


    Nicole provides a very insightful explanation of the situation in the Euro zone, as usual. Another thing that makes the U.S. different from Europe is a standardized tax system. Residents of New York and Mississippi face the same tax rates on income. So while one state may or may not be paying in a share equal to what it receives, all know that the others are at least playing by the same rules. Germany has a different tax structure than Greece. So if Greeks choose to tax themselves at a lower (de facto) rate than Germans, they should expect Germans to resist transfers to cover deficits caused by Greeks’ refusal to appropriately tax themselves for the public goods they consume.


    Fantastic article! Interesting how it flipped to a cash only system and credit was not as appealing anymore. Im pretty sure my coworker at my music school would greatly appreciate this. Thanks for the great information I really appreciate it!

    – Peter Thao @ San Jose Piano Tuning and Repair

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