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Europe's New Barbarians

By       Message Conn Hallinan     Permalink
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Reprinted from Dispatches From The Edge

From flickr.com/photos/31810462@N07/19347118886/: The Greek Tragedy: A Labyrinth of Debt
The Greek Tragedy: A Labyrinth of Debt
(Image by Carlos ZGZ)
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On one level, the recent financial agreement between the European Union (EU) and Greece makes no sense: not a single major economist thinks the $96 billion loan will allow Athens to repay its debts, or to get the economy moving anywhere but downwards. It is what former Greek Economic Minister Yanis Varoufakis called a "suicide" pact, with a strong emphasis on humiliating the leftwing Syriza government.

Why construct a pact that everyone knows will fail?

On the Left, the interpretation is that the agreement is a conscious act of vengeance by the "Troika" -- the European Central Bank, the European Commission and the International Monetary Fund -- to punish Greece for daring to challenge the austerity program that has devastated the economy and impoverished its people. The evidence for this explanation is certainly persuasive. The more the Greeks tried to negotiate a compromise with the EU, the worse the deal got. The final agreement was the most punitive of all. The message was clear: rattle the gates of Heaven at your own peril.

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It was certainly a grim warning to other countries with strong anti-austerity movements, in particular Portugal, Spain and Ireland.

But austerity as an economic strategy is about more than just throwing a scare into countries that, exhausted by years of cutbacks and high unemployment, are thinking of changing course. It is also about laying the groundwork for the triumph of multinational corporate capitalism and undermining the social contract between labor and capital that has characterized much of Europe for the past two generations.

It is a new kind of barbarism, one that sacks countries with fine print.

Take Greece's pharmacy law that the Troika has targeted for elimination in the name of "reform." Current rules require that drug stores be owned by a pharmacist, who can't own more than one establishment, that over the counter drugs can only be sold in drug stores, and that the price of medicines be capped. Similar laws exist in Spain, Germany, Portugal, France, Cyprus, Austria and Bulgaria, and were successfully defended before the European Court of Justice in 2009.

For obvious reasons multinational pharmacy corporations like CVS, Walgreen, and Rite Aid, plus retail goliaths like Wal-Mart, don't like these laws, because they restrict the ability of these giant firms to dominate the market.

But the pharmacy law is hardly Greeks being "quaint" and old-fashioned. The U.S. state of North Dakota has a similar law, one that Wal-Mart and Walgreens have been trying to overturn since 2011. Twice thwarted by the state's legislature, the two retail giants recruited an out-of-state signature gathering firm and poured $3 million into an initiative to repeal it. North Dakotans voted to keep their pharmacy law 59 percent to 41 percent.

The reason is straightforward: "North Dakotans have pharmacy care that out-performs care in other states on every key measure, from cost to access," says author David Morris. Drug prices are cheaper in North Dakota than in most other states, rural areas are better served, and there is more competition.

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The Troika is also demanding that Greece ditch its fresh milk law, which favors local dairy producers over industrial-size firms in the Netherlands and Scandinavia. The EU claims that, while quality may be affected, prices will go down. But, as Nobel Laureate economist Joseph Stiglitz found, "savings" in efficiency are not always passed on to consumers.

In general, smaller firms hire more workers and provide more full time jobs than big corporations. Large operations like Wal-Mart are more efficient, but the company's workforce is mostly part time and paid wages so low that workers are forced to use government support services. In essence, taxpayers subsidize corporations like Wal-Mart.

A key demand of the Troika is "reform" of the labor market to make it easier for employers to dismiss workers, establish "two-tier" wage scales -- new hires are paid less than long-time employees -- and to end industry-wide collective bargaining. The latter means that unions -- already weakened by layoffs -- will have to bargain unit by unit, an expensive, exhausting and time-consuming undertaking.

The results of such "reforms" are changing the labor market in places like Spain, France, and Italy.

After years of rising poverty rates, the Spanish economy has finally begun to grow, but the growth is largely a consequence of falling energy prices, and the jobs being created are mostly part-time or temporary, and at considerably lower wages than pre-2007. As Daniel Alastuey, the secretary-general of Aragon's UGT, one of Spain's largest unions told the New York Times, "A new figure has emerged in Spain: the employed person who is below the poverty threshold."

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http://dispatchesfromtheedgeblog.wordpress.com
Conn M. Hallinan is a columnist for Foreign Policy In Focus, "A Think Tank Without Walls, and an independent journalist. He holds a PhD in Anthropology from the University of California, Berkeley. He oversaw the (more...)
 

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