06 Nov 2011

When a Referendum Is Seen as Cheating

Big Brother, Economics 12 Comments

This FreedomWatch interview of Gerald O’Driscoll hit on something I’d been thinking too:

Near the end of the above clip, Napolitano and O’Driscoll discuss the irony that when it comes to the crisis in Greece–the birthplace of democracy–the one group who will not be consulted is the Greek people themselves.

Even though I think the institution of political democracy is, shall we say, overrated, I was struck by this too as the pundits were shocked at Papandreou’s move to call for a referendum. I am not going to bother finding citations, but I’m pretty sure there were plenty of “progressives” who were disgusted by this obvious ploy to avoid facing the music, making the hard choices, being a statesman, etc. etc. And yet: If “everybody knows” this thing wouldn’t hold up if the Greek people actually voted on it, then how the heck can self-described proponents of democracy (not to mention champions of the unemployed Greeks) so cavalierly assume that these rescue packages need to happen? Of course Papandreou did this for strategic reasons, and not because he didn’t feel right about moving ahead without official approval from his employers, but that doesn’t change the overall situation.

So is this episode of democrats (small “d”) guffawing at democracy just pure paternalism, or is there something else going on here?

12 Responses to “When a Referendum Is Seen as Cheating”

  1. Joseph Fetz says:

    It really is sad that state when people have to leave a disclaimer regarding the political philosophy that they are referring to as “little xyz”, even though it is quite clear from the usage. In reality, it is an attempt to ask people to stop their “group” thinking, and actually look at the philosophy itself. Unfortunately, it is only a small minority that actually know the difference.

  2. MamMoTh says:

    I tend to agree with the fact that the Greeks should be the ones deciding on their fate.

    On the other hand I think Papandreous’ timing was ridiculous: he should have announced he will hold a referendum before the negotiation, which was not an easy one and it involved concessions by many parties.

    Moreover the Greeks should choose between at least 2 alternatives, and not only hold a referendum on the rescue package without other options.

  3. Sam says:

    You are absolutely right in this claring hypocrisy of the political elites in Europe. I’m Denmark and the entire political/media/academic establishment has pushed for Denmark to join the eurozone which the Danish people(and Scandinavian people) in general are opposed to. This has been the case whether it is the big parties on the left or the right. Whenever a poll has shown that the Danish people would vote no on joining the the eurozone then the politicians have simply said that they wouldn’t have the election then. The absurdity of this disconnect between the people and the politicians is astounding.

    Europhilia, as we EU sceptics call it, has captured all the big parties in the big important countries. The EU has something for everybody which is why you can be a socialist and support and a liberal(classical) and support it. The socialist loves this even more then they love democracy which they only love since it tends to led to socialist policies. On this it doesn’t and therefore they don’t approve.Same reason nobody flinched when big European countries rammed down the Lisbon treaty after it had clearly been rejected publicly by voters in Europe.

    Increasingly the support among liberals is finally starting to wane both here in Denmark and Germany. Once this happens the game is over because at the moment, all the people of Europe can do is to vote in another big party that also supports the euro and EU. Until the liberal-conservatives get serious we will start to see more and more populist parties rising like in Finland.

    Thanks for the blog btw

  4. Tel says:

    Everyone in the Greek government knows they are deep into the process of selling out their own people; and they know that the Greeks know.

    Papandreous did nothing more than remind his fellow politicians that they can either deal with him, or deal with accountability. Obviously enough of them were shit scared of facing their own people.

  5. Prateek Sanjay says:

    There was no hypocrisy!

    Issues of financing a government are not democratic issues. Votes don’t finance a democratic government. Money finances a democratic government. If money can’t decide how to finance a democratic government, then money will not finance a democratic government. And then there will not be a democratic government.

    Here is what Greeks can do if they wanted to show solidarity for public finances and prove that they should have a say. Do what the Japanese do. Buy lots and lots of their government’s bonds. It’s partly why Japan’s bond yields are lower than the bonds of Greece (the rest is also IS-LM and monetary sovereignty mechanics in play), even though Japan’s government has much much higher debt than that of Greece. You can’t just move from public solidarity when the government seems to be hurting your interests to private selfishness when it comes to upholding the finances of a system you support. In this double standard, the beneficiaries of government show less interest in being contributors of the government.

    Otherwise Financial Issues != Democratic Issues. It’s pretty consistent to be a democrat who believes in upholding democracy selectively, because without financing for a democratic government, there is no democracy.

    • Tel says:

      If money can’t decide how to finance a democratic government, then money will not finance a democratic government. And then there will not be a democratic government.

      With all due respect, that doesn’t make any sense at all.

      If the government has the support of the majority and the majority want to default then finance is irrelevant. The majority get their will, that’s how democracy works.

      Let’s suppose some small finance committee decide otherwise… who are they to question the majority decision? On what basis?

      Here is what Greeks can do if they wanted to show solidarity for public finances and prove that they should have a say. Do what the Japanese do. Buy lots and lots of their government’s bonds.

      That’s just the same as paying as much tax as possible… why would the Greek people do that when they desire the exact opposite?

      … without financing for a democratic government, there is no democracy.

      Why? Are you intending to invade Greece or something?

      • Bob Roddis says:

        Oh, come now. All of us MMTers know that our benevolent and all-knowing democratic government doesn’t need to collect taxes in order to spend. It spends so we all might have the money we need with which to pay our taxes which are collected solely to control inflation and then that money is just burned. And, of course, the fully informed citizenry voted for this excellent system with their eyes wide open about its unique and special powers. Everyone knows that.

    • skylien says:

      This is not just about how to finance Greece. This is about democratically elected leaders are selling the country’s sovereignty to someone else outside of Greece, outside of the democratic process. Wasn’t democracy the idea that people should have a say of who will govern? And now you think it is democratic if the elected politicians can sell this without asking it’s populace? They have no right what so ever to pass the right/duty of governing (also even partly) further to any third party outside of Greece without permission! If this isn’t per definition antidemocratic, I don’t know what is..

  6. david nh says:

    I see the political value of the referendum. I don’t see what appears some are arguing to be the unambiguous moral value of it. From my perspective, the Greeks made their democratic choice and kept on making it as they elected successive profligate governments. The democratic choice they made was to enter into debt contracts under which they promised to pay back the funds that they borrowed. Now, perhaps the debt contracts stipulated that the Greek only had to pay the money back as long as they didn’t have second thoughts, as expressed in the referendum, but I doubt it. Insolvent quasi-socialist states are very much democracy in action, as libertarians know.

    If you believe that democracy is a valid collective decision-making tool, and those defending the referendum presumably do, then I would have thought that Greece would be considered to have a moral duty to pay back as much of the debt as they possibly can. Voting on whether they now find it acceptable to pay back the reduced amount that has been negotiated doesn’t strike me as particularly moral. This is all the more so given that the role that Greeks themselves played in the insolvency : the institutionalized tax evasion, the 13 months salary, the retirement in their early 50’s, the classification of hairdressing as hazardous, etc.

    Yes, the lenders were foolish but that doesn’t affect Greece’s obligation. It perhaps is relevant to the question of whether bank shareholders and debt holders should be bailed out (they shouldn’t) and whether they should take a haircut (they should) but not to Greece’s obligation to pay back the reduced amount.

    Now, you may argue that individual Greeks who may be completely blameless – who paid their taxes, worked hard, saved, were self-reliant and didn’t use the state to feed off the efforts of their neighbours- shouldn’t have to bear the consequences of the madness of their government. I’d agree with you. But that’s not an argument in favour of a referendum or more democracy – it’s an argument against it.

  7. Prateek Sanjay says:

    Tel, the majority can choose to default.

    And then the majority will not get access to capital markets for years.

    But the majority also wants to retain all the social programs and public services to which they are used. ISN’T THAT WHY THEY ARE PROTESTING AGAINST AUSTERITY?

    So if they want to keep those services, why are they not financing those services? But if they don’t want to finance those services, they don’t have to worry about austerity and losing those services.

    It’s like this. Suppose LewRockwell.Com is on the verge of shutting down. Various libertarian readers don’t want that to happen. But they also don’t want to donate to LewRockwell.Com to keep it running. But if they don’t want to donate, they can’t complain about LewRockwell.Com shutting down, right?

    • Joseph Fetz says:

      You’re conflating voluntary actions with state actions.

      Of course the Greeks don’t want to lose particular benefits, and they don’t want to deal with austerity measures, but that is not really saying much. They have the feeling that because they paid their taxes that they’re being ripped off (that they deserve the entitlement because they paid into the system) I don’t blame them, this is very similar to the case with our own social security system.

      The fact is that they paid into the system and their government screwed them (I won’t get into bureaucratic inefficiencies and the self-interest of bureaucratic/political officials). These aren’t market considerations unless one decides that sovereign debts are indeed part of the market mechanism (I don’t).

      Your example is entirely bankrupt, because LRC us an entirely private entity. There is no coercion to donate or support LRC, it is an entirely voluntary affair. With regard to Greece, there simply is nothing voluntary about it. Sure, a Greek could voluntarily decide not to support the Greek government, but then they would be imprisoned. With regard to LRC, if one abstains from supporting LRC, LRC simply disappears (there is no force to arrest you for not supporting LRC).

      The fact that a majority of Greeks would like to keep their current government-provided services is entirely irrelevant to whether such a system is viable. I want a Bugatti Veyron, it doesn’t mean that it is going to happen…