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Economic Sadism

PARIS, Jul 9 2012 (IPS) - Sadism? Yes, sadism. What other word is there for this complacency at the infliction of pain and humiliation on so many people?

We have seen, in these recent years of crisis, how the merciless imposition of a ceremony of punishment by Germany (freezing pensions, raising the retirement age, cutting public spending and services of the welfare state, shrinking funds for combating poverty and social exclusion, labour reform, etc.) ­in Greece, Ireland, Portugal, Spain and other countries of the European Union (EU)­ has provoked a dizzying spike in unemployment and evictions. Mendacity is proliferating, as the suicide rate climbs higher and higher.

Despite the fact that people’s suffering has reached intolerable levels, German chancellor Angela Merkel and her followers (which include Spanish president Mariano Rajoy) continue to assert that suffering is good and that this should be seen not as a period of torture but an occasion for celebration. According to them, every new day of punishment purifies and regenerates us as we draw closer to the hour of the final torment. This philosophy of torture was derived not from the writings of the Marquis de Sade but rather the theories of economist Joseph Schumpeter, one of the fathers of neoliberalism who believed that all suffering of the people contributes in some way to the fulfillment of a necessary economic objective and that it would therefore be a mistake to mitigate it even slightly.

In Spain, where the Rajoy government is imposing savage austerity programmes that come extremely close to constituting “sadism” [i], expressions of social discontent are multiplying. At the same time various essential pillars of the state are collapsing: the Crown (with the grim story of the king elephant hunting in Botswana), the judiciary (with the scandal involving judge Divar), the Church (which pays no real estate taxes), the banking system (which we were assured was the “most solid” in Europe and which we now see in free fall), the Bank of Spain (incapable of foreseeing the collapse of Bankia and other spectacular bankruptcies), the Autonomous Communities (a number of which are mired in abysmal corruption scandals), and the major media (far too dependent on advertising, they obscured the disasters gathering on the horizon).

All of this gives the lamentable impression of a country that is on the verge of shipwreck, whose citizens are discovering rapidly that behind the facade of Spain’s much-proclaimed “economic success” lay a model ­ the “real estate bubble” ­ that was eaten through with incompetence and greed.

To a certain degree we now understand ­and at a high cost to ourselves­ one of the great enigmas of Spanish history: how was it possible that despite the mountains of gold and silver stripped from the Americas by the colonial Empire, the country found itself transformed in the 17th century into a sort of court of miracles filled with beggars, wanderers, and freeloaders? What became of its astounding wealth? We now have the answer right before our eyes: the incompetence and myopia of government leaders and the infinite greed of the bankers.

The current phase of punishment is not over yet. After Moody’s lowered Spain’s credit rating last June by three notches, from A3 to Baa3 (one notch above “junk bonds”), the country’s risk premium became unbearable. Spanish solvency headed inexorably towards a bailout. And whether it is a bank bailout or a bailout of public debt, the social costs will be horrific. In its annual report on Spain, the International Monetary Fund is already demanding that the government raise its Value Added Tax (VAT) and approve as quickly as possible a new cut in salaries of government workers to reduce the deficit.

Similarly the European Commission is recommending pushing the VAT higher and adopting new austerity measures: raising the retirement age, checking spending by the Communities, tightening unemployment benefits, eliminating housing subsidies, and shrinking the public administration ­ all before 2013. Given that it is impossible to devalue the euro, the entire country will have to be devalued, reducing its living standard by between 20-25 percent.

Though Angela Merkel promised at the European Summit (Jun. 28-29) to allow the European Stability Mechanism (MEDE) to lend directly to banks, she is still demanding that Spain continue its profound economic and fiscal reforms. Despite Rajoy’s almost canine loyalty to her, Merkel fiercely opposes any move of the Spanish government that would allow the country to step off the path of austerity and structural reform.

Berlin wants to take advantage of the “shock” created by the crisis and Germany’s dominant position to achieve an old objective: the political integration of Europe along lines dictated by Germany. “Our task today,” Merkal stated before the German parliament, ” is to compensate for what was not done (when the euro was created) and put an end to the vicious circle of eternal debt and non-compliance with rules.” Certain pundits are already speaking about a fourth Reich.

If the EU makes the “federal leap” and moves towards a political union, each member state of the EU will have to renounce considerable parts of its national sovereignty. Afterwards, a central federal body would be able to intervene directly in the budgets and taxes of every state in order to force compliance with the accords. How many countries would be willing to abandon this much of their national sovereignty? While giving up elements of sovereignty is inevitable in a project of political integration like the EU, there is a major difference between federalism and neocolonialism [ii].

In countries that have been subjected to bailouts ­Spain, among others­ this loss of sovereignty is already tangible [v]. Contradicting Rajoy, German finance minister Wolfgang Schaeuble asserted that the troika (the ECB, European Commission, and IMF) would oversee the restructuring of the Bank of Spain [iii]. The troika will govern its fiscal and macroeconomic policy in order to insure the continued imposition of reforms and cuts and to make it a priority that Spanish banks make their payments to the European (though mostly German) Central Bank [iv]. It is undeniable that since last June, Spain has had less freedom, less sovereignty over its financial system, and less fiscal sovereignty.

And all of this without any guarantee that the crisis will end.

But if these sadistic “austerity to the death” policies don’t work, why prolong them? Because capitalism is on the march again and has launched an offensive with a clear goal: to eradicate the social programmes of the welfare state that have been implemented since the end of World War II and for which Europe today is the final sanctuary.

But this offensive had better proceed with caution, because the “masses” are grumbling and upset. (END/COPYRIGHT IPS)

* Ignacio Ramonet is editor of Le Monde Diplomatique en Espanol.

[i] See Conn Hallinan, “Spanish Austerity Savage to the Point of Sadism”, Foreign Policy in Focus, Washington, June 15, 2012.

[ii] One proof of the mentality of the neocolonisers is the grotesque EuroVegas project that the autonomous communities of Madrid and Catalonia are competing for. It is based on urbanistic and financial speculation and linked with the rise in money laundering, prostitution, gambling, and mafias. See the platform at http://aturemeurovegas.wordpress.com/http://aturemeurovegas.wordpress.com

[iii] El Pais, June 14, 2012.

[iv] Vicent Navarro, Juan Torres, “El rescate traera mas recortes y no sirve para salir de la crisis”, Rebelion, June 15, 2012.

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