Weimar Parallels: Greek Democracy in Danger

(News tip @GreeceInCrisis)

When Adolf Hitler and his cohorts in the NSDAP first entered the German legislature, their share of the votes was in the single digits. During the same time the German communists made great strides, and the old mainstream parties that were supposed to be the backbone of parliamentary democracy were being associated with the Weimar Republic’s devastating economic decline. As a result, it was impossible to form a workable parliamentary majority.

The legislature, which controls the executive branch in parliamentary systems, went into deadlock. The parliament was dissolved and a new election yielded similarly unworkable results. After repeated attempts over a period of three years the “old” parties had run dry of credibility and political energy, and let Hitler become chancellor, i.e., assume the executive office.

The rest is well-known history.

Tomorrow Sunday, Greece will hold a parliamentary election that has frightening parallels to Germany in 1930. After years of austerity policies, misguidedly used to save a government that has made untenable commitments through its welfare state, the mainstream political parties have lost a lot of their credibility with Greek voters. Extremist parties are gaining ground, both in the form of Soviet-style communists and neo-Nazis. As the Daily Telegraph reports, this may lead to parliamentary impasse. If that happens, it adds yet another parallel to Europe’s interbellum history:

After forming just a few months ago, Independent Greeks is poised to win nine per cent, which could make it a significant power broker in negotiations to take place this week to form a coalition government. Other small parties from the Left and Right are set to prosper, with up to 10 expected to win seats. Most want to renegotiate or tear up the £110 billion European bailout agreed last year, which propped up the economy but brought severe austerity with it, cutting government wages and pensions by 30 per cent, slashing budgets and raising taxes. Even the two major parties that reluctantly supported the bailout, the socialist Pasok and centre-Right New Democracy, want more time for Greece to pay its debts. The latter in particular argues that the rescue plan focused too much on debt and not enough on growth – a complaint now echoing across Europe.

The problem is, you basically cannot grow yourself out of the crushing weight of a welfare state. The only workable strategy is to follow the Swedish route, which means essentially creating a two-tier economy: you relieve the exports industry of some of the pressure of regulations and taxes that otherwise applies to the private sector, let them make profits and pay taxes. That way you get just enough extra revenue to fund the welfare state a few more years.

Anyone familiar with the Swedish welfare state knows that it is falling apart. However, the pace is slower because of the two-tier policy vs. the private sector. All that this buys you is time. As for Greece, they don’t have much of an exports industry to rely on. As a result, they are experiencing a Swedish decline in a time concentrate. This also means that the parliamentary consequences of the economic desperation that austerity brings, are all the more visible. The Daily Telegraph again:

But having alternated leadership of the country for 30 years, building up an inefficient, corrupt and eventually unaffordable paternalistic state, both parties are set to be punished by voters for years of mismanagement. Typically they shared 80 per cent of the vote, but now may not even win the 50 per cent needed to renew their uneasy coalition of the past six months in the caretaker government whose technocratic leader, Lucas Papademos, is stepping aside. Without a stable government, Greece could fail to meet its debt obligations which could leave the EU obliged to withhold the next tranche of the bailout. The viability of the euro itself could then be called into question all over again.

Never mind the debt obligations. If you cannot form a parliamentary majority, voters will grow even more disgruntled with their democratic government. This is exactly the kind of fertile ground that extremists in Greece’s Golden Dawn Nazi party and the communists are looking for. And those extremists are already hard at work finding people to blame for the country’s economic disaster:

The Left blames international bankers for humiliating the nation, while Right-wing populist forces like Independent Greeks blame Germany and tap into resentment at atrocities committed during the Second World War. “We are the victim of German loan sharks. We are under German occupation again and I truly believe we are living under an economic Fourth Reich,” says [a spokesman for Independent Greeks]. Even more alarming to those hoping for a sane political discourse in the coming months is the rise of Golden Dawn, a far Right party that critics say has strong neo-Nazi tendencies. It denies that label, despite outfitting its thuggish volunteers all in black, and despite pictures on the wall of its Athens headquarters of members giving the fascist salute at a torch-lit night gathering. Long part of the political fringe, the party is now forecast to win parliamentary seats for the first time.

What was Hitler’s main theme, aside blaming the Jews for Germany’s trouble?

“We talk about the survival of the nation, of the Greek identity, the economy and illegal immigration and people are listening,” said Yiannis Vouldis, a muscular 65-year-old with a skull tattooed on his left bicep, and one of the party’s candidates in the capital. Anything from 450,000 to two million undocumented workers, chiefly from South Asia, Africa, Iraq and Afghanistan, have arrived in Greece over the past 20 years, exploiting a weakly controlled border with Turkey and numerous ports. Parts of central Athens have turned into ghetto-like neighbourhoods where drug users inject openly and muggings and burglaries are regular events.

It is undeniably true that Europe has enormous problems with illegal immigration, and even lawful immigration, of people from culturally and geographically remote corners of the world. It is also true that these immigrants for the most part lack even the elementary skills for acquiring an education. But that does not mean that they are the causes of the economic crisis. On the contrary: they are symptoms, having come to Europe – including Greece – because of the welfare state. Which, at the end of the day, is the root cause of Europe’s current problems.

And just to reinforce the parallels back in time, the Daily Telegraph reports that the Golden Dawn has formed its own version of the Sturm Abteilung:

Golden Dawn has been blamed for vicious attacks on immigrants and Mr Vouldis boasts that squads of his organisation’s volunteers have cleared out illegal immigrants from squats and hotels where they live five or six to a room. “We don’t like violence but sometimes there is no other way to remove someone from an area,” he said. The spectre of Golden Dawn taking their place in parliament causes many Greeks to shudder. But they will probably be overshadowed by Left-wing groups, which are also confident they will perform better than ever. The Communist Party of Greece, unreconstructed in its pro-Soviet ideology, a self-described progressive coalition called Siriza and the Democratic Left, the most moderate of the three, could earn 25 to 30 per cent between them.

At the end  of the day, Nazis and communists are the same breed of ugly totalitarians. Their philosophical differences are limited to whether to execute political dissidents with a bullet in the right or left temple. But that does not mean that they won’t oppose one another: the 20th century saw numerous clashes between these two competing authoritarians (including, let’s not forget, World War II). It is unlikely that the surge for the two in Greece will bring any immediate turmoil to the country, but if the parliamentary system fails to produce a workable government, all bets are off.

What is happening in Greece today was unthinkable a couple of years ago. The situation has been brought about by years of devastating austerity policies. As I have explain numerous times, the austerity policies, which are put in place to save the welfare state, only aggravate the situation. (For an analysis of the destructive force of austerity, see this paper.) Austerity, however, treats a symptom, not the cause of the economic problems. That cause is the welfare state; the only solution is to reform away big government.

Every country that has a welfare state is ultimately at the risk of entering the same downhill slope that Greece is on today. America, e.g., with its enormous debt problem could very well end up on the downhill slope of austerity. We have a more resilient government in our constitutional republic and its majority-based representation system, and we have a big currency that provides a big credit cushion. But let’s keep in mind that a big currency – the euro – was supposed to protect Greece; let’s also remember that up until 2010 our elected officials had made absolutely no coherent efforts at reining in our federal deficit.

Other European countries are in danger of falling into the same downward spiral as Greece. They better hear the alarm bells sounding in Athens and radically re-think their commitment to the welfare state and big government. If they don’t, then austerity will eventually bring them down as well.

Down the road, Europe’s fate presents America with a fateful choice: continue to build a European welfare state – or restore America to what her Founders and Framers intended.

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