The Greek situation — having perhaps outlived the term “crisis”, now that it has taken so long to unfold — appears to have finally reached its terminal point. This is, of course, an illusion: It has been at its terminal point for a long time.

The terminal point is the juncture where neither the Greeks nor the Germans can make any more concessions. In Greece itself, the terminal point is long past. Unemployment is at 26 percent, and more than 50 percent of youths under 25 are unemployed. Slashed wages, particularly in the state sector, affecting professions including physicians and engineers, have led to massive underemployment. Meanwhile, most new economic activity is occurring in the untaxable illegal markets. The Greeks owe money to EU institutions and the International Monetary Fund, all of which acquired bad Greek debts from banks that initially lent funds to Greece in order to stabilize its banking sector. No one ever really thought the Greeks could pay back these loans.

The European creditors — specifically, the Germans, who have really been the ones controlling European negotiations with the Greeks — reached their own terminal point more recently. The Germans are powerful but fragile. They export about a quarter of their gross domestic product to the European free trade zone, and anything that threatens this trade threatens Germany’s economy and social stability. Their goal has been to keep intact not only the euro, but also the free trade zone and Brussels’ power over the European economy.

Germany has so far avoided an extreme crisis point by coming to an endless series of agreements with Greece that the Greeks couldn’t keep and that no one expected them to keep, but which allowed Berlin to claim that the Greeks were capitulating to German demands for austerity. This alleged capitulation helped Germany keep other indebted European countries in line, as financially vulnerable nations witnessed the apparent folly of contemplating default, demanding debt restructuring and confronting rather than accommodating the European Union.

Greece and the Cypriot Situation

For the Germans, Greece represented a dam. What was behind the dam was unknown, and the Germans couldn’t tolerate the risk of it breaking. A Greek default would come with capital controls such as those seen in Cyprus, probably trade barriers designed to protect the Greek economy, and a radical reorientation of Greece in a new strategic direction. If that didn’t lead to economic and social catastrophe, then other European countries might also choose to exercise the Greek option. Germany’s first choice to avoid the default was to create the illusion of Greek compliance. Its second option was to demonstrate the painful consequences of Greece’s refusal to keep playing the first game.

This was the point of the Cyprus affair. Cyprus had reached the point that it simply could not live up to the terms of its debt repayment agreements. The pro-EU government agreed under pressure to seize money in bank accounts holding more than 100,000 euros (around $112,000) and use that money to make good on at least some of the payments due. But assigning a minimum account balance hardly served to lessen the blow or insulate ordinary Cypriots. A retiree, after all, may easily have more than 100,000 euros in savings. And hotels or energy service companies (which are critical to the Cypriot economy) certainly have that much in their accounts. The Germans may have claimed the Cypriot banking system contained primarily Russian money, but — although it undoubtedly contained plenty of Russian funds — most of the money in the system actually represented wealth saved and used by Cypriots in the course of their lives and business. The result of raiding those accounts was chaos. Cypriot companies couldn’t pay wages or rent, and the economy basically froze until the regulations were eventually eased — though they have never been fully repealed.

The Germans were walking a fine line in advocating this solution. Rather than play the pretend game they had played in Greece, they chose to show a European audience the consequences of genuine default. But those consequences rested on a dubious political foundation. Obviously the Cypriot public was devastated and appalled by their political leaders’ decision to comply with Germany’s demands. But even more significant, the message received by the rest of Europe was that the consequences of resistance would be catastrophic only if a country’s political leadership capitulated to EU demands. Seizing a large portion of Cypriot private assets to pay public debts set an example, but not the example the Germans wanted. It showed that compliance with debt repayments could be disastrous in the short run, but only if the indebted country’s politicians let it happen. And with that came another, unambiguous lesson: The punishment for non-compliance, however painful, was also survivable — and far preferable to the alternatives.

The Rise of Syriza

Enter the Coalition of the Radical Left party, known as Syriza, one of the numerous Euroskeptic parties that have emerged in recent years. Many forces combined to drive pro-EU factions out of power, but certainly one of them was the memory of the behavior of pro-EU politicians in Cyprus. The Greek public was well aware Athens would not be able to repay outstanding debt on anything even vaguely resembling the terms set by the pro-EU politicians. Cognizant of the Cypriot example, they voted their own EU-friendly leaders out, making room for a Euroskeptic administration.

Syriza ran on a platform basically committing to ease austerity in Greece, maintain critical social programs, and radically restructure the country’s debt obligations, insisting that creditors share more of the debt burden. EU-friendly parties and individuals — and the Germans in particular — tended to dismiss Syriza. They were used to dealing with pro-EU parties in debtor countries that would adopt a resistant posture for their public audience while still accepting the basic premise put forth by Germany and the European Union — that in the end, the responsibility to repay debts was the borrower’s. Regardless of their public platform, these parties therefore accepted austerity and the associated social costs.

Syriza, however, did not. A moral argument was underway, and the Germans were tone deaf to it. The German position on debt was that the borrower was morally responsible for it. Syriza countered that, in effect, the lender and the borrower actually shared moral responsibility. The borrower may be obligated to avoid incurring debts that he could not repay, but the lender, they argued, was also obligated to practice due diligence in not lending money to those who were unable to repay. Therefore, though the Greeks had been irresponsible for carelessly borrowing money, the European banks that originally funded Greece’s borrowing spree had also been irresponsible in allowing their greed to overwhelm their due diligence. And if, as the Germans have quietly claimed, Greek borrowers misled them, the Germans still deserved what happened to them, because they did not practice more rigorous oversight — they saw only euro signs, just as the bankers did when they signed off on loans to Greece rather than restraining themselves.

The story of Greece is a tale of irresponsible borrowing and irresponsible lending. Bankruptcy law in European and American culture is a system of dualities, where expectations for prudent behavior are placed on both the debtor and creditor. The debtor is expected to pay everything he can under the law, and when that is ability is expended, the creditor is effectively held morally responsible for his decision to lend. In other words, when the debtor goes bankrupt, the creditor loses his bet on the debtor, and the loan is extinguished.

But there are no bankruptcy laws for nation-states, because there is no sovereign power to administer them. Thus, there is no disinterested third party to adjudicate national bankruptcy. There are no sovereign laws dictating the point where a nation is unable to repay its debt, no overarching power that can grant them the freedom to restructure debts according to law. Nor are there any circumstances where the creditor is simply deemed out of luck.

Without these factors, something like the Greek situation emerges. The creditors ruthlessly pursue the debtor, demanding repayment as a first priority. Any restructuring of the debt is at the agreement of creditor and debtor. In the case of Cyprus, the government was prepared to protect the creditors’ interests. But in Greece’s case, Syriza is not prepared to do so. Nor is it prepared, if we believe what the party says, to simply continue crafting interim lies with the country’s creditors. Greece needs to move on from this situation, and another meaningless postponement only postpones the day of reckoning — and postpones recovery.

The Logic and Repercussions of a Grexit

A Greek withdrawal from the eurozone would make sense. It would create havoc in Greece for a while, but it would allow the Greeks to negotiate with Europe on equal terms. They would pay Europe back in drachmas priced at what the Greek Central Bank determines, and they could unilaterally determine the payments. The financial markets would be closed to them, but the Greeks would have the power to enact currency controls as well as trade regulations, turning their attention from selling to Europe, for example, to buying from and selling to Russia or the Middle East. This is not a promising future, but neither is the one Greece is heading toward now.

Many have made a claim that a Greek exit could lead the euro to collapse. This claim seems baffling at first. After all, Greece is a small country, and there is no reason why its actions would have such far-reaching effects on the shared currency. But then we remember Germany’s primordial fear: that Greece could set a precedent for the rest of Europe. This would be impossible if the rest of Europe was doing well, but it is not. Spain, for example, has unemployment figures almost as terrible as Greece’s. Some have pointed out that Spain is now one of the fastest-growing countries in Europe, which would be impressive if growth rates in the rest of Europe weren’t paralyzed. Similarly, Spain’s unemployment rate has fallen — to a mere 23 percent. Those who are still enthused about the European Union take such trivial improvements as proof of a radical shift. I see them as background noise in an ongoing train wreck.

The pain of a Greek default and a withdrawal from the eurozone would be severe. But if others see Greece as a forerunner of events, rather than an exception, they may calculate that the pain of unilateral debt restructuring makes sense and gives Greeks a currency that they can at last manage themselves. The fear is that Greece may depart from the euro, not because of any institutional collapse, but because of a keen awareness that sovereign currencies can benefit nations in pain — which many of Europe’s countries are.

I do appreciate that the European Union was meant to be more than an arena for debtors and creditors. It was to be a moral arena in which the historical agony of European warfare was abolished. But while the idea that European peace depends on prosperity may be true, that prosperity has been lost. Economies rise and fall, and Europe’s have done neither in tandem. Some are big winners, like Germany, and many are losers, to a greater or lesser degree. If the creation of a peaceful European civilization rests on prosperity, as the founding EU document claims, Europe is in trouble.

The problem is simple. The core institutions of the European Union have functioned not as adjudicators but as collection agents, and the Greeks have learned how ruthless those agents can be when aided by collaborative governments like Cyprus. The rest of the Europeans have also realized as much, which is why Euroskeptic parties are on the rise across the union. Germany, the country most threatened by growing anti-EU sentiment, wants to make clear that debtors face a high price for defiance. And if resistance is confined to Greece, the Germans will have succeeded. But if, as I think it will, resistance spreads to other countries, the revolt of the debtor states against the union will cause major problems for Germany, threatening the economic powerhouse’s relationship with the rest of Europe.

Who is paying for my health care

The expansion of the entitlement mentality has gone beyond healthcare to include wants like….. 

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Will it be a long winter?

I have been on the record for the last 6 years that economic “surprises” will likely be negative. And right on cue…..

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On Health Care

The health care debate is dominated by people just so full of BS. It is profoundly dis-honest to regularly frame the discussion as if it’s private versus public care….. 

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Taxing the oil and gas industry

It’s hard not to laugh at the folks encouraging the Alberta NDP to raise corporate taxes on oil and gas firms. Why? Because the oil and gas industry is losing money…..

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In his essay, “What are universities for?” philosopher Leszek Kolakowski writes: “The greatest danger is the invasion of an intellectual fashion which wants to abolish cognitive criteria of knowledge and truth itself. The humanities and social sciences have always succumbed to various fashions, and this seems inevitable. But this is probably the first time that we are dealing with a fashion, or rather fashions, according to which there are no generally valid intellectual criteria.”

The counter-culture of the 1960s drew a bright line between all past and present understanding of what universities were for. Standing on one leg, one might say that in the past universities felt it was their mission to teach students how to think, and in doing so it was considered natural to use as a teaching guide, as the 19th century cultural critic Mathew Arnold put it, “the best which has been thought and said” in our culture. Arnold’s dictum governed my own university experience in the golden age of university expansion between 1945 and 1960. My courses were blessedly free of ideology, and devoted to cultivation of students’ critical faculties through exposure to a variety of opinions.

Since the late 1960s, universities have considered it their mission to teach students what rather than how to think. Students soon internalize the catechism, summed up in the Twitter hashtag #whiteprivilege, meaning: Western civilization thrived on white, Christian, Euro-centric aggression against Others; Western literature and art are the patriarchy’s handmaidens; the university’s mission is to further a just society and empower the wretched of the Earth; objective “knowledge” is a tool for one dominant race, gender and sexuality to oppress the powerless; reason is but one “way of knowing”; any opposition to identity politics and multiculturalism is racism; there are no hierarchies in cultural values — in matters of gender, art and family, all manifestations are equally valid; and most insidiously, acknowledging and rewarding objective merit is considered an “institutionalized form of racism and classism.”

Just as Gender Studies considers all men to be “carriers” of the patriarchy, many progressives consider conservatism to be so retrograde, so obsolete, so inherently wrong that indulging its proponents with a podium on campus is akin to countenancing immorality. To illustrate, last year about this time I participated in a debate on the state of free speech at Canadian universities. I argued it was endangered. My opponent, a York University academic, did not deny freedom of speech was tightly curtailed on our campuses. But his position was that cultural, gender and racial diversity on campus, admittedly far more advanced today than in my era, is more important than and — I inferred — even incompatible with intellectual diversity. Which did not dismay him at all.

If, across Canada every year, 20 or 30 politically incorrect speakers don’t get to speak on campus because their views were offensive [to progressives], my opponent said, so what? Times have changed, he explained; anyone can make their views known on the Internet! And therefore campuses are not obliged to provide a soapbox for every “crackpot.” His views shocked me (not least because I am one of those “crackpots” that feminists tried to stop from speaking at McGill some years ago).

According to his curious strain of logic, if the Internet is a viable ideas forum for students, why the need for any speakers on campus? Obviously, the Internet is no such thing. But his casual dismissal of the need for intellectual diversity is not unusual in academia; rather it is typical.

Strategies for eliminating intellectual debate on campus are manifold. Amongst them: disinviting guests, such as Brandeis’ 2014 commencement dis-invitation to the heroic Ayaan Hirsi Ali because her views on Islam offend some Muslims, or disrupting the speech of politically incorrect speakers (conservatives, pro-life activists, advocates for men’s centres on campus and pro-Israel speakers often need tough security on campuses, but never the other way around); eliminating neutral survey courses, but sanctioning group identity courses designed to promote activism; speech codes to punish “offensive” language to women and minorities; and hiring according to ideology and group identity rather than academic accreditation.

Ironically, the marginalization of conservatism in the universities has produced a counter-revolution amongst conservative thinkers. As former leftist-turned-vehement conservative David Horowitz writes: “excluded conservatives [in the universities] … are forced by the cultural dominance of the left to be thoroughly familiar with the intellectual traditions and arguments that sustain it. This is one reason for the vitality of contemporary conservative thought outside the academy, and for the inability of progressives to learn from the past.”

Conservative thinkers in the fields of history, economics and sociology, knowing they cannot do the research they want to on campus, have been migrating to think tanks, supported by private individuals and companies. This is something Adam Daifallah predicted and urged in his 2005 book written with Tasha Kheiriddin, Rescuing Canada’s Right. Look at the recent crop of new conservative Canadian policy advocacy groups: The Manning Centre, The MacDonald-Laurier Institute, the Frontier Centre, The Institute for Marriage and the Family, all having sprung up in the last decade, all sponsoring intelligently provocative work.

Interestingly, UCLA Higher Education Research Institute data shows that self-identified conservative students report higher levels of satisfaction with their university education experience than self-identified moderate or liberal students, with the exception of those in the humanities and social sciences. Not coincidentally, there are fewer conservative students in the humanities and social scientists and more in fields like political science, political philosophy and economics. Indeed, conservative economists have dominated the Nobel Prize since its inception in the 1970s.

In a June 2014 article in New Criterion magazine, journalist Steven F. Hayward addresses the root cause of conservative students’ attraction to these disciplines, and finds it in the fundamental difference of outlook between liberals and conservatives. Chiefly, he says — and I concur — the answer resides in the Left’s unrealistic tendency to demand utopian solutions and the realistic conservative tendency to respect human and social limitations. “There is no utopian right,” says Hayward. Thus, conservatives like subjects that are concrete rather than abstract and in which objective evidence is what leads to conclusions, rather than theories, ideology, feelings or cultural narratives.

Abraham Lincoln said, “The philosophy of the schoolroom in one generation will be the philosophy of government in the next.” The university is therefore our most important cultural institution, and preserving its credibility and excellence — in this case rescuing it from its present lack of credibility and excellence — our highest civic duty.