This is Horrible, but it’s No Coup: Why the Greek Deal is Democratic

by Benjamin Studebaker

Greek Prime Minister Alexis Tsipras has betrayed the people of Greece by agreeing to the troika’s austerity demands. The deal is terrible and will unnecessarily inflict additional mass suffering on Greece’s unemployed (25%), youth unemployed (50%), and children living in poverty (40%). Many well-intentioned people have participated in the hashtag #ThisisaCoup, accusing the EU of overriding democracy. While I share the frustration and anger, it’s very important that we understand that this is precisely the way European voters insisted that policymakers design the European Union to work. It is the voters of Europe who have inflicted this travesty of justice upon the continent.

I would like to start by pointing out that no one coerced Tsipras–he agreed to the austerity package freely. Many people advised Tsipras to reject the demands, dump the euro, and reintroduce the drachma. Others advised the troika to forgive the debt. I said so. Krugman said so. Stiglitz said so. Piketty said so. The people who wanted Greece to stay in were primarily concerned with keeping Spain, Italy, and Portugal in. Those who supported austerity did not even attempt to argue that austerity was in Greece’s interests–they instead claimed that Greece was morally unworthy of help or that it would set a bad precedent for other European countries. It is not Tsipras’ job to worry about those things. Tsipras is the prime minister of Greece. It is his job to do what is in the long-term interest of the Greek people. He should have demanded debt forgiveness, and when the troika failed to give him that and closed down the banks, he should have left the euro.

Instead, we learned that Tsipras never believed in his own party’s platform. He appears to think that even a bad deal is better than a euro exit. As I and others have argued, there is no basis for his view. It’s a dogma. Tspiras has never studied social science in college–by training, he’s an engineer. He clearly lacked economic competency and this made him vulnerable to bad arguments and outside pressure. It’s for this reason that Yanis Varoufakis, the finance minister who was genuinely willing to stand up to the troika, was pushed out. Unless it comes out that Germany threatened Greece with military action, there is no excusing Tsipras’ cowardice and incompetence. In short:

But if Tsipras’ terrible, horrible, no good, very bad deal is to take effect, the Greek parliament has to approve the austerity Tsipras agreed to. Parliament could say no, and it should. If parliament agrees and the deal goes through, the plan will have been approved by legislators directly elected by the Greek people. Those legislators are informed by the public referendum, but they are not constitutionally bound by it. This is not a coup, this is representative democracy. Incompetent leaders agree to bad plans, and incompetent parliaments approve them. Sometimes they approve them even when they’re both terrible and unpopular. This doesn’t make the approval process undemocratic. Democratic procedures can and do regularly produce bad outcomes that harm millions of people. When a policy is freely agreed to by an elected prime minister and freely enacted by an elected parliament, democracy is to blame. Nothing stops Tsipras or parliament from saying “no” and dumping the euro aside from their cowardice and incompetence.

But this goes deeper than Greece. This situation only became possible in the first place because of the decisions of European voters. If the EU had a federal government like the United States, there would be no negotiation between Germany and Greece. The federal government would make monetary and fiscal government for the good of Europe as a whole, not for any individual part of it. In the US, when one state runs into economic trouble, there are an array of federal programs that automatically transfer money to that region without controversy. During the savings and loans crisis in 1986-1987, Texas got around $75 billion from the federal government (around $160 billion in today’s money). This was around 25% of Texas’ GDP. This was a straight transfer–Texas was not required to repay this money. Texas didn’t have to negotiate with New York or California. It did not even need to negotiate with the feds. No one argued that Texas did not deserve help or that helping Texas would set a bad precedent. The federal government recognized the savings and loans crisis as a national issue, even though it disproportionately affected Texas. The feds understood that federal economic numbers would be stronger with the transfer than without it. They don’t care which states prosper and which flounder, they do what is in the best interest of the country as a whole. They recognized that the way to prevent future states getting into the kind of trouble Texas found itself in was not to punish Texas or make an example of it, but to regulate and legislate at the federal level to make the economic system more stable. If the feds had abandoned Texas to punish it, Texas would have had a fiscal crisis and its economy would have collapsed, spreading like a contagion throughout the union. Sound familiar? It should.

Europe has no such federal system. Why? Because European voters oppose it. European voters want to preserve their national sovereignty. They are unwilling to sign up to a true federal union that will show equal concern for the interests of European citizens regardless of whether they live in Germany or Greece. Affluent Europeans living in the wealthier countries don’t want to subsidize poorer Europeans living in the poorer countries. They are uncomfortable with the reality that a true European Union requires a federal government that can transfer money throughout the union at will. Even in ordinary circumstances, some US states get far more federal money than others to ensure that the US economy functions well as a whole:

At the same time, many European voters have recognized that in the long-term a union is necessary for an array of reasons:

  1. Peace–to ensure that European states don’t go to war again, it is necessary to make them part of a political union.
  2. Economics–to maximize the economic output of Europe, it is necessary for Europeans to move through Europe freely and trade with each other.
  3. Security–in a world dominated by large states like the US, China, Russia, and India, European states need to band together if they want to maintain any level of global influence and avoid relying on one of these larger states for security.

So they created the EU. The EU is not a federal state, it’s a bastard state. Because it has no federal government, the most powerful European states dictate policy, which means that the weaker and poorer states always get a raw deal. Since the introduction of the euro, the benefits of European growth have gone disproportionately to the wealthiest European states. Look at per capita GDP:

Eurozone Per Capita GDP


Germany’s per capita GDP was 16% higher in 2013 than it was in 2000. Italy, Spain, Greece, and Portugal have seen their figures stagnate or shrink. This is not an accident, this is what happens when you have no federal government to redistribute money from rich states to poor states. Germans complain that they shouldn’t have to fund welfare programs in Greece. What do they think American federal tax dollars do? They don’t just buy tanks and missiles, you know:

European voters are wishy washy. They want the benefits of political union without the costs. If you live in a rich European country like Germany, you must understand that you cannot have political union for free. If you want free access to the markets of Greece, Portugal, Italy, and Spain with no tariffs or trade restrictions, you have to pay for welfare spending in those countries when the people who live there can’t find jobs because your country has taken all of them. You have to have a common monetary policy that promotes the good of Europe as a whole, and you have to give up the right to veto European economic policies when they don’t suit you. You have to see jobless Greeks the same way you would see jobless Germans. It’s the European unemployment rate, the European inflation rate, the European growth rates that matter, not the German rates.

If you don’t do this, you get horrific crises that inevitably damage all of Europe, not just the poor states. No one talks about this, but even the rich countries grew faster before the euro:

Eurozone Before and After


Sooner or later, the level of suffering imposed will be too high and people living in the poor European states will wake up to the reality that as constructed, the European Union is economic colonialism and they’re the subject countries. Maybe it won’t happen today, maybe not tomorrow, maybe not for another 10 years or 200. But eventually, the European project will fail if sovereignty is not surrendered and a federal state is not imposed. Fearful of their own voters, European leaders continue to offer Europeans false hope that they can retain national sovereignty and have a successful union. It has always been nonsense. Europeans must choose. It is the European voters themselves who are the principal obstacle to union–it is democracy that holds Europe’s poor and working people hostage. The ordinary people of Europe have the most to gain from federalism and they are the ones least likely to support it. If they are not going to back federalism, the European project is living on borrowed time.

If you’re an EU voter and you think this is any way undemocratic, look in the mirror. Because to put it very simply:

You and your fellow voters could support federalism or you could support abandoning the European project altogether. Instead, you have supported an inconsistent, unstable bastard government. This is what happens when you do that. You get economic crisis and you get a political system that is completely inscrutable and accountable to no one. Learn from this and vote differently. Stop perpetuating the austerity, stop perpetuating the broken system, stop listening to the people who tell you there’s no other choice. There are two other choices. Federalism or exit. Pick one.