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Bad medicine for Greece

James Galbraith Griechenland braucht Hilfe
Galbraith James K.
June 22, 2015

The Greek patient is in a bad way and needs a potent remedy to make a swift recovery. But, as James K. Galbraith writes in this guest commentary, Europe's financial hospital seems to have forgotten its Hippocratic Oath.

Griechenland Symbolbild Stimmung
Image: Louisa Gouliamaki/AFP/Getty Images

A modern hospital is equipped with a variety of specialized wards. One of them is the intensive care unit, or ICU. Here go those who are especially sick and in need of the most devoted attention. The existence of the ICU recognizes that illness and operations do not affect all patients in the same way. Some, who are robust, recover quickly. Others who are weaker, or older, or sicker, may require different treatments and more help.

Europe's financial hospital has been busy for five years, dealing with victims of the world crisis and of the lending binge that came before it. Ireland, Portugal, Spain and (to a degree) Italy have filled the beds. They have taken the medicine, and followed the prescribed routine. Not one has fully recovered. But then again, none of those countries were ever lethally sick - at the worst, they suffered declines of 5 to 10 percent of GDP, and have been more or less stable for the past few years.

Greece is a special case. She was a weak patient to begin with. Her institutions were not strong. Her industries were not competitive. She binged on those pre-crisis loans. And when the collapse came, Europe and the International Monetary Fund (IMF) prescribed an exceptional dose of the standard drugs - perhaps three times more than was given to anyone else. The results were toxic. Greece has lost over a quarter of her income, she has 29 percent unemployment and her government has no cash reserves.

In any modern hospital, this patient would be on life support. Transfusions would be given. Intra-venous hydration, a feeding tube and an oxygen mask would be supplied. The doctors would not be embarrassed; on the contrary, they expect that in certain cases, the routine treatments do not work. They expect that in certain cases, more is required.

Bad patient

man smiling
James K. GalbraithImage: Xingquan Zhang

But today's Europe is a hospital with no ICU. Instead, the doctors have kept the patient in the ordinary ward. Every few days, they come in and check the charts. They see that there has been no change. And so they lecture the patient. She must exercise! She must take still more of the medicine! She must not expect special treatment! After all, they point out, look at the other patients! See how much better they are doing! And on and on. And then the doctors depart.

Meanwhile, back in their offices, the doctors feud. One - the IMF - says that surgery is essential, to restructure the patient's debt. Others - from the governments of Germany and other states - object that such surgery is costly and they do not wish to pay the bill. Meanwhile the European Central Bank administers saline liquidity - drip by drip - to the patient's banks.

After five years of this, with death in sight, the Greek people have decided to reject the treatments. They have asked, over the past four months, for meetings with the hospital directors, to see if the protocols can be changed. They have been told, no, not unless your doctors agree. But the doctors do not like to have their authority challenged. And just imagine - they report back to their chiefs - what would happen if we agreed? Soon the other patients might get ideas; think of what that would cost! So the treatments remain the same and the results get worse.

Stick to the Oath

There is a principle here, it's called the Hippocratic Oath and it is, in origin, incontestably Greek. The principle is, "First, do no harm." Has that principle now been replaced by another, originating in the sordid culture of international finance: "First, lose no money?"

And if so, should the patient leave the hospital? That is the choice she now must face. It is not an easy choice. Perhaps if you go home, you may die. The doctors do not want you to leave. They place obstacles in the way. To defy them requires real courage, as anyone who has ever been in the situation knows. But then again, maybe back home, things will improve? Maybe that debt can just be cut off - a crude operation that sometimes does save lives. Maybe the fresh air and home cooking will help? Imagine how furious those doctors will be, when they see the patient getting better on her own!

That is where we are in the struggle between Greece, Europe and the IMF. The outcome cannot be known, and in the end, history will judge. But I do believe that when history does judge these matters, her sympathy will be with the patient Greece. Committees of squabbling doctors, jealous of their power and stuck in their ways, do not come off well.

James K. Galbraith holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and a professorship of government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin. He is the author of "The End of Normal: The Great Crisis and the Future of Growth."

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