Greece seems very far away from New York. This is not just a statement about geography, but also a comment on the turbulent protests of the last few weeks in the crisis ridden Southern European nation. Yet, as New Yorker’s increasingly face the weight of budget cuts being made in the name of filling a deficit of some $7.4 billion, they may be able to pick up some important lessons from their counterparts in Greece on how best to resist these onerous demands. Similar things are on the line in both places — the future of state employment, wage levels and pensions. Both will have to decide whether the economy exists to pay off financiers or enrich the lives of working people.
The Trigger in Greece
The current Greek debt crisis is one part of the larger global economic crisis that began in 2008. The immediate trigger for the economic crisis in Greece came in February 2010 as the government was forced to seek refinancing for more than $66 billion in debt. During the heady days of irrational financial speculation of the late 90s and the beginning of the 21st century, global banking institutions conspired with the Greek government to conceal the extent of the debt holdings of the country. The crisis caused a sobering up, and skittish investors downgraded Greece’s risk rating and withdrew from further refinancing of the debt, causing the February crisis.
The International Monetary Fund and European Union (IMF/EU) then proposed a package of cuts that would protect investors while savaging the Greek welfare state and placing a disproportionately high burden on poor and working class people. The IMF/EU package includes a 2% increase in the sales tax, a cut in salary up to 20%, a freezing of pension payments and, in a move that most New Yorkers will recognize, new “sin” taxes on tobacco, alcohol and fuel. The package will serve to further shrink the Greek economy during a time of recession and lock the country into decades of onerous debt repayments.
Problem of a Different Sort in New York
In New York, the state economy also went into a spiral after 2008 as the drying up of the finance sector exposed the weak foundations of the local economy. Since the early 1990s, the state had pursued a policy that eased tax rates on the wealthy, allowed manufacturing firms to exit and built up an unhealthy reliance on taxes collected from Wall Street. This led to a steep recession in the upstate economy, which had relied on the now vanishing industrial production. After 2008, this depression migrated south toward New York City.
Democratic Party politicians, especially Governor David Paterson, joined their counterparts in the Greek Socialist Party (PASOK) by proposing and implementing cuts to all sorts of social services and public employment. Buses and subways, schools and even hot meals programs for the elderly were axed in the name of closing a budget deficit that had been created by catering to financiers. Trends toward the privatization of public services, especially in education, were intensified. The cutbacks reached a new high recently as Paterson proposed to fire 6,700 teachers from the state’s already beleaguered public school system.
Differing Political Cultures
Here, the Greek and New York comparisons diverge quite sharply. Greece has a long tradition of political militancy, especially among organized workers and students. Once the crisis broke in early 2010, the unions were propelled into motion. Since February, they have carried out a number of general strikes in protest of austerity that have managed to bring cities across the country to a standstill.
Political parties such as the Coalition of the Left Movements (Synaspismos) have called for using the tactic of the strike to reject the IMF/EU austerity package. They intend to force international financial institutions to reduce and re-negotiate the debt while defending the wages and pensions of Greek workers.
Things have been a bit tamer in New York. Proposals to increase tuition payments and cut operating budgets at the City University of New York have produced a small revival of student activism. Equally, attempts to close local schools resulted in inspirational community-based mobilizations against the closures that have had mixed success. However, a recent proposal to furlough, through one day a week of forced unpaid vacation, 100,000 state workers brought out large-scale worker protests in Albany and legal actions by public-sector unions that staved off the cut.
The problem facing workers in the New York is two-fold. First, a large percentage of the state’s organized workers are public employees. This means that their hands are tied by the state’s draconian Taylor Law, which enforces a three-day fine for every one-day strike action. Only coordinated actions by all public sector unions can break this restriction.
Simultaneously, state residents remain locked into a two-party electoral system, which deeply favors the Democratic Party. This political arrangement is purposefully designed to prevent radical proposals for dealing with things like budget deficits from being presented in Albany. A voter revolt at the election booth is a necessary part of breaking this stranglehold by the Democrats.
Is the Buffer Dissolving?
One final difference between Greece and New York may be evaporating quickly. Unlike Greece, the New York economy has been stabilized by Federal stimulus funds that have heavily favored Wall Street banks and investment firms. However, signs from Washington indicate that such funding will be cut, just as in Greece, to satisfy the increasingly boisterous demands of international financiers already saturated with US debt offerings. For Washington policy makers, Greece is like looking in the mirror.
Should this turn toward austerity also occur in the US, places like New York would face even greater pressure to slash budgets. That is, unless, as we see on the streets of Greece, a renaissance of the radical left occurs. In that case, proposals for putting the needs of people ahead of financial institutions might gain popular appeal. And the financial sector would be a plump target since, at last count, the 10 largest US financial institutions hold nearly 60% of all US financial assets. A lot of social good could be done, in both Greece and New York, with such immense wealth.
Perhaps New Yorkers have important lessons to learn from the seemingly far away events playing out in Greece.