Discerning the News: The Greek Financial Crisis

Center of Concern | Thu, May 13, 2010

By James E. Hug, S.J.
Source: Center of Concern
The Greek crisis raises critical values issues for us and our future.

Discerning theNews: The Greek Financial Crisis

The massive European rescue fund assembled last weekend may be necessary to prevent short-term economic disaster and suffering, but it represents serious danger to faith-based communities’ hopes for a more just global economy.

Watch how people interpret and explain it.

In a front page article ("A new reality for the old world", The Washington Post, May 11, 2010), Howard Schneider writes that the fund is backed by a political gamble "that European governments will rewrite a post-World War II social contract that has been generous to workers and retirees but has become increasingly unaffordable for an aging population." He describes it as "a virtual discarding of Europe’s rule book."

The reason? Their economies need to become "more competitive." The obvious competitors in the global economy are the "more flexible" labor forces of the U.S. and Japan. He assumes that enforcing labor force austerities is the action that must be taken by Greece, Spain, Portugal and Europe at large, but doesn’t justify that presumption.

As the European crisis has been unfolding, I have been reading The Shriver Report: A Woman’s Nation Changes Everything recently released by Maria Shriver and the Center for American Progress. The finding of the study, illustrated by extensive data and analysis, is that in the U.S. we have entered a transformational moment that is affecting all aspects of our lives. With women now half of all jobholders, the context and needs of the family have shifted dramatically. The assumption of the traditional two-parent family with one person in the workforce and one at home with the children still structures work patterns, corporate expectations, and government labor policies, making them inadequate to the fundamental needs of 80% of U.S. families today. The study makes a strong case that major changes need to be made in how we structure work life in our society to make it more family-friendly and supportive.

So do we really want Europe to rewrite its social contract to make its workforce more "flexible" and competitive with the U.S. just at the time we are finding that the U.S. model is no longer socially viable?

That is just the wrong direction to take in integrating our global economic system further – for that is what is really unfolding. It will increase stresses on families and communities around the world in the name of ever more efficient economic production aimed at reducing labor costs and increasing profits.

David Leonhardt ("In Greek Debt Crisis, Some See Parallels to U.S.," The New York Times, May 12, 2010) is much more on target. Rather than assuming that economic/labor austerity is the path we must take, he points out that we are at a decision point. We as a people have not yet decided what kind of government and what social policies we want. Right now, we want our services (Medicare, Social Security, good schools, wide highways, a strong military) but we don’t want to pay for them.

This is the real set of questions we need to face. What kind of nation do we want to be and become? What kind of social contract do we need to express that? How can we structure our economy so that it becomes, in the words of The Shriver Report, "family friendly for all families?" Or, in the words of Catholic social tradition, how can we structure our economy so that it strengthens families and communities, so that it serves the common good?

It is a dangerous myth to assume that if we serve economic or market efficiency, the common good will result automatically. The social trend patterns resulting from the economic policies of the last 30 years show that clearly.

The Greek and broader European challenges today show that we’re talking not just about how to structure a domestic economy. All major economies now must compete with each other. We’re talking about the kind of global economy we want to structure, about the kind of world community we want to create.

These are the questions we need to be discussing and debating – as a nation and as a global community. The specific details of the Greek situation and the pros and cons of how to deal with it are not at the heart of the issues we need to face. How do we transform our ingrained assumptions so that we’re asking how we can make the economy serve our social needs (while renewing Earth – but the ecological issues are the matter of another article)? It won’t happen unless we all question our assumptions and raise our voices for our social and ecological values.

James E. Hug, S.J.

Center of Concern

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