Tuesday, August 4, 2015

The social psychology of technological stagnation

I want to use this blog post to explore the following issue: what meaning can we make of western culture’s current skepticism about science and technology. Certainly from 1870-1940, science and engineering were held in high repute. In the progressive period in the United States, roughly 1880-1920, the concept of engineering took on the character of a worldview. Progressive activists and intellectuals saw engineering as the method for achieving efficiency in all dimensions of social life, whether applied to industry, natural resource conservation, municipal government or city planning. Thorstein Veblen, the skeptical economist who gave us the term “conspicuous consumption,” argued in his classic, The Engineers and the Price system, 
“That engineers must be free to do their work without interference from political and business people. In point of material welfare all the civilized people have been drawn together by the state of the industrial arts into a single going concern. And for the due working of this inclusive going concern, it is essential that the corps of technological specialists who by training, insight and interests make up the general staff of industry, must have a free hand in the disposal of available resources, in materials, equipment, and manpower, regardless of any national pretensions or any vested interests” (p 54).
We have to see Fredrick Winslow Taylor, the first industrial engineer, and  much maligned today for his efficiency studies of the factory floor, in this light. He saw the science of efficiency as a method for reducing the conflict between workers and foremen. By describing the work to be done with objectivity and precision, workers and owners could agree on what the work required and what pay-rate was fair. Taylor embodied Veblen’s hope for a rational world where "national pretensions" and "vested interests" no longer impaired judgment. 
This exaltation of engineering was also the basis for the many great Worlds’ Fairs, in London (1851), Philadelphia (1876), Chicago (1893), Paris (1900), New York City, (1939) and elsewhere. Worlds’ Fairs offered a roadmap to the future and expressed utopian strivings for the culture as a whole. Moreover, the 1893 exposition in Chicago was not simply a venue for showing tradeable goods and technical achievements but, as a man-made landscape, it was also emblematic of what could be accomplished by large scale urban engineering and planning. As Daniel Burnham, the architect who coordinated the works of the exposition wrote, “The World’s Fair came, and disclosed what all were unconsciously waiting to receive, a lesson in landscape architecture. What the matter was with our public improvements, the Columbian Exposition made forever plain. Here, studied on the spot by millions, and by millions more through the activities of the Bureau of Publicity and Promotion, a great truth, set forth by great artists, was taught to all our people. This truth is the supreme one of the need of design and plan for whole cities.
Similarly, the “Futurist movement,” a group of European artists at the turn of the twentieth century, envisioned their art as tied to the exaltation of machines and the modern. They wrote in their founding manifesto,
“We will sing of great crowds excited by work, by pleasure, and by riot; we will sing of the multicolored, polyphonic tides of revolution in the modern capitals; we will sing of the vibrant nightly fervor of arsenals and shipyards blazing with violent electric moons; greedy railway stations that devour smoke-plumed serpents; factories hung on clouds by the crooked lines of their smoke; bridges that stride the rivers like giant gymnasts, flashing in the sun with a glitter of knives; adventurous steamers that sniff the horizon; deep-chested locomotives whose wheels paw the tracks like the hooves of enormous steel horses bridled by tubing; and the sleek flight of planes whose propellers chatter in the wind like banners and seem to cheer like an enthusiastic crowd.”

Yet consider the following:  
·        On May 29, 2011, the government of Angela Merkel, the prime minister of Germany, announced that it would close all of its nuclear power plants by 2022. On March of 2012, fifty-thousand German demonstrators, responding to the first anniversary of the Fukshima nuclear disaster in Japan took part in anti-nuclear demonstrations. Once envisioned as the source of cheap and limitless power, western countries are foreswearing its use. Italians voted overwhelmingly to keep their country non-nuclear. Switzerland and Spain have banned the construction of new reactors. As of 2013, countries such as Australia, Austria, Denmark, Greece, Ireland, Italy, Latvia, Liechtenstein, Luxembourg, Malta, Portugal, Israel, Malaysia, New Zealand and Norway remain opposed to nuclear power.
·        People are also increasingly skeptical of large-scale urban engineering. On October 11, 2008, four-thousand citizens of Stuttgart Germany protested the demolition of an old railroad station, one step in an ambitious project for creating a high speed rail network between Paris and Bratislava. On September 30, 2010, hundreds of demonstrators were injured when the police used water cannon, pepper spray and batons. On the following day, more than 50,000 people took part in the largest demonstration against the project to date. On October 1, 2010, 100,000 people took part in a demonstration against the project and the proposed demolition. Demonstrators argued that the construction would cut off access to the city's cherished park areas for ten years, and that the integrity of the exceptional railroad-station building should be maintained. ·                 
·        In 1974 Robert Caro published his classic, The Power Broker, the story of the extraordinary achievements as well as the destructive impact of Robert Moses, the great builder of parks, highways and tunnels in New York City and its region from the 1930s to the 1950s. Over the course of his career, ensconced in the independent Port Authority of New York, he built 13 bridges, two tunnels, 637 miles of highways, 658 playgrounds, ten giant public swimming pools, 17 state parks, and dozens of new or renovated city parks.” In one reading of his achievements he was a populist, bulldozing through private gulf clubs and country estates to provide working and middle class families access to great beaches and preserves. Yet starting with Caro’s book, historians saw Moses as a destroyer who ousted “more than half a million people from their homes in the Bronx, on Manhattan’s Upper West Side, in Sunset Park in Brooklyn and on Long Island farms for the sake of new highways.” Some characterized these projects as “slum clearance,” arguing that Moses could have limited the number of evictions by using alternate routes.
Moreover, the resulting dislocation often created new slums. Marshall Berman, the Marxist humanist and philosopher, wrote a passionate and poignant essay on how Robert Moses destroyed the Bronx, a borough in New York City, by ramming the Cross-Bronx-Expressway through its heart. Describing the expressway in dark terms he notes, that it is, “Jammed with heavy traffic day and night, deadly at the graded entrance and exit ramps, cars weaving wildly in and out among the trucks.” It is bordered by large walls that protect the driver from seeing “hundreds of boarded up buildings,” and “dozens of blocks covered with nothing at all but shattered bricks and waste. Children of the Bronx who drive along this expressway, “Are not merely spectators, but active participants in the process of destruction that tears out at hearts.” Watching a lovely building being destroyed by a wrecking ball, Berman reflects that, “So often the price of ongoing and expanding modernity is the destruction not merely of traditional and pre-modern institutions and environments but- and here is the real tragedy-of everything most beautiful and vital in the modern world itself.” This moral vision of an expressway is dystopian to its core. To Berman, Robert Moses, was in fact “the Moloch.”
My question is what accounts for this reversal of perspective? Why would progressive activists such as Jane Addams, Florence Kelly, Daniel Burnham, President Theodore Roosevelt, a great believer in conservation, and yes Robert Moses himself, appear to be on the side of the devil today. One simple answer of course is that technologies, the engineering of everything, and indeed the entire technological apparatus are simply more hazardous, for example, with their impact on the earth’s climate.  A second and equally self-evident answer is that in a post-modern or post-industrial society we are that much more sensitized to the injuries, deaths and dislocations imposed by the very same implements and infrastructure that sustain our living standards.  Just as Marshall Berman argued that modernity destroys itself, our technology, once the vehicle for increasing our standard of living, actually reduces it. 
For example, in 1975 U.S. residents tolerated some 50,000-highway deaths per year. Ralph Nader, the consumer activist, published his indictment of car manufacturers Unsafe at Any Speed, in 1965. It “prompted the passage of the National Traffic and Motor Vehicle Safety Act of 1966, seat-belt laws in 49 states (all but New Hampshire) and a number of other road-safety initiatives.”  By 2009, the number highway deaths fell to 31,000, a 40% reduction, (though still ½ the number of U.S. military personnel who were killed in action throughout the entire Vietnam war!). We are less willing to “pay the piper” in terms of blood and lives, for the goods delivered. 
Indeed, the sociologist Ulrich Beck writes, that we live in what he calls “the risk society” in which social conflicts are focused less on the distribution of income and wealth and more on how different groups are exposed to the risks and burdens imposed by technology and its development, whether in the form of rising ocean levels, pollution, radiation poisoning, storms and hazardous waste. As one author notes, “Beck's theory describes contemporary societies as so profoundly affected by technologically-induced risk, that risk is their defining feature. Paradoxically, the importance of risk in Beck's sociological description of contemporary societies corresponds to the inability of experts to adequately determine or assess dangers posed by technological change as a defining feature of modernity. The 'risk society' is modernity in a state of excess. It is modernity at risk, ultimately, to itself. And it is not just risk, but rather indeterminate risk that Beck identifies as its central problem.” In other words technologies, and the engineers who create, build and operate them, are the ultimate sources of hazard.
One argument in favor of the idea that we live in a culture increasingly sensitized to risk is that our political culture appears to be developing an alternative conception of development, one that links the idea of progress and change to the idea of care, to transformation without destruction. Jane Jacobs, the famous naturalistic observer of city neighborhoods and an urban activist, set the stage for this way of thinking in her classic, The Death and Life of Great American Cities, that though published in 1961 remains compelling even today. As an activist, she led the opposition to Robert Moses’ plan “ to drive an expressway across Lower Manhattan  through Tribeca (it wasn't called that then), Chinatown, Little Italy, SoHo, and the Lower East Side and another major road through Washington Square, the symbolic heart of Greenwich Village”. Characterizing the spontaneous order of the city she wrote,
“Under the seeming disorder of the old city, wherever the old city is working successfully, is a marvelous order for maintaining the safety of the streets and the freedom of the city. It is a complex order. Its essence is intricacy of sidewalk use, bringing with it a constant succession of eyes. This order is all composed of movement and change, and although it is life, not art, we may fancifully call it the art form of the city and liken it to the dance — not to a simple-minded precision dance with everyone kicking up at the same time, twirling in unison and bowing off en masse, but to an intricate ballet in which the individual dancers and ensembles all have distinctive parts which miraculously reinforce each other and compose an orderly whole. The ballet of the good city sidewalk never repeats itself from place to place, and in any once place is always replete with new improvisations.”
Her description of the city’s miraculous order, what she felicitously called the “ballet” of neighborhoods, poses the question of whether or not we could transform our urban settings as our needs change, without being destructive at the same time. For example, in my own city of Philadelphia, urban development often takes place through a process called “in-fill,” through which developers build single homes on vacant plots while renovating rather than destroying old factory and commercial buildings. This stands in contrast to the landscape altering plans implemented 50 years ago. For example, in 1959, Philadelphia was physically transformed when the city destroyed many homes, stores and commercial buildings to build an expressway on its north side to speed cars east and west through the city. By the mid sixties, protestors stopped the building of a similar expressway on the city’s south side. Had it been built, center-city residents would have been cut off from the working class and minority populations on both sides. 

We can call this new model of development, “bricolage” in the sense that developers, home owners and commercial enterprises create a new landscape from the means and materials at hand, for example by renovating vacant buildings and or creating building designs to fit the idiosyncratic lot lines associated with the earlier built environment. The term “bricolage” has the merit of resonating with descriptions of a post-modern artistic and cultural sensibility, for example Andy Warhol’s collage of images of himself, his iconic pastiche of Marilyn Monroe’s face, or quite recently, using pastiche to create radio podcasts. The pleasing result of bricolage at the neighborhood scale is based on the visual surprise produced by the jumble of styles and building types that “in-fill” creates. Broadly, bricolage suggests that order is both created and maintained spontaneously through changes that take place at a small scale but with cumulative impact.  There is transformation without, or with much less destruction. This is why, despite his remarkable achievements Robert Moses, the master builder of New York City, appears now more like the devil than the magician.
If we stay with this line of thinking, we can ask what impacts does this new model of development have on the economy? Does bricolage have any costs?  Because it values experience at a small scale, one unhappy thought, if indeed this makes us unhappy,  is that it it may result in a technological slowdown if not stagnation. For example, one irony is that we have stopped building nuclear power plants when in fact we now have proven designs for building small or modular ones that function without control rods, don’t use weapons grade materials, minimize nuclear waste and of course don’t produce carbon dioxide as an after-product. Indeed, the most surefire way of improving any technology is by using it a lot. This is known as Wright’s Law, or is termed “the experience curve,” in which the unit cost of producing anything falls, or its quality rises, as the scale of production increases. This is why, for example, hospitals that specialize in heart surgery have fewer surgical errors. There are actually only 437 operating civilian power plants in the world. In the United States, from 1990 to 2013, nuclear power plants increased megawatt production by 37% or about 2.5% per year. Compare this to the experience curve effects of Henry Ford’s famous Model T, where volume increased 100 times from 1909 to 1916, reducing unit costs from roughly $8,000 per car to under $1,000. It is no wonder that nuclear power is costly and not as safe as it could be. One hypothesis is that in the risk society we paradoxically stop learning how to reduce risks. 
Indeed, several economists, particularly Robert Gordon in a widely cited paper, "The Demise of U.S. Economic Growth," and Tyler Cowen in his book The Great Stagnation,  argue that we are entering a period of relatively slow growth in productivity, one measure of technological stagnation. Gordon suggests that living standards increased significantly in the early part of the 20th century as households got access to the social and urban “grid,” such as indoor plumbing, electricity, the telephone, the radio, trolleys and automobiles. As he notes in an interview, “Something can’t be more than 100 percent of itself. You could only have the transition from a rural to an urban society once. You could only have the transition from 20 per cent infant mortality to near zero once. All of that was happening in those 50 years. And then in the early part of the post war years we completed the subsidiary inventions from the late 19th century, with commercial air transport, air conditioning and the inter- state highway system.”
Gordon presents estimates of what economists call “total factor productivity,” the portion of productivity growth that is not due to increases in scale, for example more hours worked, or more machinery, but to improvements in the quality of these resources, such as a more educated worker or a better machine. As he shows, total factor productivity has been in decline since 2005, before the financial crisis hit. In addition, Cowen argues that, “The United States produced more patents in 1966 (54,600) than in 1993 (53,200) while, ‘patents per researcher” have been falling for most of the twentieth century.”
Of course, the Internet has change the lived experience for millions of people, but it is unclear how it has changed the material conditions of life. As Tyler Cowen writes, “The revenue component of the internet is comparatively small. A lot of the internet is a free space for intellectual and emotional invention, a kind of open-ended canvas for enriching our interior lives.” We are building culture -- the expressive elements of our lives -- without building civilization, or its material elements.  As Gordon notes, if we follow the rules of economics, when the marginal cost of adding one more opinion to a website is zero, then its marginal benefit, in material terms should be zero as well. PayPal founder Peter Theil, reflecting on the failure of our accomplishments to match our earlier fantasies of the future, famously said,“We expected jet packs, but we got 140 characters” (on twitter). 
One other discomfiting development fits with this vision of stagnation. People in the United States are withdrawing from the world of work. In 1960 close to 95% of men between the ages of 25-54 were working, by 2012, the percent stood at about 83%. This decline took place over periods of enormous economic growth and several cycles of employment booms. This decline in workforce participation also accounts in part for the slow growth in median family income over the last thirty years. As Cowen writes, “In 1947, median family income was $21,771. By 1973, a mere twenty-six years later, it was more than twice higher, at $44,381. Now move from 1973 to 2004, thirty-one years later. Calculating in terms of 2004 dollars, median family income had gone up to $54,061, which is less than a 22 percent increase.” 
One hypothesis is that this decline in participation accounts in part for what George Packer, calls the “unwinding” of the “inner life” of the working class, and what Charles Murray characterizes as a “coming apart” of the white working class, as reflected in marriage and divorce rates, educational attainment, single parenthood and joblessness. Sandor Ferenczi, the famous Hungarian psychoanalyst, once noted that his patients suffered from “Sunday neurosis,” that is, on their day-off they became emotionally distressed. Work in this sense is a psychological container and in its absence we become prey to internal demons. 
Murray in his, Coming Apart: the State of white America, 1960-2010, ascribes this trend to a decline in ‘industriousness.” Some white men are simply unwilling to take available jobs, such as carpenter helper, building cleaner, truck delivery man, that while low-paying nonetheless provide a living standard above the poverty line for two adults. This development he suggests is linked to the decline in the sense of community – what Robert Putnam felicitously called the syndrome of “bowling alone.” People feel marginalized. 
But perhaps our framework provides an additional hypothesis. Absent a cultural narrative of development that links people psychologically to creating economic value, work as a venue for securing a sense of purpose is less salient. It has less meaning. This may also be why so many men with mathematical abilities who once saw engineering as a noble undertaking are now attracted to careers in finance. It represents a kind of social regression from creating value to redistributing it.
Consider a counterexample. Factory work was once at the heart of the technological apparatus of an industrializing and urbanizing America.  This is also why industrial unions were once powerful. Men with limited education, but with the capacity to master the requisite cognitive and manual skills, demonstrated tremendous discipline in subordinating their minds and bodies to often difficult and exhausting physical work. They demonstrated physical and mental courage in forming and defending unions and for the most part sustaining their democratic character. This experience of worthiness undergirded the strong community life and stable marriages they were able to sustain. 
Of course, we could argue that automation itself makes people redundant without regard to whether work is worthy or not.  From 1977 to 2012 manufacturing output rose two and half times, while manufacturing employment fell by about 40%.   
But I wonder if this trend is dispositive. Consider for example, the problem of global warming. As the Scientific American magazine reports, “While we may not yet have reached the “point of no return”—when no amount of cutbacks on greenhouse gas emissions will save us from potentially catastrophic global warming—climate scientists warn we may be getting awfully close. Since the dawn of the Industrial Revolution a century ago, the average global temperature has risen some 1.6 degrees Fahrenheit. Most climatologists agree that, while the warming to date is already causing environmental problems, another 0.4 degree Fahrenheit rise in temperature.. could set in motion unprecedented changes in global climate and a significant increase in the severity of natural disasters—and as such could represent the dreaded point of no return.”
If we take this scenario seriously, and we should, there is little doubt that large-scale engineering and technology development must play a vital role in helping communities adapt to the impact of climate change. For example, soil shrinkage due to drought affects oil and gas pipelines, drought can affect cooling systems for power stations, sea level rises can affect electricity substations in coastal regions, stormy conditions can lead to windmill shut down, power failures will cripple information and communication systems controls, change in rain density can weaken cell phone signals, high winds can knock down telephone polls, and rare earth metals will become harder to mine. It seems almost certain that we will need the appetite, talent, and the resources for large-scale engineering projects, perhaps on a vaster scale than we have ever seen, if we are to respond adaptively to climate change. The question, is will our culture help us prepare?
Stirrings on the right and on the left suggest that it might not. The right wing often opposes large-scale public infrastructure projects, for example, the modernization of the intercity rail network, because it presumes that government spending crowds out private investment. This argument is not entirely reasonable at a time when corporate savings are high—and are used primarily to buy back shares-- and interests rates are low.  But perhaps the wider cultural process I have been describing shapes the right’s skepticism. There is no shared vision of how public resources might be used and why. In contrast to the progressive era, when engineering and urbanization created a public narrative of how modern society should unfold, no narrative exerts a similar force today. One result is that sectional interests, biases and ideologies can hold sway. Indeed, theorists of post-modernism maintain that one of the most salient features of a post-modern society is that it lacks a narrative about its own development. This may be one reason that some people reject the findings of climate science on global warming. It imposes an unwanted narrative on societal development.
The left wing, which often represents the claim that technology is destructive is not always reasonable either. In the risk society, people apply the “precautionary principle,”-- a principle similar to the warning that doctors should “first do no harm,”-- when planning to implement a new and untested technology. This may be reasonable, but it must rest ultimately on a rational assessment of the harm itself. It is striking in this regard that no one has died from genetically modified food over the last 15 years, and indeed, a genetically modified organism (GMO) saved the papaya industry in Hawaii. As many scientists point out, genetic modification takes place in nature through mutation and farmers have been genetically modifying plants through breeding for centuries.
Yet as a piece of investigative reporting in Slate, the online magazine, notes, “In the past five years, companies have submitted more than 27,000 products to the Non-GMO Project which certifies goods that are free of genetically modified organisms. Last year, sales of such products nearly tripled. Whole Foods will soon require labels on all GMOs in its stores. Abbott, the company that makes Similac baby formula, has created a non-GMO version to give parents, “peace of mind.” Trader Joe’s has sworn off GMOs. So has Chipotle.” Yet as the reporter notes, “The World Health Organization the American Medical Association, the National Academy, and the American Association for the Advancement of Science, have all declared that there’s no good evidence that GMOs are unsafe. Hundreds of studies back up that conclusion.”
The Slate reporter continues quite mercilessly. He goes on, “The central argument of the anti-GMO movement—that prudence and caution are reasons to avoid genetically engineered, or GE, food—is a sham. Activists who tell you to play it safe around GMOs take no such care in evaluating the alternatives. They denounce proteins in GE crops as toxic, even as they defend drugs, pesticides, and non-GMO crops that are loaded with the same proteins. They portray genetic engineering as chaotic and unpredictable, even when studies indicate that other crop improvement methods, including those favored by the same activists, are more disruptive to plant genomes. The deeper you dig, the more fraud you find in the case against GMOs.”’
The journalist is describing a paranoid stance, not different from people who once believed that fluoridated water was poisonous, or parents today who believe that childhood vaccines cause autism. Freud argued that paranoia resulted from the projection of internal feelings of hostility. Since the hostility is projected, it cannot be addressed through appeals to objective facts.  Moreover, any failure to identify the actual threatening person or institution only proves that the conspirators have been clever to erase their footsteps. 
The question of course is what is the source of this hostility? I am inclined to think that it represents a tremendous disappointment and anger at the authorities that have failed to bequeath us a safe and beneficent world. Global warming, the war or terror, the breakup of our mediating institutions such as the family, the circulation of nuclear weapons, these pose what some may experience as existential risks. It is the apocalypse coming. In earlier times a younger generation might have seen this as a challenge to be surmounted, as setting the stage for the project of their lives, to be addressed by marshaling all of our scientific resources as well as our engineering and political capabilities. But this will-to-action may be missing. 
This may also be why people are increasingly sensitized to personal risk. Howard Schwartz, in his extensive body of work on “political correctness” has identified a cultural character type, which he calls the “pristine self.” This is the self that takes offense easily and readily without any apparent or objective manifestation of threat.  As he show, its curious impact as a cultural meme can be seen when assessing school bullying. Certainly, if one peruses the press and the Internet one might believe that school bullying is an increasing problem. But the statistics show otherwise. “For all students in grades 6-12, hate related graffiti in classrooms, bathrooms hallways, etc. dropped from 36% in 1999 to about 28% in 2011. The rate of students who reported fearing an attack or harm at school at all has dropped dramatically, from nearly 12% in 1995 to less than 4% in 2011. For black and Hispanic students it is an even more encouraging shift from more than 20% of both groups worried about being attacked in schools to less than 5% in 2011. The decline in actual physical violence is even more dramatic. It was down 74% between 1992 and 2010, according to the latest Department of Justice data, which was cited by David Finkelhor director of The Crimes Against Children Center at the University of new Hampshire, in a paper he published in last January.” 
Why this discrepancy? One hypothesis is that in a society where we fear risks that are ineffable and indeterminate, at least as they appear to us, we turn on others, in this case the imagined bullies walking school corridors, as stand-ins for the threat.  We turn ghosts of the future into present people of flesh and blood. Like the television-show, “The Walking Dead,” we become zombies to each other. In addition, to protect ourselves we seek out victims whom we morally elevate, so that we can project our own sense of vulnerability into them. We don’t consider them in their actual privation, or in their potential, both of which would be to their benefit, but as symbols of ours privation which paradoxically victimizes them more.  By attacking the powers that we believe exploit these victims, we try in our fantasy to protect ourselves. Of course this does not make us feel safe, which only intensifies our need for protection.
Perhaps we are paralyzed by the seemingly impossible dilemmas of re-engineering while exhibiting care, risking without harming, or transforming without destroying. This just may be the challenge worth confronting.

Saturday, May 16, 2015

The Greek Debt Crisis and the psychology of post-modernization

As I write this post, the Greek government faces a deadline. It needs money from its European partners to counter capital flight from its banks, meet the demand of its creditors, and funds its activities.  The two sides disagree both on the terms of bailout, for example should the EU extend the maturity of Greek bonds, and on how Greece should restructure its economy and fiscal policy to regain its creditors’ and partners’ confidence. The Greek government, under the leadership of the left wing party, Syriza, raised the minimum wage, froze privatization and rehired public servants, all steps which contravened its partners’ demands for restructuring and austerity.  But Syriza was elected on a platform of resisting European imposed austerity and for good reason. Greek privation is significant. As of January 2015 the economy had shrunk by more than a quarter, incomes collapsed by nearly a third, and one in four Greeks — and one in two young people - were unemployed.
It is clear that an austerity program, even if successfully implemented will not help Greece significantly reduce a government debt of over 400 billion.  In 2013 Greece ran an export surplus of 1 billion. If it met its partners’ criteria of running a primary budget surplus equal to 4.5% of GDP, which is about 250 billion, its budget surplus would be about 11 billion. Adding the two numbers together, the export surplus and the government surplus, and assuming for simplicity that the value of the debt does not grow, it would take, 400/12, or 33 years at current levels of economic activity for Greece to pay off its debt. As Paul Krugman writes, “at this point Greek debt..is not a very meaningful number. After all, the great bulk of the debt is now officially held, the interest rate bears little relationship to market prices, and the interest payments come in part out of funds lent by the creditors. In a sense the debt is an accounting fiction; it’s whatever the governments trying to dictate terms to Greece decide to say it is.”
Moreover, as many economists have written, targeting the budget deficit as signal of the Greece’s fiscal discipline is misplaced, because when a government reduces spending, the economy contracts, taxes collected fall, unemployment benefits rise and the deficit may in fact grow, as happened from 2008 through 2010
                                                       Greece Government Budget

So what is the meaning of the political and economic pressure the EU has imposed on Greece? One conventional narrative is that the pressure reflects the unfair demands of a German government, ready to punish the Greeks for their profligate spending between 2000 and the Great Recession. In that period, Greek households borrowed money to import goods and services from the rest of Europe. Living standards rose but so did household debt. Moreover, in that same period, investment was limited and imports were greater than exports. In effect, as happened in the United States during the run-up to the sub-prime housing crisis, growth was fueled by debt.
But, so the story continues, consumer spending grew because cheap German loans financed Greek borrowing. The Euro's creation as a common currency in 1999 meant that lenders to Greek banks no longer faced a currency risk; the risk that at one time the Greek Drachma would depreciate as Greek consumers imported goods and services from the rest of Europe. Moreover, at the turn of this century, Germany itself went through its own difficult economic period. Called at the time the “sick man of Europe,” it experienced a recession, partly in response to the IT bubble of the late 90’s. Instead of spending, German companies and households focused on rebuilding their balance sheets, becoming net savers. German lenders therefore looked for new borrowers and Greek households were ready to take on new debt. So Germany, in this narrative, is responsible for Greek profligacy!
There is some truth to this story but I think it is too one-sided, creating a stereotype of the German as an oppressor without a moral claim, a familiar cultural trope, to match the stereotype of the Mediterranean Greek as lazy and profligate.
So, what in fact is at stake, and what accounts for the difficulty, severity and at times intractable conflict between Greece and its partners? As I write this post, the New York Times reports that, “Far from giving Greece a break, the Governing Council (of the European Central Bank) is expected to tighten the screws next Wednesday by placing further restrictions on emergency cash the central bank provides to keep the Greek banking system from collapsing.” I propose that we need to symbolize the situation as a Russian doll, where one level of reality gains its salience from the context that subsumes it.  We cannot understand the debt crisis without considering its widest meaning.
Consider for example that one simple solution to the Greek crisis is to allow Greece to implicitly default on its bonds, for example, by extending their maturity, reducing the interest rate, asking private creditors to take a “haircut,” linking principal payment to Greece’s GDP growth, and enabling the Greek banks to borrow money from the European Central bank (ECB) using devalued Greek government bonds as collateral. This would be a default in all but name. In fact, private creditors have already taken a substantial cut, and the ECB had accepted Greek government debt as collateral for Greek bank loans until this past February.  
But calling it a default, as opposed to a restructuring, suggests that the European Central Bank (ECB) has become a “lender of last resort” to all banks and private creditors who hold devalued sovereign bonds. This was the role the U.S. Federal Reserve bank played as a lender to those U.S. banks and financial institutions whose assets evaporated in the subprime crisis.  But if the ECB keeps public and private creditors whole, this means each European country becomes in effect “too big to fail.” The anxiety is that countries and their creditors will then experience few constraints to lending and borrowing in the future. This is why on Monday, May 11 the ECB stated explicitly that the, “Bank cannot act as a lender of last resort to countries in the Eurozone.”
This anxiety helps explain why in fact the “Troika”—the European Central Bank (ECB), the International Monetary fund (IMF), and the European financial stability facility (EFSF), insists that Greece restructure its economy before it gets its next tranche of aid, some €7.2 billion, even though, as one analyst notes, “Compared to what has already been disbursed, the 7.2 billion euros are a small amount.” In other words, the financial stakes are not high. Moreover, as he points out, the value of Greek’s maturing debt spikes this year, 2015, and then stabilizes through 2033. “It is thus surprising,” he notes, “that the Euro zone governments and the ECB put the whole exposure of their citizens to Greece at risk just for this issue.”
Moreover, the Eurozone governments, particularly Germany and France, have taken steps to reduce their own banks’ exposure to Greek public debt. As the French Finance Minister noted, “We have learned to build walls to protect ourselves, to protect the banking system to protect other countries which could become fragile. So Europe is much stronger. Europe has sheltered itself from turbulence. The danger is for Greece.”
In this sense the overhang of Greek debt has become a symbol, rather than the measure of a substantial financial risk.  But a symbol of what? One hypothesis is that should the European Central Bank become officially and explicitly a lender of last resort, supporting deficit spending countries, the prime minister of Germany, Angela Merkel, worries that the German people’s commitment to the grand European experiment of a single currency will weaken. One survey showed that Germans’ support of economic integration across Germany fell five percentage points between 2012 and 2013. Support in France fell fourteen percentage points!  I believe that Merkel’s personal commitment to the European project of integration is inviolate, and not for economic reasons alone. It has been a vehicle for strengthening the democratic practices of the post-Soviet Eastern European countries. It is also a symbol of a democratic capitalism at a time when China and Russia are developing the practices of an authoritarian version. 
But the economic difficulties facing Greece, Portugal and Spain are undermining Germans’ belief in the viability of an integrated Europe.  Indeed, should Greece’s debt be forgiven, or should it in fact exit from the Eurozone, “The German people," one analyst writes, would discover instantly that a large sum of money committed without their knowledge and without a vote in the Bundestag had vanished. Events would confirm what citizens already suspect, that they have been lied to by their political class about the true implications of ECB support for southern Europe, and they would strongly suspect that Greece is not the end of it. This would happen at a time when the anti-euro party, Alternative fur Deutschland (AfD), is bursting on to the political scene, breaking into four regional assemblies, a sort of German UKIP nipping at the heels of Angela Merkel.”
But should Greece default, would the Germans incur substantial losses on both private and public debt? Are their anxieties based on the prospect of material losses?  I suggest again that the threat to Germany is more symbolic than real.  During the normal course of business the Bundesbank is exposed to claims on Greek banks, as all the central banks of Europe net out their claims on each other every day. Like the Federal Reserve Bank, the ECB is the clearing and settlement house for all central banks. Writing in December of 2014, one writer notes, that Bundesbank claims on the ECB system as a whole, “Have jumped from €443bn in July to €515bn (though down from €750 in 2012-LH). He writes, “Most of this is due to capital outflows from Greek banks into German banks, either through direct transfers or indirectly through Switzerland, Cyprus and Britain.” To be sure, this represents 14% of Germany’s GDP, through in the event of the collapse of the Eurozone, Germany would be liable for only 27% of the debt, or 3% of its GDP. But should the Eurozone remain intact, as is most likely, these claims, as The Economist notes, “are merely bookkeeping entries.”  The ECB can effectively print Euros through Quantitative Easing, buying soverign debt to cover its central banks’ liabilities. Strikingly, while yields on short term Greek Government debt are very high, the yield on its ten-year bond has fallen over the past month, while the yields on other sovereign debt within the Eurozone have risen only slightly. The bond market is not panicked about the long run. 
Let me propose the following hypothesis. The sense of the Euro’s fragility is linked to fears that the European project of integration and modernization, writ large and beyond finance, is losing its legitimacy.  Indeed, from 1974 to 2004 belief  among Europeans in the European Union as a “good thing” declined. 

What is the basis for these feelings? One scholar suggests that Europeans increasingly resist the union because it has developed undemocratic practices of governance, that there is a "democracy deficit."  She writes, “In democracies public policy requires the ability to generate and sustain consent among the ones who are affected by a generally binding decision. Without such consent the European project will remain fragile. Besides, growing skeptical views on the European union will reduce the willingness of citizens to support the European integration process and to show solidarity throughout Europe” (p. 115). It is important to note in this regard, as two authors write, “Few nations sought popular support to create the euro. The German leadership avoided a referendum, and in France, the Maastricht treaty was passed with a thin majority of 51 percent.” Denmark voted against the Euro and Sweden chose not to joing the European Exchange Rate Mechanism (ERM)
It is also striking in this regard that just as Pan-European institutions have offered their citizens the prospect of an integrated polity extending from Portugal to Romania, there has been a countermovement of devolution and fragmentation, for example in Catalonia, Scotland and among the Walloons of Belgium. These are not movements against Europe per se but rather movements in the search of conditions of more local governance. As a Wikipedia entry on the 2014 elections to the European parliament notes, “These elections saw a big anti-Establishment vote in favor of eurosceptic parties taking around 25% of the seats available. Those who won their national elections include: UKIP in the UK (the first time since 1906 that a party other than Labor or the Conservatives had won a national vote), National Front in France, The Peoples Party in Denmark, Syriza in Greece, and second places taken by Sinn Fein in Ireland. Following the election, European Council President Herman Van Rompuy agreed to re-evaluate the economic area's agenda and to launch consultations on future policy areas with the 28 member states.” Moroever, David Cameron, the winner in the recent British elections for Parliament has pledged to hold a referendum on Britain's membership in the EU. In this sense, we can say that Greece has become a symbol of a much wider process that is undermining the European Union’s political and psychological legitimacy.
This development is striking because the original European Common Market was a triumph. It was an instrument for rebuilding Europe after World War Two, for modernizing the continent’s economies, for securing the peace between Germany and France, for resisting prospective Soviet incursions and-- by sustaining welfare state policies -- for reducing the political appeal of indigenous communist parties, particularly in France and Italy. To be sure, it originally consisted of only six countries. But its success demonstrated that countries could modernize by integrating their economies. This conception was based partly on the United States as an example of a country that developed economically by expanding from "sea to sea." The question is why would this modernizing and integrating thrust be jeopardized today? What delegitimizing process is at work?
It is interesting to look at the Greek economy and society here. There is a general consensus both among Greek and non-Greek economists and sociologists that Greece harbors an only partially developed economy. Compared to the other advanced economies in Europe, Greek wages are low, but not as low as it prices, so that production costs are high while the profit share of national income is relatively low. As the following table from a Mckinsey report shows, Greeks work more hours, earn less income and are strikingly less productive than their European counterparts.  This is partly due to the fact that Greek workers support a proportionately larger number of people who do not participate in the workforce, one result of its generous pension system. As one analyst writes, “The average age of retirement age in Greece was 61; in Germany it was 67.”



GDP per capita
Dollars per hours worked
Hours worked per capita
Hours per employee
Participation rate in labor force
There is a sense in which Greece retains some of its pre-modern cultural characteristics.  Both Greek and Non-Greek critics refer to what they call the culture’s “clientistic” sense of government and its services, which enables interests groups to exploit government programs to increase their own standing and well being, for example through patronage, bribes, special favors, tax evasion or avoiding license requirements. Lacking is a sense of the government as an impartial arbitrator, setting standards for efficiency and supporting economic development. As one Greek critic notes, “Greece is ranked 69th in the world on the Corruption Perceptions Index 
alongside Bulgaria, Italy and Romania. Greece also has the EU's lowest Index of Economic Freedom and Global Competitiveness Index, ranking 130th and 81st in the world respectively. Citing a Transparency International study, he notes that, “In 2009 alone, the Greeks paid an average of €1,355 in bribes for such services as speeding up the process of obtaining a driver’s license or building permits, getting admitted to public hospitals, or manipulating tax returns.” Greece also has the largest informal or shadow economy in Western Europe, and as a result a very poor record of tax collection.  This is one reason for its persistently high budget deficits.

Similarly, a 1995 study of Greek family life, suggests that, “although affluence has been increasing in recent years, the traditional extended family has not decomposed into isolated nuclear families, but has changed its configuration. Its morphological equivalent is the extended family system in the urban setting with a continuation of contacts with its network of kin. Indeed, in comparing the frequency of these contacts with other cultures, Greece has one of the highest rates of visits and telephone contacts with relatives.” The scholar goes on to note, “This explains why such a large proportion of Athenian families live in the same apartment building.” To be sure, this study is two decades old, but it does suggest that when Greece households began to run up their debt at the turn of this century, Greek family life had some of these pre-modern characteristics, with overtones of attachment to kin displacing attachment to the polity. This is why they could exploit government services. [1]

There is little doubt that Greece must modernize its economy, but let me propose the following hypothesis.  Greek resistance to modernization, for example reducing pensions, privatizing industry and increasing productivity, has stimulated some wider anxieties about what we can call post-modernization or what some critics call, “Neo-liberalism.” This trends and its vicissitudes are germane to all advanced capitalist countries. In this sense Europeans, as well as observers in the United States, are projecting onto Greece, feelings and anxieties stimulated by their own emerging difficulties.

Consider for example, the experience of Germany when, at the turn of this century, it was characterized as, “The sick man of Europe.” As one German journalist wrote in June 1999, five months after the Euro was introduced, “The social-market economy devised in Germany after the Second World War, with its careful blend of market capitalism, strong labor protection and a generous welfare state, served the country well for several decades. But it is now coming under pressure as never before. As economic growth stalls yet again, the country is being branded the sick man (or even the Japan) of Europe. ”
The journalist goes on to catalogue a host of obstacles to efficient market functioning, such as, “a byzantine and inefficient tax system, a bloated welfare system, excessive labor costs” and the disincentive to hiring workers because the cost of firing them is too high. “Getting rid of workers is costly too. Severance pay is typically a month's salary per year worked, plus generous retirement pay-offs for older workers. ‘The jobs market doesn't really deserve to be called a market,’ says one disgruntled company manager.’” Moreover, he writes, “Germany is still smothered in regulations that crimp markets. Many prices are still regulated, and consumers remain “protected” in bizarre ways: shops can be fined for discounting or making three-for-the-price-of-two offers if these are deemed to send confusing signals to consumers.” Shades of Greece!
One response to this economic crisis was that labor, business and government together agreed to progressively dismantle the system of centralized wage bargaining by industry, so that wages would be set according to local conditions, in others words, to further “marketize” the labor market.  As two authors write,The fiscal burden of German reunification, coupled with an immediately more competitive global environment, made it increasingly costly for German firms to pay high union wages. The new opportunities to move production abroad, while remaining still nearby, changed the power equilibrium between trade unions and employer federations, and forced unions and/or works councils to accept deviations from industry-wide agreements which often resulted in lower wages for workers.” One result was that from 2003 to 2007 unit labor costs in Germany fell (the green-lowest- line) while they rose in the rest of the Eurozone. 

This was also the period in which the German government “loosened” the labor market by lowering unemployment benefits, reducing welfare payments and, when the jobless fail to follow through on their commitments to look for work, cutting benefits. In other words, the Germans went through their own period of privation, of what the authors call “painful reforms.” Income inequality rose in this period as well.
John Kenneth Galbraith, the economist, published a book in 1967 titled The New Industrial State.” It proposed that Big Labor, Big Capital and Big Government, particularly in its instantiation as the Welfare State, oversaw national economic and social development. This was also the time when in Europe, central economic planning still appeared as a viable strategy for building economic wealth. [1] 
We could call this the “corporatist” form of capitalism. One way to interpret the German experience, and indeed the North American experience, is that countries today are dismantling corporatism. Today, Big Labor is losing its clout throughout the western world, and Big Capital, in the form of the global corporation is less vested in the interests of any particular locale or even country. Moreover, in facing the global competition for jobs and investment, states have less discretion over their welfare programs. The tripartite system of power sharing, which once characterized modern or advanced capitalism, has unraveled. I want to call this unraveling process, post-modernization, and suggest that the Germans have connected this new process and the social pain it stimulates, to the more classical challenge Greece faces in modernizing its own somewhat pre-modern economy and society. Indeed, facing post-modern conditions, Greece itself can hardly modernize by simply lowering unit labor costs or reducing wages. Its challenge instead is linked to the technical sophistication of its products and services. As two economists note, “German exports are concentrated in the most-complex products of the complexity scale while Greece and Portugal’s exports are concentrated in the least complex." The potential trauma facing Greece is that its economy is in fact outmoded.
 My critical reader may ask why I reference a process of “post modernization” rather than “neoliberalism.” The latter term is customary and proposes to describe a new phase in the developmental of capitalism, hence the term, “neo.”  It also carries with it a critical edge, suggesting that this new phase is perhaps not really new, that it simply represents a new form of classic liberalism based on our continued and even more pervasive subordination to market processes. In this way of thinking, by dismantling the welfare state, neo-liberalism returns us to the market of the 19th century. And today, all job-holders, facing uncertain prospects in the labor market, become the new proletarians.
I use the term “post-modernism” because the term “neoliberalism” does not express the broader cultural changes, the changes in sensibility that are reshaping Western countries everywhere. The rebellion of the Scots, the decline of big labor, Europeans’ resistance to the EU’s undemocratic practices, weakened state power and the marketization of society, are all cut from the same cloth. They reflect I propose, profound trends of decentralization and devolution at every level of society, and contests for authority in every institution. This is one reason for example that some economists focus increasingly on the city rather than the nation as the new locus of economic development. The city has become the hothouse for innovation producing dense networks of association among technologists, crafts people, service professionals, investors, and financiers. These networks are intensely local in character. That is one reason why it is so hard to “reproduce” a Silicon Valley anywhere else. It must emerge spontaneously or not at all. Density replaces scale.  
Nonetheless the term “neoliberalism” highlights the dark side of post-modernity and helps account for the resistance to an integrated Europe, often expressed by the right rather than left.  Should every person become a cipher in a network of market exchange, investing in his or her individual “human capital,” to hopefully survive the obsolescence of not simply jobs, but entire industries and professions?
Edmund Phelps, the economist, examines the decline of corporatism in advanced capitalism. He associates corporatism with “traditionalism.” Linking surveys of traditionalism with job satisfaction he finds that people in more traditionalist countries such as Portugal, Spain and France have less job satisfaction than people in less traditionalist countries such as the U.S., Denmark and Finland. 
                                                                Mean job Satisfaction

The survey used to construct the index of traditionalism includes such questions as,  Do you feel that service to others is important in life?” “Do you think that children should have respect and love for their parents?” “Do you think that parents have responsibilities to their children?” “Do you agree that unselfishness is an important quality for your children to have?”  As this set of questions suggests, we have to ask what price we are willing to pay for job satisfaction in particular, or for marketization in general.
My sense is that we carry within us a profound ambivalence about these developments. Job satisfaction may very well be a marker of an institutional world in which our skills and interests are acknowledged and respected, and we have a voice in the development of our settings. In fact, I believe this is true. This is perhaps the promise of devolution, localization and decentralization. But for the moment, this transition is very painful, nor is it entirely certain. After all, signposts of devolution are matched by indicators of the further concentration of power, for example by national security agencies, and by global financial institutions, for example the European Central Bank.
I suggest that we are projecting our ambivalence about post-modernization onto the Greek debt crisis. It has taken on a meaning that transcends the facts undergirding it. There is therefore a risk that decision makers and leaders will not take pragmatic steps to resolve it, falling prey instead to their roles in a symbolized conflict.
Observers have been puzzled by the provocative stance that the Greek finance minister, Yanis Varoufakis has taken in the ongoing negotiations. For example, he accused the head of the ECB Mario Draghi of being afraid of Germany’s hard liners. Draghi’s “soul” he said, “was filled with fear.” The day before I posted this blog he said that he wished that Greece, “still had the drachma.” Naturally, he has offended many of his counterparts, so much so that the Greece’s prime minister and his close collaborator, Alex Tsipras, has sidelined him in the negotiations. One conception of group dynamics is that participants are anointed to play symbolic roles in the wider drama that carries the cultural meaning of particular events. Of course they have to have a valence for such roles. As a self -described “erratic Marxist,” he may relish leading the fight against world neo-liberalism. But this is not really his battle, nor does he have the standing and resources to lead it. And the Germans, pressed by the stresses of their own post-modernizing situation may willingly take up the role of taskmaster for others. Where is the pragmatism?

[1] Indeed one reason, that Greece today has many state owned enterprises, is that under the direction of Prime Minister Karamanlis, the first post-junta prime minister and the founder of the Conservative New Democracy party, Greece pursued a policy nationalizing private enterprise as a vehicle for accelerating Greek economic development. While 35 years later, such an approach seems outmoded, at that time it was considered part of the normal practice of statecraft.

[1] This reading of the situation however is a partial one and in some sense unfair. One cannot separate the current Greek experience of government from its dark history. A military junta ruled the Greek people from 1968 to 1974. As one scholar recounts,The worst and most visible act of brutality came in November 1973 when students occupied Athens Polytechnic and university buildings in Salonika and Patras. Coup leader and post-coup Prime Minister (and eventually President) Georgios Papadopoulos sent in troops and tanks to crush the students; this was apparently carried out with extreme brutality and at least 34 students and others were killed, hundreds of others were wounded and almost a thousand arrested. The treatment of the students in Athens and other locations was met with extreme revulsion, and although not on the scale of the brutality carried out in the early Franco regime, this, along with the lengthy period of repression after the civil
war—Greece was ruled by repressive regimes for more than twenty-five years—may have been enough to convince citizens and civilian opposition from all political leanings
that an authoritarian government was to be avoided at all costs in the future.” In other words the image in Greek mind of central authority was one of toxicity. Moreover, when in 1980 the Socialist party, PASOK came to power it expanded welfare state benefits partly as compensation for the suffering and trauma that Greeks on the left had endured since the defeat of the communists in the aftermath of World War Two.