What if Nixon Went to China But All He Got Us Was This Lousy T-Shirt?

I have several blog posts swirling around in my head, but they will take me some time to sort out and put in order.  In the meantime, this column annoyed me enough that I felt the need to write a refutation.

The basic premise of the column is that Alexis Tsipras will be the Greek equivalent of Luis Ignacio Lula da Silva of Brazil or Kim Dae-jung of Korea -- a politician of the Left who nonetheless adopts fiscally responsible, free market policies and thereby cements them into irrevocable policy on the theory that “If he now says that these measures are unavoidable, there truly must be no alternative.” Or, as the author himself comments, the left-wing equivalent of Nixon going to China.

The reason I am unconvinced is that the author is leaving out an important detail. For someone to adopt a policy that goes against ideological type and thereby cement it forever, it is not enough for the policy to go against ideological type.  It must also be successful.  If a political leader adopts a policy that goes against ideological type only to see it fail badly, people tend to be unimpressed by his going against ideological type and continue to want a policy that is successful.  People are funny that way.

Consider Nixon going to China, for instance.  Up till then, the formal policy of the US toward China had been one of regime change.  Specifically, we were formally committed to overthrowing the Communist government and restoring the Kuomintang government of Chiang Kai-shek in exile on Taiwan.  Of course, neither we nor the Chiang Kai-shek government had any capacity or plan for bringing such a result about, so our actual policy was to refuse all dealings with China's Communist government and hope it would go away.  It failed to cooperate.  Although the policy was an utter failure by any standards, no one dared depart from it for fear of being attacked by right wing hawks like Nixon.  Thus Nixon could get away with going against ideological type by going to China because he was immune from such attack.  But if it took Nixon to go to China, it took success to make Nixon going to China be a model to be emulated.  When Nixon went to China, it was the beginning of a long, slow process whereby the US and China normalized relations and China came out of its isolation to join the community of nations.  If instead Nixon had gone to China and received insulting and deliberately humiliating treatment there and a year or two later China had invaded Taiwan and/or South Korea, no one would cite Nixon going to China as a model to follow.

Or consider Nixon's predecessor, Lyndon B. Johnson.  I am firmly of the opinion that, just as it took a Nixon to go to China, it took a Southerner to enforce the Second Reconstruction.  But Johnson could be said to have gone against ideological type in another way as well.  His immediate predecessors, the liberal New England Democrat John F. Kennedy and the liberal Republican Dwight David Eisenhower had both resisted the temptation to go to war in Vietnam, considering it unwise to fight a land war in Asia.  In 1964, Barry Goldwater criticized Johnson for his timidity resisting going to war in Vietnam.  The American people voted for Johnson by a landslide, considering Goldwater a crazed warmonger.  Johnson nonetheless ended up sending 500,000 troops to Vietnam.  Arguably, he was going against ideological type.  But oddly enough, no one ever says, "It takes a Johnson to fight a land war in Asia," or "If even he sent 500,000 troops to Vietnam, there must truly have been no alternative."  The fact that the war did not go very well probably has something to do with that.

So, too, with Kim Jae-jung and Luis Lula da Silva.  I know more about Lula than about Kim.  My understanding in that case is that Lula looked at leaders of the Latin American Left who tried to overturn the social and economic order through the electoral process, only to see the order fight back and win.  After giving it careful thought, he decided that this was not a wise course of action and left the general structure intact, while pursuing moderate redistribution programs intended to put more money in the hands of poor people and allow poor children to stay in school.  Lula's policies became firmly cemented, not just because they went against ideological type, but because they worked.  If Lula had pursued generally conservative policies only to see Brazil grow torpidly, most benefits go to a narrow oligarchy, and then the economy crash into another crisis, it seems mostly likely that most people would not have said, "If even he says these measures are unavoidable, there must truly be no alternative."  More likely, people would have gone on looking.

Well, that is exactly what is going on in Greece today.  The EU has demanded that Greece continue pursuing policies that have been disastrous so far and give all promise of being disastrous into the indefinite future.  Center-left political parties have been duly falling in line with such policies since the financial crisis began, and they have been consistently unsuccessful.  Despite the fact that center-left parties have endorsed these conservative policies, the pubic remains unconvinced that there is truly no alternative.  The main result has not been making the public love austerity, but the destruction of center-left parties (the subject of one of those blog posts swirling around in my head). The author may think that a far-left party will make all the difference, but color me unconvinced.

In fact, the author sort of half-heartedly admits that one reasons people keep looking for an alternative to ever more austerity and "structural reforms" that look very much like very greater numbers of layoffs is that these policies have not worked very well.  

Foreign creditor governments can be unreasonable as well. The misperceptions and errors by leaders in Germany and other creditor countries have been as damaging as those on the part of the less-experienced Greek leaders. For example, the belief that fiscal austerity raises income, rather than lowering it, even in the short run, was a mistake, as was the refusal in 2010 to write down the debt. These mistakes explain why Greece’s debt/GDP ratio is even higher today than it was then.

Each side’s refusal to admit its mistakes reinforced the other side’s stubbornness. The Germans would have done better to admit that fiscal austerity is contractionary in the short run. The Greeks would have done better to admit that democracy does not mean that one country’s people can vote to give themselves other countries’ money.

Is it my imagination, or does is the acknowledgment that the measures creditors were insisting on actually harmed the Greek economy sort of undermine the argument that Greece should never have resisted them?  I suppose the author might argue that he wasn't talking about austerity, he was talking about "growth enhancing structural reforms" without ever explaining what these "structural reforms" are.  Is it too much to insist that anyone proclaiming that "structural reforms" are the secret to economic recovery should first at least explain what those "structural reforms" consist of?

I have seen only one explanation of why an agreement that is basically just more of the same policies that have been so disastrous up till now will be successful, and comparisons to Lula are instructive. Lula da Silva ran for President of Brazil promising to put the interests of the domestic population, especially poor people, ahead of foreign investors and creditors.  This so alarmed foreign investors and creditors that Conventional Wisdom urged Lula to begin his term by undertaking some harsh measure to hurt or punish poor people, not because it made any sense at all, but on a "Nixon goes to China" theory that only such a measure would reassure creditors that he didn't really mean it.  Well, Lula did not take their advice, and somehow creditors managed to calm down anyhow.  The article I have seen explains that for domestic consumption, Greece's creditors have to take some harsh measure to hurt Greece whether it makes economic sense or not, just to punish it for defying creditors.  But they don't really mean it and once the domestic public is not looking, they will secretly take it back and not insist on squeezing the Greeks, but merely on more of those "growth enhancing structural reforms," slightly more specifically identified as "promises on privatization, labor markets, and pension reform."  The author argues that, having adequately punished and humiliated Greece, Europe can't afford to see its latest effort fail and will have to loosen up.  In other words, Syriza committed the unforgivable sin of pointing out that Europe's policies were not working, Europe has forced Greece to say that they work and will now change its policies to something that actually does work in order to claim vindication.  I guess we will see.