Kostas Kalloniatis – Greece: 10 unscientific slips of a left-wing critique

In his article Kostas Kalloniatis argues that the situation in Greece not as bad as claimed by Sergio Cesaratto and Stavros Mavroudeas in their article “Revelli, SYRIZA and Render unto Caesar the things that are Caesar’s…” in BRAVE NEW EUROPE.

There were no English translations for some of the links, so we decided to still provide access to the Greek orginals. We apologise for any inconvenience – The editors of BRAVE NEW EUROPE

Kostas Kalloniatis is an economist working for the Greek parliament. He has worked for the Ministry of National Economy and several Greek research Institutes like INE (Labour Confederation’s Research Institute), ITEP (Tourist Research Institute) and IOBE (Institute of Economic and Industrial Research). He was also an economic analyst for the Greek daily financial newspaper “EXPRESS” and “KYRIAKATIKI ELEUTHEROTYPIA”.

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This article constitutes a critique to a critique by economists Professors Sergio Cesaratto and Stavros Mavroudeas who tried to deconstruct Professor Marco Revelli’s positive assessment of SYRIZA’s governance. Their response was provoked by Revelli’s accusations of Tsipras left-wing critics (like Cesaratto who characterized Tsipras as traitor and spoke of SYRIZA’s economic policy failure) as pseudo-left and nationalist, serving the purposes of the conservative Right.

We believe that everyone has the right to express his / her opinion, and that the public debate cannot be based on similar descriptions and aphorisms (pseudo-left, nationalists or traitors). Nor can it be based on incomplete or false elements that lead to misinformation. While it is true that Tsipras tried but failed to implement his original program to exit the Memorandum and end austerity policies and has been reconciled with the troika, it is also true that he has made some remarkable changes in the economy while trying to redistribute the burdens of austerity to society for weaker income classes.

Cesaratto and Mavroudeas article does not recognize any improvement in any field. We disagree and focus our criticism on 10 points in which we believe the two writers have slipped into unscientific estimates.

  1. Health and welfare expenditure

It is correct that medical services remain underfunded and with a great shortage of staff. That is why the government has decided this year to employ 1,200 permanent workers in hospitals and Health Centers throughout the country in posts and specializations that currently are being covered by other auxiliary staff.

Apart the fact that thousands of nurses were recruited by the current government in reopened hospitals, “two million Greeks returned under the umbrella of the national health system” as Revelli rightly points out.

In addition, government-funded healthcare expenditure declined by -41% in 2009-2014, but increased 5% on SIRIZA-ANEL (2014-2017) governance on a clear reversal of the previous trend and although the country was in a memorandum. Also, per capita total health expenditure in the first period decreased by -36%, while during the second increased by 7%.

It is totally false to attribute to SYRIZA the 37% increase of the poverty and social exclusion rate in Greece. This percentage rose from 27.6% in 2009 to 36% in 2014 to fall to 34.8% in 2017. If social transfers were also taken into account, the poverty rate was reduced by 2 percentage points on SYRIZA (from 22.1% in 2014 to 20.2% in 2017). Greece spends about 27% of its GDP on social assistance – compared to 29% in EU – and occupies 11th place across Europe over Spain, Portugal, Slovenia and Cyprus.

  1. First residence protection and auctions

According to the General Secretariat for Trade and Consumer Protection, the protection of main residence continues to apply to heavily indebted natural persons who do not have the commercial status through their inclusion in Law 3869/2010, which, following legal amendments, provides absolute protection for the debtor’s main home permanently provided he is unable to make payments to all creditors (banks, individuals, companies, etc).

Henceforth, accelerating house auctions is not for any deterrence of public resistance as presumed, but for the simple reason that if the balance sheets of banks are not alleviated, there will be no restart of the necessary bank financing for businesses that want to invest and development will be lacking momentum.

  1. Taxes and inequalities

The tax cut is a reduction in tax deduction and does not constitute any new tax. The government has committed itself to gradually reduce taxes accordingly to progress on fiscal space creation.

As regards the worsening of the income distribution estimated by the authors, official data refute them: during 2009-2014, the index of uneven income distribution (Gini) rose by 4.2% and the income quintile share ratio (S80 / S20) increased by 12%, while in the period 2014-2017 both indicators declined -3.2% and -6.2% respectively. Instead of the estimated worsening by the writers, there was a clear decrease in income inequalities by SYRIZA.

  1. Austerity policies and government management

The writers accuse Revelli of sophistry. But sophistry or misconception is to charge SYRIZA with previous PASOK-ND government performance and not to recognize any progress made on its governance. Misconception is the flattening of all policies during the crisis based on the limitations of the Memoranda, without any distinction being made in the policy mix or reforms. Misconception is not to balance but arbitrarily compare reforms weight among the first two and the third Memorandum, concluding that the work of SIRIZA was easier and lesser, when it is well known the underground war which was unleashed by the status quo (domestic and international) towards the first Greek left-wing government, treated as a “left parenthesis”. Misconception is to attribute economic recovery solely to market automation and the economic cycle, which in Greece’s case has been completely circumvented as professors themselves confess. Misconception and full adoption of ND’s argument is that “positive growth rates were to be seen” in 2014, when investments declined by -5% and reforms in social security, VAT etc. had been abandoned, hence the stoppage of troika quarterly reviews and the non-conclusion of the Memorandum. Finally, the government has never claimed with complacency that the return to development guarantees strong and long-term growth.

  1. Growth rate and exit to markets

It is rather strange that the two economics professors disregard two significant structural factors that burden Greece’s economy growth potential, the overthrowing of which takes time and prevents reactions of a ‘compressed spring’ type: these are the high public and private debt levels, and the distorted production structure of the economy based on consumption and the manufacturing of non-internationally traded goods. Add to these the creditworthiness of an almost bankrupt economy, and maybe one can see why SYRIZA’s policies to achieve primary surpluses (whose targets have been reduced compared to those of ND-PASOK government) and to plan economic restructuring, have a stabilizing and developmental character and why a 2% medium-term growth is not trivial in today’s global situation of international market turmoil and geopolitical risks.

As for the exit to the markets, it is not a fraud, because debt refinancing  outside Memorandum means you must resort effectively to international private markets by previously gaining investment confidence and having opened your economy to foreign competition, which during the crisis started to build through the implementation of structural reforms, the management of public property and the increase in exports (the percentage of goods and services exports to GDP increased from 19% in 2009 to 34% in 2018).

  1. Unemployment, full employment and migration

Their review of the labor market contains inaccuracies and mistakes not justified for economics Professors. First, unemployment today is not more than 20% but just 19.5% (May 2018). Second, youth unemployment (15-29 years) is not 40% but 35.6% (2017), having fallen by almost 10 percentage points since 2014 (when it was 45%). Third, during 2010-2016, 710,000 emigrated, but only 376,000 of them were Greeks, while 476,000 have immigrated to Greece of which 224,000 were repatriated Greeks, so that the net outflow of Greek citizens were 152,000 (not the supposed 710,000), while brain drain should not exceed 120,000 young graduates. Fourth, the full employment rate from 2017 to date is not decreasing but rising slightly from 90.2% in 2017 and 89.5% in the first quarter of 2017 to 90.4% in the first quarter of 2018. Of course, if we compare to absolute numbers of 2017 with the first quarter of 2018, full-time jobs fell by 17,000. However, seasonality factors oblige the comparison to be made with the first quarter of 2017, so instead of being reduced, full-time jobs have increased by 92,000! Fifth, long-term unemployed are no longer 3 out of 4, i.e. 75% of all unemployed, but 68.4% (first quarter of 2018) declining by 5 percentage points from the fourth quarter 2014 levels (73%).

  1. Sustainability and debt restructuring

The professors´ article, questions the sustainability of debt, citing the IMF DSA report, arguing that SYRIZA did not negotiate a debt relief. But they don’t acknowledge the fact that the IMF’s Debt Sustainability Analysis concludes that debt is sustainable until 2038! They don’t mention the debt relief measures provided by ESM (restructuring debt maturity, decreasing interest rates and imposing a cap on Gross Financial Needs), that according to ESM estimates are equivalent to a debt reduction of 55%.
As it is known long-term sustainability forecasts are very sensitive to the macroeconomic and financial assumptions used. For this reason, markets and investors base their investment decisions on official international organizations reviews, such as the IMF, ESM, creditworthiness agencies etc.
All the above institutions positively appreciate the medium-term debt sustainability. The debt relief measures taken in conjunction with the substantial cash buffer accumulated by the authorities as well as the Euro group’s commitment to implement long-term debt relief measures after 2032, if proved necessary, mean that the country is gradually returning to regularity and international markets.

  1. After Memorandum supervision

The authors clearly suggest that enhanced surveillance will be permanent and that it is a new program. However, strengthened supervision will last only 6 months and European Commission clearly states: “Enhanced supervision is neither a continuation of the current program nor a new program… enhanced surveillance does not include new conditions. The commitments undertaken only concern the completion of a series of reforms already initiated by Greece under the Stability Program”.

  1. Grexit and left-wing politics

Certainly, a true left-wing government in Greece has to confront the EU. Not to risk the situation of sliding into a state of insolvency and national isolation, but to help the Union and mostly its people to secure inclusive growth, equality, prosperity, and fair living conditions. This policy means that texts, institutions and treaties have to be improved (see asymmetries of monetary and economic union, North-South inequalities, absence of democratic functioning and institutional control, incorrect fiscal adjustment and migration policies etc.). That’s how economic and social conditions will also be improved for working people and peripheral countries like Greece.

Those who attribute the plight of Greece exclusively to EU policies, or EMU design and the assignment of critical economic policies to it seem to disregard five essential factors: Firstly, the economic crisis is not due to the undoubtedly outdated today and therefore problematic European architecture, but to global economic imbalances of the capitalist system. Secondly, precisely because the crisis has global dimensions, the problems that arise also demand global solutions and can’t be dealt with on a national scale (see deindustrialisation which started before the EEC creation, or climate change, the immigration crisis etc). Thirdly, if Greece leaves EU, it will geopolitically tend to identify with a third-world country seeking angrily allies to face the threat of war (see Turkey’s aggressiveness). Fourthly, those who propose Grexit forget to evaluate where led us the nationally independent economic policy of the past. Fifthly, the proposal of a ‘true left and nationally independent governance’ should be based on a prior appraisal not only of the costs of staying in or the benefits of leaving the EU, but also of the benefits of staying in the EU as well as the costs of the exit (see Brexit, or even Argentina’s return to the IMF). Perhaps then one would discover that things are much more complicated than first thought

  1. In conclusion

In conclusion, we do not have any ‘growth leap mechanism’ to boost the economy out of all the problems and pathogens which have been accumulated and burdened it over time in order to celebrate the return to prosperity. However, we have accomplished the conclusion and therefore the exit from the Memoranda of Understanding and there are solid proof of the recovery of the economy shown clearly by most economic and social indicators, so that we can finally argue about a difficult but in general successful, with all the shortcomings, management of the economic crisis by SYRIZA.

 

7 Comments

  1. I thank Kostas Kolloniatis for his reply. We shall comment it later. Just one remark for now: I never personally wrote or said or even thought that Tsipras is a traitor. I believe that Syriza had dramatic decisions to take. I only find ridicolous the triumphalism about the supposed end of the Troika control of Greece. I expect Kostas to apologize for the accusation he made.

  2. Dear Sergio, please believe me when I say it was not in my intentions to distort or defame your political views and that I have no problem to apologize if I misunderstood you. Likewise I am happy you now deny the ‘accusation’. But when I read the first paragraph of your common (with Mavroudeas) article saying: ‘In a recent article Marco Revelli published in Greek and Italian – a habitual guest in Greece of SYRIZA and his government – made a diatribe against what he called ‘pseudo-left’ for considering Tsipras a traitor and SYRIZA’s economic policy a failure’ I considered the characterization “traitor” (not uncommon to the far left circles at least) to be an acknowledged fact as I did not see any denial from your part.
    Εven more importantly, in the fourth paragraph before the end of your article very clearly you write the following: ‘The misfortune in the Greek case was that the Greek Left (all of its sections) shied away from proposing in concrete terms the abovementioned alternative programme and restraint itself to simply promoting popular mobilisations (resisting troika’s changes but without offering an alternative) and an abstract anti-capitalism (that despite its vociferousness failed to concretely challenge capitalism). This facilitated SYRIZA to steal people’s support; and of course, subsequently, to betray the people.’
    Now if SYRIZA betrayed the people as you say, I wonder what does this mean for his political leader in your opinion.

  3. Βefore the rooster crows … Kalloniatis instead of Revelli

    Since SYRIZA’s mouthpieces seem to have a habit for employing evangelic dictums it is apposite perhaps to use one: Before the rooster crows Kalloniatis emerged behind Revelli with a reply to our critique which did not even bother to translate several references in Greek. Why such a rush? Isn’t Revelli able to reply for himself? Or there is a latent relation between Revelli and a SYRIZA journalist whose regular job is trying to bash every left-wing critique of SYRIZA and who from the very beginning was for an accommodation with the troika and the EU?

    Debate and critique are not only necessary but an essential part of the Left; but open, honest and disinterested one. If M.Revelli is willing to engage in it he is more than welcome. However, ‘employed’ pens – like Kalloniatis – are not. Particularly when not long ago they were related not with the Left but with PASOK. Moreover, Kalloniatis’ arguments are fallacious, his use of data selective (and sometimes massaged). His accusation of unscientificity is, to say the least, arrogant.

    However, in a forthcoming article we will deal in detail with the following issues: (a) unemployment, (b) income distribution and (c) health. In all these areas, contrary to SYRIZA’s mouthpieces, its record is dismal.

    PS. Tsipras may not be a traitor since he and the hard core of his party never actually ascribed to the people’s cause and always had systemic ties and dependencies. Nevertheless, they are certainly blatant liars and demagogues that betrayed all their declarations and promises to the Greek people.

    • Stavros, on one point we editors of BRAVE NEW EUROPE shall have to take responibility. When preparing Kostas´s article to be posted, we should have spotted the references in Greek. This is a common error among our authors, who cut and paste references and footnotes forgetting that they are in other languages than English. It is part of our job to spot these. In this case we failed Kostas and our readers. We apologise.

      In the meantime we have provided the English version for those links where possible, otherwise we have left the Greek originals for those readers who understand Greek.

  4. We are going through a period in which Right Wing parties are on the rise all over in Europe, while in Greece, under the center-right lionskin, it has launched a general assault to force out the SYRIZA government, in order to implement an absolutely neo-liberal and unpopular policy program. This is another reason – apart from the Left’s morality – to believe that left-wing criticisms towards the government must be constructive and, at the very least, scientifically documented to foster public debate with rational arguments. Otherwise, if we stick to the ‘black and white’ logic, degrading criticisms and flattening assessments, then we will repeat the sectarian errors of the Stalinist left of the 1930s when the Communist parties called “Socialfascists” the reformist Social Democrats, thus dividing the labor movement and paving the way to real fascism and war.

    This is the scientific documentation which I didn’t discern in S.Cesaratto and S.Mavroudeas criticism, and that triggered my political motivation to answer with an article based on available economic data or arguments with reference to exact sources or documents.

    While I was expecting an equally well-established answer from the two respected academicians that would question or debate my arguments or even question the information I quoted, in order to find any mistakes or misconceptions in my assessment, instead a brief comment was uploaded by S. Mavroudeas, quoting that “Kalloniatis’ arguments are misleadingly, the use of data is selective (and sometimes subject to data massaging)” and “he is at least, arrogant, for characterizing the paper unscientific. ”

    I could not find in his response any argument to justify his heavy accusations for me. Instead of an economic analysis and presentation of economic facts, the professor, prefers to ‘teach’ in a very unacceptable language by accusing me as a journalist, spokesperson and hired pen-writer for SYRIZA, latently related to M. Revelli, persecutor of every left-wing critique to SYRIZA and warm supporter of the troika and the EU.

    I really feel sorry for the ethos and mentality of the professor which is not appropriate for the image of a left progressive academician. People of the left ideology know how to respond to arguments with new arguments, rather than use personal attacks and offensive characterisations. Even if he considered that I am a CIA agent, Mr. Mavroudeas should confront my analysis and arguments with his counterarguments, if he was to respect his readers and his eminent position in society.

    The issue is not whether I am a journalist or a SYRIZA’s ‘employed pen’, which I am not, neither if I have a relationship with Revelli (whom I do not know) or whether I am a supporter of the Troika and the EU, which I ain’t. The question is if what I wrote about Mr Mavroudeas criticism is based on facts or not.

    Mr Mavroudeas thinks that he can avoid any such answer, ascribing to my article an intention that he then condemns through characterizations believing he condemns the article as well. This is the definition of the intentional trial, an extremely well-known political method in the Stalinist left.

    Mr Mavroudeas says that he favours debate and critique if it is open, honest and disinterested. He does not discuss with me as I am a SYRIZA’s “employed pen” and ‘not long ago I was related not with the Left but with PASOK’. That means that neither SYRIZA (reformist left) or PASOK (social democracy) supporters are entitled to participate in Mr. Mavroudea’s dialogue, because these people can’t engage in sincere and unselfish criticism (does this rings a bell related to stalinist sectarian experience of the 30’s ?), such as he can or M. Revelli, whom he invites to dialogue.

    He forgets, of course, that in his article he described Mr Revelli as “a habitual guest in Greece of SYRIZA and his government”, that he had twice accused him of sophistry, that Revelli uses as his title an evangelic dictum that – as Mavroudeas claims in his comment – is a typical habit of SYRIZA (although Mavroudeas himself uses also one). Finally, he forgets that his article concludes by calling Revelli a pseudo-left («It would be advisable next time M. Revelli accuses others of being pseudo-leftists first to have a look at his mirror»).

    In other words, Mr Mavroudeas can dialogue to Mr Revelli being “a sophist and a pseudo-left, regular guest and mouthpiece of SYRIZA government”, but he can’t dialogue with me, as he considers me an ‘unwanted intruder’ (see the title of his blog comment) in his closed leftist economic academy, ignoring that elitism has never been a feature of left ideology.

    I will not give another answer to Mr Mavroudeas’s miserable personal attacks. But I have to point out the difference to Mr Cesaratto’s comment which was polite and decent. That’s why I apologized if I misunderstood him by quoting at the same time the points in his article that might have led to the misunderstanding.

    In any case, I want to thank Brave New Europe’s editors for their hospitality.

  5. As usual Kalloniatis’ arguments (together with his data) deform reality. I would like to add two brief points, for the sake of the readers of BRAVE NEW EUROPE and then end this exchange.

    Debate regarding the strategy and the economics of the Left concerns primarily those belonging to the Left. Revelli is such a case. ‘Hired pens’ serving several masters are not part of it. And Greece is a small country and personal trajectories are easily known. So pace Kalloniatis …
    Second, a reply to the misleading arguments and the massaged data of the non-papers and those the government’s advisers and promotors will follow soon. This is a different debate from the one on the Left’s strategy.

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