Dictatorship of the technocrats in Greece and Detroit

More than 20 years ago, Lucio Magri of the now defunct Communist Party of Italy observed that because of capitalism’s internal logic, which is to expand privilege for the few at the expense of the many, Capital from time to time runs afoul of formal democracy. When this happens Capital’s impulse is to suppress democracy.

Post-industrial Capital’s first choice for doing so, according to Magri,  is neither an authoritarian dictatorship nor fascism; instead, it prefers to endow appointed experts with the authority to supersede elected officials–a dictatorship of the technocrats if you will.  Two examples are now underway on both sides of the Atlantic.

In Greece, the European Commission, European Central Bank, and International Monetary Fund last November demanded and received the resignation of Prime Minister George Papandreou after he suggested that Greeks should vote whether to accept  austerity measures proposed by the three institutions, which have become known as the Troika. The Troika demanded the austerity measures in return for loans to help Greece service its huge debt obligation. Papandreou was replaced by an unelected, MIT-educated banker with a PhD in economics.

Back in the US, Michigan’s governor and Detroit’s mayor are negotiating an agreement designed to deal with the city’s heavy debt load. The agreement, called a consent decree, would result in the appointment of a Financial Advisory Board with the authority to reduce and privatize city services, terminate contracts with public service workers’ unions, and ignore elected officials on the City Council.

The Troika was reluctant to allow a vote on its austerity plan. It would impoverish more Greeks and was opposed by a nine to one margin. The Troika believed that a popular rejection of its plan would lead to a disorderly default on the country’s debt, which would jeopardize the worldwide banking system; consequently, it had Papandreou replaced with Lucas Papademos, who served as Vice-President of the European Central Bank between 2002 and 2010.

Papademos then oversaw the imposition of the country’s second round of austerity measures in two years. Meanwhile, the Troika organized an orderly default that cost private bondholders dearly, but prevented, at least so far, a general fallout.

Meanwhile, the austerity plan for a second time cut pensions, slashed services, reduced pay for government employees, and reduced the minimum wage. Annual economic growth has been reduced to -7 percent and business curtailed so badly that a strong economic recovery that could alleviate the current misery is unlikely.

Like Greece, Detroit, the US city hit hardest by the nation’s de-industrialization policies, is in financial trouble. Only two auto plants remain in the Motor City, and a population that once exceeded a million is now about 700,000. As a result, the city’s tax base and revenue have shrunk leaving the city mired in debt.

Last summer, Mayor Dave Bing insisted that city employee unions agree to concessions to help the city service its debt. The unions were reluctant, but eventually agreed. Michigan’s governor Rick Snyder said that the concessions weren’t enough and prepared to implement Michigan’s Emergency Management Act, which allows the governor to appoint financial managers with broad powers to manage local governments in financial distress.

Last week Michigan’s state treasurer Andy Dillon drafted a consent decree outlining how the Emergency Management Act would be implemented. The draft calls for the appointment of a nine-member Financial Advisory Board and a chief financial officer, a chief operating officer, and a chief human resources officer. The board and the newly appointed officers would manage the city’s day-to-day affairs. The mayor would retain some policy-making functions, but the City Council would be reduced to a rubber stamp.

Negotiations between the mayor and governor over the consent decree have faltered over details, but if an agreement is reached, the first order of business for the appointed advisory panel and the city’s new officers will be to reduce city services and unilaterally break the city’s contracts with its workers’ unions.

Al Garrett, president of AFSCME Council 25, which represents 60,000 city workers in the State of Michigan, said the purpose of the consent decree is to make sure that the city does not default on its loans. “There’s no concern about services, or with the city living up to its contracts,” Garrett said. “It’s about making sure that bond holders are paid.”

The bankers’ coup in Greece will expire in April when new elections are held, but Garrett says that the consent degree contains no time limit for  how long the Financial Advisory Board would run the city. “The only people protected by the consent decree are the Wall Street folks,” Garrett said.

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One thought on “Dictatorship of the technocrats in Greece and Detroit

  1. Pingback: Unions join movement against foreclosures | Left Labor Reporter

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