Wednesday, July 1, 2015

Why are Greece's creditors so stubborn?

Given the reasonable and moderate policies of the Tsipras government (elected only five months ago) it's hard to understand why Greece's creditors are so stubborn and stick to their view of how Greece should solve its problems. Partly it's arrogance, the arrogance of power, and partly it's the defense of interests. But there's more. There's the psychology of the creditors -- of the men and women representing the creditors.

Who are they?

They are officials working at the ministries of finance, at the central banks and at the international financial institution to which they move temporarily or for a lifetime: the IMF and the ECB.

I have worked for many years with these officials, as the chair of an informal working group on international finance, and as the director of the Forum on Debt and Development FONDAD.

They are pleasant, intelligent and often soft-spoken persons. Why do they defend policies that harm the lives of people and even kill them (for example, Greek patients who die because they don't get anymore the usual medical treatment)?

Why do they think their policy prescription for Greece is the right one, even when the facts show the medicine has not worked?

The answer is simple and can be summarised in four basic observations: 
  • They are trained to think this way.
  • They are selected in these jobs because they think this way.
  • If they think differently, their bosses make them think this way.
  • They stick to what their colleagues (those who they take seriously, that is, those who think like they think; so not Varoufakis) think.
You can go deeper in trying to understand the psychology or the psyche of the officials representing Greece's creditors. But that's for another post.

No comments: