Bridging the Income Gap

Piketty in South Africa

Via The New Yorker: Piketty in South Africa. Excerpt from a long, informative, and discouraging report:

The French economist Thomas Piketty’s visit to South Africa began with some bad luck. Because he did not have two blank pages in his passport, he was not allowed to board his flight from Paris, and he missed the lecture he was due to give at the University of Cape Town. 

As the audience waited for a video connection to Piketty in Paris to start up, a small but vocal group of student protesters from the Rhodes Must Fall movement—which recently succeeded in its efforts to have a statue of Cecil John Rhodes, the British colonial governor, removed from the campus—briefly took over the stage. 

The video connection still wasn’t working, so Murray Leibbrandt, an economics professor at U.C.T. and a leading researcher on inequality in South Africa, gave an ad-hoc presentation of Piketty’s slides. 

“I wasn’t sure what the punchline was, but it had to be about South Africa, so I thought I would tease out the main points,” he later said. The protesting students left without listening to Piketty’s evidence about inequality, but about half the audience remained. “It was a remarkably South African thing, this type of dialogue,” Leibbrandt said. “We couldn’t have contrived it if we tried.” 

Piketty arrived in Johannesburg the next day, in time to give the Nelson Mandela Foundation’s annual lecture in Soweto, the township where Mandela had lived before he was imprisoned. Some two thousand people snaked in lines around the Soweto campus of the University of Johannesburg to get into the hall where Piketty, whose book Capital in the Twenty-First Century has sold more than one-and-a-half million copies, was to speak. Local newspapers had described him as “the rock-star economist.” The Mail & Guardian, a Johannesburg weekly, took the analogy further: “It’s almost the equivalent of the Rolling Stones playing at your neighbourhood bar.” 

In South Africa, Piketty, whose book chronicles the growing gap in wealth in developed countries, had come to the equivalent of the Hall of Fame. South Africa is the most unequal country in the world. The top ten per cent earn sixty to sixty-five per cent of the income; in the United States, by comparison, their share is forty-five to fifty per cent, and in Europe it is thirty to thirty-five per cent. Even in Brazil, long held to be one of the most unequal countries in the world, the top ten per cent’s share is fifty-five to sixty per cent of income, and falling, Piketty said in the Mandela lecture. “South Africa is really at the top of the class, so to speak.” 

It’s no coincidence, then, that Piketty’s book begins with the story of the Marikana massacre, in which police opened fire on striking platinum workers, killing thirty-four, in a bleak mining settlement northwest of Johannesburg in 2012. The miners were demanding that their wages be doubled. “This episode reminds us, if we needed reminding, that the question of what share of output should go to wages and what share to profits—in other words, how should the income from production be divided between labor and capital?—has always been at the heart of distributional conflict,” Piketty writes. 

At the U.C.T. lecture, Leibbrandt showed a graph that tracked the income of the top one per cent in South Africa, the United States, and France from 1913 to 2012. It tells an unsurprising story of the years of apartheid, but a rather bleak one of the post-apartheid period. In 1948, when the formal policy of apartheid was enacted, the top one per cent of the population received about twenty-two per cent of income (compared with about nine per cent in France, and eleven per cent in the United States). 

By 1975, the share for South Africa’s top one per cent had dropped to about ten per cent, where it remained until 1991, still “at world-beatingly high levels,” Leibbrandt told me. But in the twenty years since the demise of apartheid, the top one per cent’s share of income has increased to nearly twenty per cent. 

The South African shift is “extremely puzzling for all of us,” Piketty told his Soweto audience. This was partly due to international factors beyond South Africa’s control, he said. But it was also partly because “the South African revolution, so to speak, did not deliver as much as one might have expected.”

US: A disadvantaged start hurts boys more than girls

Via The New York Times: A Disadvantaged Start Hurts Boys More Than Girls. Excerpt:

Boys are falling behind. They graduate from high school and attend college at lower rates than girls and are more likely to get in trouble, which can hurt them when they enter the job market. This gender gap exists across the United States, but it is far bigger for poor people and for black people. As society becomes more unequal, it seems, it hurts boys more. 

New research from social scientists offers one explanation: Boys are more sensitive than girls to disadvantage. Any disadvantage, like growing up in poverty, in a bad neighborhood or without a father, takes more of a toll on boys than on their sisters. That realization could be a starting point for educators, parents and policy makers who are trying to figure out how to help boys — particularly those from black, Latino and immigrant families. 

“It’s something about family disadvantage itself,” said David Figlio, a Northwestern University economist and co-author of a new paper, presented publicly for the first time on Thursday. “Black people in America are more disadvantaged than white people in America, and if we were to reduce the disadvantage, we may see a reduction in the relative gender gap as well.” 

Marianne Bertrand, an economist at University of Chicago who with Jessica Pan has studied the gender gap, also found that boys fare worse than girls in disadvantaged homes, and are more responsive than girls to parental time and resources. “Their findings were very consistent: Families that invest more in children are protective for boys,” she said. 

The reasons that boys react more negatively to disadvantage are varied and hard to pinpoint. Even in utero, boys are more sensitive to extreme stress than girls, and tend to have more unruly temperaments. Society discourages boys from showing vulnerability. Low-income families are often led by single mothers, which has been found to affect boys differently than girls. 

By the time boys from poor neighborhoods start kindergarten, they are already less prepared than their sisters. The gap keeps widening: They are more likely to be suspended, skip school, perform poorly on standardized tests, drop out of high school, commit crimes as juveniles and have behavioral or learning disabilities. Boys tend to have more discipline problems than girls over all.

But the difference is much bigger for black and Latino children — and more than half of the difference is because of poverty and related problems, the researchers found. For instance, while boys in well-off families have almost the same test scores as their sisters, the gap is more than three times as large in the most disadvantaged families, the study found. While well-off boys are 3.1 percentage points less likely than their sisters to be ready for kindergarten, the most disadvantaged boys are 8.5 percentage points less likely.

Why inequality persists in America

Via The New Yorker, an excellent overview through several new books: Why Inequality Persists in America. The introduction of a long article:

For about a century, economic inequality has been measured on a scale, from zero to one, known as the Gini index and named after an Italian statistician, Corrado Gini, who devised it in 1912, when he was twenty-eight and the chair of statistics at the University of Cagliari. If all the income in the world were earned by one person and everyone else earned nothing, the world would have a Gini index of one. If everyone in the world earned exactly the same income, the world would have a Gini index of zero. 

The United States Census Bureau has been using Gini’s measurement to calculate income inequality in America since 1947. Between 1947 and 1968, the U.S. Gini index dropped to .386, the lowest ever recorded. Then it began to climb. 

Income inequality is greater in the United States than in any other democracy in the developed world. Between 1975 and 1985, when the Gini index for U.S. households rose from .397 to .419, as calculated by the U.S. Census Bureau, the Gini indices of the United Kingdom, the Netherlands, France, Germany, Sweden, and Finland ranged roughly between .200 and .300, according to national data analyzed by Andrea Brandolini and Timothy Smeeding. 

But historical cross-country comparisons are difficult to make; the data are patchy, and different countries measure differently. The Luxembourg Income Study, begun in 1983, harmonizes data collected from more than forty countries on six continents. According to the L.I.S.’s adjusted data, the United States has regularly had the highest Gini index of any affluent democracy. In 2013, the U.S. Census Bureau reported a Gini index of .476. 

The evidence that income inequality in the United States has been growing for decades and is greater than in any other developed democracy is not much disputed. It is widely known and widely studied. Economic inequality has been an academic specialty at least since Gini first put chalk to chalkboard. In the nineteen-fifties, Simon Kuznets, who went on to win a Nobel Prize, used tax data to study the shares of income among groups, an approach that was further developed by the British economist Anthony Atkinson, beginning with his 1969 paper “On the Measurement of Inequality,” in the Journal of Economic Theory. 

Last year’s unexpected popular success of the English translation of Thomas Piketty’s “Capital in the Twenty-first Century” drew the public’s attention to measurements of inequality, but Piketty’s work had long since reached American social scientists, especially through a 2003 paper that he published with the Berkeley economist Emmanuel Saez, in The Quarterly Journal of Economics. Believing that the Gini index underestimates inequality, Piketty and Saez favor Kuznets’s approach. (Atkinson, Piketty, Saez, and Facundo Alvaredo are also the creators of the World Top Incomes Database, which collects income-share data from more than twenty countries.) 

In “Income Inequality in the United States, 1913-1998,” Piketty and Saez used tax data to calculate what percentage of income goes to the top one per cent and to the top ten per cent. In 1928, the top one per cent earned twenty-four per cent of all income; in 1944, they earned eleven per cent, a rate that began to rise in the nineteen-eighties. 

By 2012, according to Saez’s updated data, the top one per cent were earning twenty-three per cent of the nation’s income, almost the same ratio as in 1928, although it has since dropped slightly.

Yanis Varoufakis: How I became an erratic Marxist

Via The Guardian, a remarkable manifesto: Yanis Varoufakis: How I became an erratic Marxist. This is a long statement by the new Greek finance minister, and it deserves careful reading and reflection. Excerpt:

Europe’s elites are behaving today as if they understand neither the nature of the crisis that they are presiding over, nor its implications for the future of European civilisation. Atavistically, they are choosing to plunder the diminishing stocks of the weak and the dispossessed in order to plug the gaping holes of the financial sector, refusing to come to terms with the unsustainability of the task. 

Yet with Europe’s elites deep in denial and disarray, the left must admit that we are just not ready to plug the chasm that a collapse of European capitalism would open up with a functioning socialist system. 

Our task should then be twofold. First, to put forward an analysis of the current state of play that non-Marxist, well meaning Europeans who have been lured by the sirens of neoliberalism, find insightful. Second, to follow this sound analysis up with proposals for stabilising Europe – for ending the downward spiral that, in the end, reinforces only the bigots. 

Let me now conclude with two confessions. First, while I am happy to defend as genuinely radical the pursuit of a modest agenda for stabilising a system that I criticise, I shall not pretend to be enthusiastic about it. This may be what we must do, under the present circumstances, but I am sad that I shall probably not be around to see a more radical agenda being adopted.

My final confession is of a highly personal nature: I know that I run the risk of, surreptitiously, lessening the sadness from ditching any hope of replacing capitalism in my lifetime by indulging a feeling of having become agreeable to the circles of polite society. The sense of self-satisfaction from being feted by the high and mighty did begin, on occasion, to creep up on me. And what a non-radical, ugly, corruptive and corrosive sense it was. 

My personal nadir came at an airport. Some moneyed outfit had invited me to give a keynote speech on the European crisis and had forked out the ludicrous sum necessary to buy me a first-class ticket. On my way back home, tired and with several flights under my belt, I was making my way past the long queue of economy passengers, to get to my gate. 

Suddenly I noticed, with horror, how easy it was for my mind to be infected with the sense that I was entitled to bypass the hoi polloi. I realised how readily I could forget that which my leftwing mind had always known: that nothing succeeds in reproducing itself better than a false sense of entitlement. Forging alliances with reactionary forces, as I think we should do to stabilise Europe today, brings us up against the risk of becoming co-opted, of shedding our radicalism through the warm glow of having “arrived” in the corridors of power. 

Radical confessions, like the one I have attempted here, are perhaps the only programmatic antidote to ideological slippage that threatens to turn us into cogs of the machine. If we are to forge alliances with our political adversaries we must avoid becoming like the socialists who failed to change the world but succeeded in improving their private circumstances. 

The trick is to avoid the revolutionary maximalism that, in the end, helps the neoliberals bypass all opposition to their self-defeating policies and to retain in our sights capitalism’s inherent failures while trying to save it, for strategic purposes, from itself.

ECB to Greece: Drop dead

Via the economics blog naked capitalism: ECB to Greece: Drop Dead. Excerpt:

Even by the standards of bank thuggishness, the move by the ECB against Greece last night was a stunner. Americans have become used to banks taking houses under dubious pretexts when both the investors and borrowers would do better with a writedown. But to see the ECB try to take a country is another matter entirely. As one seasoned pro said, “If anyone had tried something like this against a country with a decent sized military, the tanks would be rolling.” 

The ECB’s bombshell was to put Greece at risk of an intensification of its ongoing bank run in order to pressure it to agree to a deal with the Troika under an impossibly tight timetable, even shorter than the February 28 pre-existing deadline that Greece Finance Minister Yanis Varoufakis had planned to extend until June. 

As we’ve discussed at length previously, a longer negotiation timetable would be necessary to meet Greece’s objective of restructuring of the relationship with the Troika. Greece wanted that to be based on the recognition that Greece could never pay off its debts and that it was in both sides' interest to let Greece implement more growth-oriented policies. But the message from the enforcers at the ECB was unambiguous: Greece has no rights and needs to accept its debtcropper status. 

The ECB has thus also effectively said that it would rather have fascists like Golden Dawn running Greece, which is what will eventually occur if it succeeds in breaking Syriza. It also just handed France’s Marine Le Pen, head of the nationalistic, anti-Eurozone Front National, fantastic fodder for her campaign. 

The February 28 date was the result of Greece presumably needing access to so-called bailout funds to pay off an IMF obligation coming due. Varoufakis said he would refuse those funds, and could get by until June, when more loans came due, by relying on existing tax receipts and getting what he regarded as minor waivers from the central bank. He also had some creative ideas for restructuring Greece’s debts and said that he wanted the OECD rather than the Troika to provide auditors on behalf of the lenders. 

Even though we warned that the ECB was likely to use its control over liquidity facilities to stymie Syriza’s plans and force Greece to the negotiating table sooner rather than later, the smackdown was even more brutal than we imagined possible. The press release contains these main elements: 

1. The central bank will not allow Greece to pledge Greek government debt as collateral for ECB loans after February 11. The mechanism was the lifting of a waiver that the ECB had in place. This in theory will not have an impact on the banks, since they hold little in the way of Greek sovereign debt and in any event banks can still pledge Greek government debt for emergency lending purposes (note there has been misreporting on this issue). The immediate impact is to thwart Varoufakis’ plans to issue some additional short-term debt to carry Greece through June. Note that the ECB once briefly removed this waiver in 2012 when negotiations with Greece became fraught. 

2. It stated that “it is currently not possible to assume a successful conclusion of the programme review.” This looks to be directed at Greece’s rejection of Troika bailout monitors. 

3. It affirmed that Greek banks still have access to the emergency lending assistance, or ELA. But as we pointed out, that access is on a rolling two week basis. And now that Greece is officially on the ECB’s hit list, the renewal now becomes another choke point for Greece.

Syriza has bold solutions to the forces of austerity that are strangling Europe

Via The Guardian, an op-ed by Costa Lapavitsas: Syriza has bold solutions to the forces of austerity that are strangling Europe. Excerpt:

The inaugural week of the new government in Greece has already delivered a considerable jolt to EU politics, and there is much more to come. 

First, it is necessary to deal with the widely circulated canard that the coalition government between Syriza, the party which I represent in parliament, and the Independent Greeks (Anel) signifies an unholy “red-brown” alliance. Anel is not a soft version of the fascist Golden Dawn. It is a nationalist party that speaks for broad sections of grassroots conservatism, and they have consistently opposed the disastrous policies of austerity. Indeed, with regard to Greece’s national debt, its position might even be considered to the left of Syriza. 

Needless to say Syriza would have preferred to form a government alone, but the election results did not allow it. To its shame, the Greek Communist party refused to join or even support a Syriza government. There is no other party with anti-bailout credentials in the Greek parliament. The dilemma for Syriza, therefore, was either to form a government with Anel and apply the anti-bailout programme, or let the country go to fresh elections, which would have been disastrous for both economy and society. 

We did the right thing. 

Greece no longer considers the troika to have a valid institutional status The reality of Syriza in power began to emerge as soon as the government was formed. A succession of ministers made remarkable announcements while taking office: reversal of electricity and oil privatisations, the re-employment of sacked public sector workers, the scrapping of labour deregulation, raising the minimum wage and more. 

Meanwhile, the new minister of finance declared that the country will no longer negotiate with the troika of the European Commission, the European Central Bank and the International Monetary Fund. Greece will not submit to the planned assessment of its bailout programme, even if that means not receiving a further €7.2bn of troika funding this year. Indeed, the country no longer considers the troika to have a valid institutional status. 

To cap it all, Greece appeared to differentiate itself from EU policy regarding sanctions on Russia. 

The reaction of the Athens stock market was immediate: share prices collapsed, particularly those of banks. It is likely that financial pressure will re-emerge this week since banks have been losing liquidity and international investors are very jittery. 

The reaction of European policy makers, meanwhile, has been one of astonished disbelief, hardly masked by diplomatic niceties. Irate phone calls have doubtless been made to Athens during the past few days. 

The Syriza government is inexperienced, but it would be a mistake to think of it as a group of agitators picking fights with all and sundry. What it is actually doing is applying the “line” – in old-fashioned leftwing terms – by which it won power. 

To be specific, it is applying the “good euro” line claiming that the European monetary union, and indeed the EU, could be radically transformed from within. The leadership of Syriza has absolutely no intention of pulling Greece out of the EMU. Furthermore, it believes that the costs of “Grexit” would be so severe that Europe would not force Greece out of the common currency. 

On this basis it thinks that if a powerful alliance of leftwing forces emerged across Europe, the nightmare of austerity could be ended, the debt burden could be assuaged across the continent, policies to increase employment could be adopted, and the welfare state could be re-strengthened. 

Europe would be transformed.

Asia: Growing levels of inequality hurting both growth and the poor

Via South China Morning Post: Growing levels of inequality hurting both growth and the poor. Excerpt:

There is no denying that a substantial number of people have been lifted out of poverty in some parts of the world over the past decade. Recently, the UN reviewed its Millennium Development Goals and stated that 700 million fewer people lived in extreme poverty in 2010 than in 1990. 

However, at the global level, 1.2 billion people are still in extreme poverty, living on less than US$1.25 a day and lacking sufficient access to basic human needs, including food, safe drinking water, sanitation, health, shelter and education. 

For three years, the World Economic Forum's Global Risks survey has found "severe income disparity" to be one of the major global risks for the coming decade. This is in line with the estimate by the Asian Development Bank that an additional 240 million people in Asia - 6.5 per cent of the population - would have escaped extreme poverty had growth been more equitably distributed over the past two decades. 

The World Bank has similar concerns, and is setting goals to end extreme poverty by 2030 and boost shared prosperity so that the bottom 40 per cent of income earners can share in economic growth. Without doubt, the unprecedented inequality worries the World Bank, the UN and NGOs alike. The difference is that NGOs also see its effects first hand in areas where they carry out poverty reduction projects. 

Our report "Asia at a Crossroads" pointed out that despite growth seen in the region, the gap between rich and poor has grown: four out of five Asians have seen an increase in economic inequality. It has also manifested itself through unfair wage systems, wage disparity between men and women, and low spending on social protection, which reduces both resources and opportunities to assist the poor in breaking poverty's vicious cycle. 

Some progressive-minded business leaders tweeted from Davos that if we had more women in leadership, we would have better governance. This would, in turn, lift many more out of poverty. The yawning gender divide and associated pay gap deserve critical attention as women constitute 70 per cent of the poorest population. 

In countries such as India and Pakistan, only one in three women are in paid employment. And four out of five of these women are in low-end, insecure jobs. In Bangladesh, it is estimated that women earn 21 per cent less per hour than men. The justification is that women start work an hour later each morning as they need to complete their household chores. The burden of unpaid care work alongside discriminatory attitudes affect women's economic status. 

Clearly, inequalities and injustices such as these must be addressed if we are to eradicate poverty, boost economic growth and find a sustainable way forward. The world is in need of mindful leaders in governments and business to find concrete solutions to achieve this sustainable future.

Greek FM calls for Berlin talks on debt deal

Via The Local.de: Greek FM calls for Berlin talks on debt deal. Excerpt:

New Greek Finance Minister Yanis Varoufakis said on Sunday he would like to hold talks "soon" in Berlin and Frankfurt to explain his austerity-hit country's position on the repayment of its debt.  

"I'm really eager to go to Berlin... Madrid, Frankfurt," Varoufakis told reporters in Paris where he has just begun a European charm offensive as Greece seeks to renegotiate its 240 billion euro ($270 billion) bailout despite Germany's insistence that it will refuse to consider any debt relief.   

"It is essential that we meet," Varoufakis said, referring to German Finance Minister Wolfgang Schäuble.   

Speaking at a press conference after meeting his French counterpart Michel Sapin, Varoufakis  said he wanted to see a global agreement on his heavily indebted country's financial situation "by the end of May".   

Between now and then, Greece was "not going to ask for any new loans", he said.    The German finance ministry said it had not yet received an "official request" for such a visit, according to a spokesman in Berlin.   

Greece's Prime Minister Alexis Tsipras has tried to calm nerves and markets spooked by his radical plans, saying he did not intend to renege on commitments to the European Union and International Monetary Fund. 

"It has never been our intention to act unilaterally on Greek debt," Tsipras said in a statement to Bloomberg News.  

But he said Greece needed greater leeway to tackle root problems in its economy, such as tax evasion, corruption and policies which favour only a wealthy few. 

"We need time to breathe and create our own medium-term recovery programme," he said.

Syriza: The radical left's Greek Spring?

Via openDemocracy.net: Syriza: The radical left's Greek Spring? Excerpt:

The phenomenon of Syriza has captured the hearts and minds of European intellectuals. For many informed observers Greece is the prelude of tectonic changes that would shape future European politics, as there is a wave of elections in in 2015 countries facing similar challenges, including Portugal and Spain. The rising popularity of the Spanish ‘Podemos’ movement makes it plausible to see another party of the radical left gaining electoral support in the aftermath of the Eurozone crisis. 

In a pre-electoral speech in Athens, Mr. Alexis Tsipras and Mr. Pablo Iglesias, the leaders of Syriza and Podemos respectively, addressed the audience together promising ‘Syriza, Podemos, Venceremos’ (literally “Syriza, we can, we’ll win”).  So, should we expect a ‘spill-over’ of governing radical left parties in Europe or is, this, another Greek exceptionalism? 

Although it is very difficult to make an accurate prediction within such a volatile political context, the chances of replicating the success story of Syriza elsewhere in Europe are slim. 

First, whether the Greek radical left will be seen as a model relies primarily on Syriza’s performance in the effective management of the crisis. The tight external conditionality attached to the bailout is coupled with a limited timeframe within which crucial decisions need to be taken. 

Syriza’s honeymoon period is very short, and it is therefore highly probable to disappoint many domestic and European sympathizers. By February 28th, Athens would have to reach an agreement for the extension of the bailout with the Troika (ECB, EU, IMF). Otherwise, the Greek government would lose access to approximately 11 billion euros in bailout bonds to protect Greek bank capital needs in the Hellenic Financial Stability Fund. 

Apart from the external influences, there are also a number of reasons endogenous to the Greek political system that makes it difficult to replicate the model of Syriza abroad. For starters, the Greek electoral law, guided by an unusual majoritarian ‘winner take all’ logic makes it easier for a radical party to form a government. In sharp contrast to most other European countries operating under some form of proportional representation, in Greece the first party receives a premium of 50 seats (that is a sixth of the total 300 seat parliament). 

Hence, while in most continental European countries the first party needs to participate in broad coalition government and convince a number of partners on the credibility of its program, a real obstacle for radical parties, Syriza under Greece’s current electoral system only needed to secure the first position (and following the elections the support of the small and unpredictable Independent Greeks party of the populist right). 

Similarly, Greece is the only country in the Eurozone where the economic recession triggered a political crisis, marked by governmental instability, electoral rise of the far right and mass MP defections. 

A unique feature of the Greek political system since the beginning of the recession in 2009 is the high number of MP defections who crossed the floor. In our study we found that the period between 2010-2012 approximately 75 MPs defected; since then this number has increased.   

It is worth remembering that Syriza is a broad church, ranging from radical Marxists to social democrats with radically different policy preferences in dealing with the crisis. Within such a highly volatile political context, it becomes impossible for Syriza to maintain the loyalty of all its MPs in the long term, especially if they have to make painful concessions in the negotiations regarding debt restructuring. A wave of defections, similar to that experienced by all governing parties in the past three years will weaken Syriza’s negotiating power and will disappoint domestic and international sympathizers. 

Finally, another reason why the Syriza experiment may prove difficult to bear fruit elsewhere is related to the idiosyncratic structure of the party itself. In sharp contrast to Podemos, which emerged from a loose grassroots social movement, Syriza participated in the parliament even before the crisis, even though as a party with minimal electoral support. Hence, power structures were already present, while it could also draw on experienced mainstream politicians.

Is Canada ripe for a Syriza movement?

Via The Tyee, an article I published on January 27: Is Canada Ripe for a Syriza Movement? Excerpt:

When the Greek colonels overthrew democracy in its birthplace in 1967, the Americans were not directly involved, but they were aware of what was going on and supported the junta. It took seven years before the junta collapsed.

And of course the United States was behind the military coup that overthrew Chile's elected president Salvador Allende in 1972. Henry Kissinger, then the secretary of state, had strongly backed the coup, saying the Chileans could not be allowed to be "irresponsible" in choosing such a leader. Like Iran, Guatemala, and Greece, Chile was consigned to years of state terror.

Unwritten doctrine

An old Chinese saying advises, "Kill the chicken to scare the monkey," meaning you kill the weaker enemy to scare the stronger enemy. Such ousters were intended as a deterrent to anyone who might think their country would be better off with left-wing policies. With Chile it was finally clear: no serious left-winger would be allowed to take power democratically in any region where the U.S. felt it had strategic interests.

Almost 45 years after Allende, that unwritten doctrine was challenged in Greece on Sunday. Syriza won the election with 36 per cent of the vote -- pretty close to the 39.62 per cent that got Stephen Harper a majority in 2011. With 149 seats, just two short of an absolute majority, Syriza has become the government with the aid of a populist far-right party, Anel, noted for its anti-semitism and German-focused xenophobia.

Alexis Tsipras, Syriza's leader and Greece's new prime minister, is only 40. Wikipedia says he was born on July 28, 1975, "three days after the fall of the Greek military junta." He started as a Young Communist but stayed in the left-wing coalition Synaspismos after the Greek Communist Party left it. He is clearly a very smart man with a lot of political experience.

Six years of failure

But his experience on the Athens city council has not equipped him to deal with neoliberals in the European Union like Angela Merkel. The economic powers in Europe have been locked into austerity as the only thinkable response to the meltdown of 2007-08; seven years of failure have not weakened their resolve to continue the beatings until morale improves.

Tsipras's victory has already encouraged others. Spain's Podemos (an ironic translation of Obama's "Yes we can") has grown in less than six months from nothing into the country's second-largest party, with 300,000 members. Like Greece, Spain has taken a beating from its E.U. partners, and morale has not improved.

Least of all has morale improved among the young southern Europeans who have paid the costs of the meltdown and E.U.-decreed austerity -- in careers lost, families struggling, educations wasted.

For Greeks, Italians and Spaniards born since Tsipras, economic depression is the basic condition of life. Ireland is exporting its young people again. Even social democracies like Sweden and Finland are struggling to make ends meet, and neo-fascist groups are raising the spectre of job competition from immigration to attract new members.