PIGS Vs. APEs: Living on an Animal Farm
How would you feel if one day you woke up and discovered that you were a PIG?
December 6, 2010
On how I woke up on an animal farm…
My new porcine identity was suddenly unveiled by a flurry of furious reports, mainly in the United States, UK and Northern European-Germanic media, whose authors were accusing my species of every kind of evils.
In one instance, I was told that the pension of a poor Bavarian woman was in peril because my apparent inherent tendency to profligacy was putting at risk the financial stability of her country.
On another occasion, I went to bed full of remorse because an American Nobel laureate was saying that my family and I were aggravating the global economic crisis to the point of no return.
Some people with solid social and academic credentials were even suggesting that we PIGS should be prevented from attending the same restaurants and using the same currency shared by the more civilized members of humanity.
Remember the old colonial placards at the entrance of posh clubs throughout the British Empire preventing Chinese and dogs from entering? Well, now from Fleet Street to Wall Street, the same was being suggested about us. Apparently, for delicate neo-Victorian nostrils, we PIGS stink as badly as Chinese and dogs were supposed to.
…And it was no joke
Of course, the animal fable I have been referring to is no invention of mine.
At some point during 2008, as the global financial crisis was spreading beyond its epicenter in the United States, the acronym "PIGS" hit the headlines first in the salmon-colored-paper press in Europe, then in the United States and finally all around the blogosphere.
“PIGS” stands for Portugal, Ireland (and/or Italy), Greece and Spain, the countries which, according to critics, were mainly responsible for setting the next stage in the global financial drama — the one moving from private sector liabilities to sovereign debt crises and, ultimately, defaults.
There are different variations of the tale, but the basic storyline concocted in prominent Anglo-American and North European-Germanic editorial boards and decision-making centers (later replicated by their imitators in other latitudes) goes like this:
First, the inhabitants of PIGS-land are per nature spendthrift and financially irresponsible. Therefore, in order to pay for their indulging habits, their governments have been incurring massive structural deficits that they are now unable to handle.
This is so because, caught in the midst of the worst crisis since 1929, financial markets no longer have confidence that the PIGS will be able to pay back their dues plus interest.
The corollary is that, sooner rather than later, most if not all of the PIGS are doomed for the slaughterhouse: Witness the case of Greece before last summer or Ireland’s current predicament.
Second, in the not-so-distant past, those poorly endowed PIGS were induced into living like the nouveau riche thanks to the drug-like enhancing effects of the euro. Sharing the same currency as their more austere and responsible neighbors to the North allowed them to have access to credit at artificially low interest rates.
As would be expected from such irredeemable sinners, instead of putting all that money to good use, they spent it in mostly imported trifles, brick and mortar, siestas and fiestas. As a result, their productivity collapsed, the imbalance in their current accounts skyrocketed and a real estate balloon was inflated to colossal proportions. Witness the case of Spain.
Actually, the storyline goes farther, as our kind of supposedly piggish behavior was not only fatal for the countries directly involved in it. It also put at risk the very survival of the euro.
No wonder an increasing number of voices from the more rational and puritanical realms started advocating the expulsion of the PIGS from the restricted kingdom of a euro for the chosen few — those able to manage their houses according to the letter of the divine law as interpreted by the market and its Anglo-Saxon and Germanic prophets.
As in every sinners’ tale, there is a moral to all this storytelling. Predestined as they were to spend their porcine lives stuck in the mud, but spurred by envy and avarice, the Catholic and Orthodox PIGS tried to fly. Icarus-like they aimed for the sun. But lacking wings, they were condemned to return to their natural habitat. Obviously, the subsequent fall was all the harder.
Now they must be punished to spend a miserable life in the modern equivalent of the Marshalsea debtor prison focusing the rest of their physical existence on this earth, if you can call it that, on deleveraging, deflation, decreasing salaries, diminishing pensions and the eternal repayment of their debts both here on earth — and thereafter in hell.
By contrast, those beloved by their Protestant God are much closer to sharing with Him the heavenly rewards awaiting the ones devoted to a life of hard work and sober habits.
Max Weber revisited
Sadly, one of the most striking side-effects of the recent economic and financial crisis, particularly in Europe, has been the resurfacing of old-fashioned, scientifically flawed and, in some cases, overtly racist theses about the innate superiority of some countries over others when it comes to run an efficient, clean and balanced economy.
This line of thinking has been traditionally represented by Max Weber's hypothesis about the advantages of Protestantism when it comes to creating and nurturing a capitalist society over those nations that were immune to the lures of Luther and the charms of Calvin.
There are several ways to rebut this revived Weberian nonsense. The first, and most obvious one, is to look at the historical record and then move to see what is really happening beyond the coverage of the Second Great Recession by certain media and analysts.
A brief look at history, just for the sake of comparison
Take the case of the Netherlands at its peak as a colonial power, allegedly the quintessential poster child of Protestant probity and rationality, in contrast with, say, the fiscal irresponsibility and corruption of Catholic Spain at the time of its Empire.
Well, it so happens that the company with which the Protestant model of capitalist expansion is mostly associated — the Dutch East India Company, or VOC in Dutch — ended its days known as the Vergaan Onder Corruptie (the same VOC lettering, but now with a hard-edged twist to its meaning, to indicate “Perished By Corruption”). Hardly a sign of having been chosen by God, it seems.
In fact, in terms of longevity, and despite its shaky financial foundations, the Spanish Monarchy lasted as a global power from 1492 until the 1820s — more than three centuries. Meanwhile, the peak of the Dutch Empire came — and all but vanished — in just 50 years, roughly from 1602 to 1652.
And, by the way, if we talk about efficiency and lasting legacies as a sign of God's preferences and divine intervention, just compare how many people now speak Dutch (fewer than 25 million) and how many belong to the ever-expanding Spanish-speaking world (more than 450 million).
In terms of cultural (or soft power), output per every penny invested by Catholic Spain did much better over the long haul than every penny invested by the Protestant Low Countries.
Actually, the case of Spain withstands comparison not only with the Dutch model. We could take a look at the British Empire and the way it managed its public finances. The latter does not seem to have been precisely an example of Protestant prudence, either.
As a result of constant wars and/or mismanagement, Britain had a national debt representing 156% of GDP in 1784. And that was just the beginning.
After the Napoleonic Wars by 1816, the debt had escalated to a staggering 237% of GDP. Even during the 20th century, the record was not precisely rosy. From 1920 to 1937, the UK had a national debt of more than 150% — and from 1945 to 1960 it stood at more than 100%.
And closer to our economic times, Carmen Reinhart and Kenneth Rogoff, in their seminal work about the history of financial crises, remind us that most of the pre-2007, post-World War II bank-centered financial crises in advanced economies took place in Anglo-Protestant economies, not in PIGS-land. Of the 18 crises listed in their work, 13 were caused by Teutonic, Anglo-Saxon and Scandinavian countries, compared with only three by the PIGS (plus two in France and Japan).
Editor's Note: This is Part I of a three-part essay. The views expressed by Luis Francisco Martinez Montes in this article are his own personal opinions.
One of the side-effects of the recent economic crisis, particularly in Europe, has been the resurfacing of the thesis about the superiority of some countries in running an efficient, clean and balanced economy.
"PIGS" stands for Portugal, Italy (and/or Ireland), Greece and Spain, the countries which, according to critics, were mainly responsible for setting the next stage in the global financial drama.
The Dutch East India Company, or VOC in Dutch, ended its days known as the <i>Vergaan Onder Corruptie</i>, which translates as "Perished By Corruption."
Apparently, for delicate neo-Victorian nostrils, we PIGS stink as badly as Chinese and dogs were supposed to.
This has been represented by Max Weber's hypothesis about the advantages of Protestantism when it comes to a capitalist society.
Luis Francisco Martínez Montes
Counselor to the Spanish Representation to the United Nations Luis Francisco Martínez Montes is a counselor to the Spanish Representation to the United Nations in New York. As a diplomat, he has served as advisor to the Cabinet of the Secretary of State for Foreign and Ibero-American Affairs in the Spanish Ministry of Foreign Affairs […]