Some Thoughts about Adults in the Room

The year is not even half-done, but I'm quite confident that Yanis Varoufakis political memoir, Adults in the Room: My Battle with Europe's Deep Establishment, will be one of my top-3 reads for 2018. Now I've been aware of Varoufakis since 2015 when Greece's bailout referendum was all over the news. So I was already aware of common arguments Varoufakis and other economists cited on why austerity was bad economic policy, or why the EU was making a colossal mistake in its handling of the Greek debt crisis. But to vicariously experience that fateful 2015 through the eyes of an insider as Varoufakis is something else entirely. So whether or not you're familiar with the Greek debt-crisis, I highly, highly recommend reading this book. Sure, given that it's a political memoir written by a "loser," it's hard to tell just how objective and truthful of a writer Varoufakis is, but if even only half of the things he tells in this book are true, it still makes for a shocking read. Like my other Some Thoughts posts, I don't mean to do a proper review or a convenient summary. Instead, I'll ruminate on some tangential ideas I had while reading this book.

Among fans of military history, there are many who often lose sight of the forest for the trees. This comes in several varieties. Those obsessed with hardware while ignoring software. Those obsessed with tactics over strategy. Those obsessed with pure combat over organizational structure and administration. But even those who remember not to lose sight of this"forest" known as the "military" may nevertheless forget that this forest isn't some isolated, abstract entity. Rather, it's inextricably linked with other "forests" such as the state and society to form a larger ecosystem, if you will. This is important to remember because many events in military history don't make sense if you approach it purely within the confines of military strategy. One famous example is Japan's conquest of Manchuria in 1931-32, justified through a false-flag incident. A quick look at a map (non-Mercator, preferably) is enough to see that Manchuria is big. Officially, the Japanese puppet state known as Manchukuo was nearly 1.2 million km², which would be roughly as big as France, Germany, Austria, Netherlands, Belgium, and Switzerland combined. Usually in strategy games, you'd want time to properly "digest" such a big land-grab. Indeed, even Kanji Ishiwara, the man who engineered this land-grab without proper military authorization, thought the same. He advised building up Manchukuo and Japan's strength while playing friends with the rest of East and Southeast Asia before ultimately challenging the USSR. But Japan never stopped. Despite the supposed Tanggu truce with China, Japan's Kantou/Kwantung Army continued to nibble away at Inner Mongolia and Northern China, leading to frequent conflicts with both the Chinese and the Soviets, ultimately resulting in a full-blown war known as WW2.

"I got mine so fuck y'all niggas." -Kanji Ishiwara-

How does one explain such recklessness that makes a mockery of grand strategy? Simple. States, armies, or any organization in general are not hive-mind entities. They're run by individuals. And those individuals have their own individual priorities and ambitions. Sure, Ishiwara may have thought it wise to put the breaks on aggressive expansionism for a while, but that's also because he was speaking from a more comfortable position as a living legend. He made his footprint on history and won honour and glory. Imagine if you were a starry-eyed young Japanese officer wanting promotions, honour, and fame. Would you really be okay seeing "winners" kick away ladders to deny you the same chance that they had enjoyed? Things like Hokushin-ron and Nanshin-ron may make it seem like Japan's foreign policy in the 1930s can be understood within the sphere of military strategy alone, but you're missing a huge point when you fail to see how even these doctrinal debates are really just domestic political struggles being played out on the front-lines. Now I don't want to pretend like I'm saying anything super insightful here. But the idea that wars can be waged not to achieve foreign objectives but rather domestic objectives is an important lesson to keep in mind, especially for citizens in democracies. And such wars need not be "won militarily" to achieve their real objectives.

For a concise book on austerity as an economic policy, check out this book.

So what does this all have to do with Adults in the Room? Just as reckless/senseless wars are sometimes waged primarily to serve domestic political struggles and individual interests, Adults in the Room shows that exactly the same applies for economic crises and the politicians and technocrats tasked with solving them. In short, neither military nor economic theory is adequate to fully explain the odd twists and turns in military and economic histories. To illustrate, consider the following incident from the book:

During the negotiations with the troika a similar 'war of the [economic] models' took place, with real casualties among the Greek people. For example, whenever I argued that in a struggling economy marred by poverty and tax evasion the best way to increase the state's revenues from VAT or from corporate tax was to reduce VAT and corporate tax rates, the troika would retort that their computer models showed the opposite: only by increasing the rate of VAT and corporate tax would tax revenue rise. . . When they showed me their models, I realized why they had been reluctant to do so. Inside there lay a scrupulous economist's nightmare: an inbuilt and frankly ridiculous assumption that price increases such as those produced by VAT increases never reduce sales, and that rises in corporate tax rates always lead to more tax paid by business. They had omitted to include any 'price elasticities' in their models. . . No economist ever assumes that a price increase, however steep, will leave sales unaffected.

You don't have to be a genius to see the PhD-level of idiocy going on here. But to simply label the troika technocrats as idiots would be to misunderstand the situation. If it had been a simple stupid mistake, they would have fixed it when pointed out by Varoufakis. But in reality, Varoufakis only slightly inconveniences the troika elite who doggedly continue to insist that the emperor is indeed wearing clothes. Because you see, the entire Greek bailout and austerity debate had never really been an economic issue at its core. Hence, it wasn't something that rational economic analysis could ever solve. As Varoufakis states time and time again, the major players in the EU, ECB, EC, and IMF all knew exactly what they were doing. They knew that the initial "bailout" of Greece wasn't really to bailout the Greek economy, but to bailout the French and German banks without causing important people to lose face. They all recognized the futility of further bailout packages to Greece without easing up on enforced austerity measures. Hell, even the head of the IMF told Varoufakis that the austerity measures the troika insisted on can't work, but that he should nevertheless go along for the sake of all the political capital that's already been invested. In short, the vast majority of people in this tragic drama were far more motivated about their individual legacies, possible promotions, future elections and parliament seats than actually sitting down like adults and working out a sound solution that could save millions of lives. Of course, economics is complex and it would be sheer folly to assume that listening to self-proclaimed Cassandra-esque prophets like Varoufakis would have magically solved the debt crisis. But what makes reading Adults in the Room so frustrating as it is compelling is the fact that so many of these elected and unelected officials care so little about solving real problems than they do about their egos and careers.

Ever since Brexit and Trump's election, I've noticed a creeping support for the view that the average citizen simply isn't fit to make important political choices, and that we would be far better-off entrusting our fates to technocrats with their fancy PhDs from elite universities. Like 19th-century Saint-Simonians, they place their faith in a meritocratic technocracy and the power of rational thought. But such enthusiastic idealism misses, perhaps wilfully, the darker side of humanity. Getting a PhD doesn't confer immunity to being egotistical or immoral. Hell, even when higher education institutions across the world like Islamic madrasas or Neo-Confucian academies focused primarily on giving someone a moral education, they still churned out their fair share of scummy graduates. This is the point where I want to be like Yang Wen-li and tell people to have faith in democratic institutions, but I'm honestly disillusioned as fuck and am just waiting to see how much shittier the world can get. If I can at least read about how the world goes down the shitter through an insider's perspective as in Adults the Room, the book-nerd in me will at least be satisfied.