Further austerity can only worsen Greece's economic plight, particularly already-catastrophic unemployment, warns Dimitri B. Papadimitriou, president of the Levy Economics Institute, according to the Institute's macro-economic model. But "unthinkable" economic policies - suggested by conservative and progressive economists alike - could.Truthout Interview
Austerity's Failure in Greece: Time to Think the Unthinkable?
CJ Polychroniou | President of the Levy Economics Institute
6 comments:
Introducing a "parallel national non-convertible currency, including government tax-based bonds traded and used for payment of taxes at par" could be a great idea, a much needed first step to overcome austerity and get the economy moving again.
The recent Levy Institute paper on the Greek economy had already pointed out the likely, catastrophic consequences of pursuing the current course. Now its President is coming forward with these suggestions for practical, effective measures. Let's hope that Greece may soon find a leadership capable of implementing these "unthinkable" policies - for the alternative pushed by foreign creditors since 2010 can only bring further devastation to the country's economy and its people.
I’ve come across numerous low grade articles from the Levy Institute, and this is one more example. Most of the article just rambles on about the “scourge” of unemployment, and those wicked neoliberals and the the nonsense that is expansionary austerity.
Well we’re all aware of the costs of unemployment: we don’t need academics with time on their hands to devote thousands of words to the point. As to neoliberals and that nonsensical expansionary austerity idea, obviously neoliberals think Greek austerity is great, and do doubt the advocates of expansionary austerity thought the latter would cure Greek’s problems. But that’s all a side show.
The important point is that austerity is not being imposed on Greece for purely sadistic reasons: there is some method in this madness, namely that it’s supposed to cut periphery costs, which in turn is supposed bring about an internal devaluation. The author, Polychroniou, is completely unaware of that point: the word devaluation does not appear in his article. He’s clueless.
As to whether we’re actually seeing internal devaluation, I’ve actually looked at the numbers (unlike Polychroniou). And that devaluation is coming, but far too slowly, far as I can see. Bill Mitchell has looked at the numbers as well. So my conclusion (like Bill Mitchell) is that some or all periphery countries should leave the Euro.
Polychroniou reaches the same conclusion, but his reasoning his hopeless.
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A bit late to say the end is nigh, 7 years onto the austerity and internal devaluations through Europe. Most economic indicators are looking more stable or even slightly rising for the first time in years. The troika should have/could have created a more humane reform with an investment program to create jobs as they transitioned Greece to an economy in the German image but this is the medicine that economists have doled out for decades.
In the end the cost would not have been much different but the human suffering would have been less. Without forcing the government's hand and inflicting the austerity, I can't imagine there would have been the political will to make the cuts to government required to stay in the Euro zone, which even now is fairly popular. People like to wait for the vice to clamp down before making changes. Hard to believe so many people see the shared sacrifice as a price worth paying for European unity and democracy. Almost biblical to sacrifice a generation to appease the blood thirsty god.
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