Archive | June 2015

Some thoughts on the Greek crisis

A Greek former student of mine, Marina, asked me on Facebook yesterday what I thought of the Greek crisis. Reflecting on her question I realized that there were a few thoughts I had that might be committed to my blog, so I am going to give it a shot. Obviously it is difficult to be original given the amount of commentary about this topic but I hope there is something someone finds interesting…

1/ The elephant in the room – German domination of Europe

One of the more distressing elements of this crisis has been the extremely infantile comparisons of Germany/Angela Merkel to Hitler/the Nazis that have appeared in the Greek press. This sort of thing is obviously ignorant, offensive and betrays an appalling knowledge of history. Such unpleasantries aside, the (domineering) role of Germany in Europe is a discussion that needs to be had. Peacefully integrating Germany into Europe has been our continent’s biggest problem for over 150 years, and the 1933-45 period was only the most notorious manifestation of an older problem. The European Communities were of course also set up primarily to contain Germany, and ever since the issue has occupied policymakers far more than is commonly acknowledged.

Given this historical background, I confess that I find the behaviour of the German taxpayer and Government particularly worrying. Germany went into the Euro quite conscious of the prospect of economic superiority over countries that had previously devalued to stay competitive (on page 432 of Carlin and Soskice, 2015 if you don’t believe me), and its lack of solidarity with countries it profited at the expense of in the Euro’s first decade is very troubling. To paraphrase Thomas Mann, what we need is a European Germany rather than a German Europe…

2/ I generally dislike Syriza

I actually think that a Grexit would be in the best interests of Greece, but I do have a series of reservations about Syriza. I am unsure about their negotiating tactics. Rather than perpetually engaging in brinksmanship, it might just be better to initiate a Grexit as responsibly as possible. If they want to hold a referendum (and referendums must be used highly sparingly if they are to have any meaning at all), it would also surely be better to hold a referendum on Greek membership of the Euro rather than on a mere single agreement. There is also of course Syriza’s highly unsavoury links with Putin and the movement’s ludicrous demand for reparations from Germany to take into account…

3/ German/EU arguments about austerity have a sell by date of around 2011/12

Even if one bought the original economic arguments for austerity (and many of us were suspicious of them at the time), it is blatantly clear that, after five long years of mass unemployment and incredible social deprivation, austerity is simply not working. However badly the Greek political classes behaved prior to 2010 (and you could argue that some deserved criminal prosecution), simply observing the evidence of austerity’s record until this point should convince us of what a terrible idea it has been. People still seem to (unbelievably) advocate austerity in Berlin, Brussels and Frankfurt however. I remember lecturing on this topic in 2012 and saying that I could understand the German/troika point of view, but my position has gradually changed as austerity has continued…

4/ I have a feeling it is all going down

By nature I can be something of a pessimist, and I suspect that Greece may just be the first of the dominoes to fall. If Greece leaves the Euro, which is not a bad bet, I predict that its economy will recover more quickly than the other Mediterranean countries which are also chafing under austerity. If that is the case, people in other Mediterranean capitals may start getting ideas…

Anyway hope there was something there that someone found useful. Comments welcome as always…