Must-Read: Simon Wren-Lewis: The Ideologues of the Eurozone
Must-Read: Simon Wren-Lewis, who is very smart and has followed the Eurozone crisis much more closely than I have, seems to have joined the Ancient, Hermetic, and Occult Order of the Shrill: “Ph’nglui mglw’nafh Euro R’lyeh wgah’nagl fhtagn!”. We wish him luck with his new appointment at Miskatonic University in picturesque Arkham, Massachusetts. And we are seriously considering, after reading him, whether the Euro project needs to blown up–indeed, whether the fundamental flaw was in U.S. occupation authorities allowing the formation of the Bundesrepublik, because a European Union that now had five members named “Brandenburg”, “Saxony”, “Bavaria”, “Rhineland”, and “Hanover” would be likely to have a much healthier politics and economics than our current one, with one member named “Germany”:
: The Ideologues of the Eurozone: “It was all going so well…
…True, Greek GDP did shrink by 25% over 4 years, unemployment rose to 25% and youth unemployment to 50%, but before Syriza’s election Greek GDP had actually stopped falling. Further austerity was planned so that Greece could start to pay interest on its enormous debts, together with various ‘reforms’ that were so obviously in the interests of the Greek economy, and the consensus forecast was that the Greek economy might start to grow at a pace that would also stop unemployment rising. Who knows, in a decade or so it might even fall below 20%. But then disaster struck. The Greek people went and spoilt everything by electing a government that suggested that there might be an alternative…. The real blame must lie with the ‘populist’ politicians who pretended there could be an alternative. The ever patient and understanding Troika negotiators then had to deal with ‘adolescent ideologues’… cheered on by pundits and economists on the left in the UK and US who wanted nothing more than to use Greece as part of a ‘proxy war’ to get more Keynesian policies in their own countries.
If you think the above parody is over the top, click on the two links. The hypocrisy of some of the commentary on Greece is amazing. When the ‘adolescent ideologue’ Mr Tsipras shows a statesman-like maturity in being prepared to compromise… he is accused of inconsistency…. When those who he is negotiating with push him further than he is prepared to go, he is accused of ‘taking Greece to the brink’ by having the temerity to ask the Greek people to choose…. The OECD estimate that the output gap in Greece is currently well over 10%. In plain English that means that those currently unemployed could be producing something useful and GDP could easily expand by at least 10% without generating any increase in inflation. (Greek inflation is currently around -2%)…