Afternoon Must-Read: Raquel Fernández and Jonathan Portes: Argentina’s Lessons for Greece

If there was one lesson that should have been learned from the 1920s and 1930s–and relearned many times since–it is that the stubborn pursuit of destructive policies in the hope that if only they gain enough credibility they will cease to be destructive is, quite frankly, mad. No policy can be less credible than the repeated claim that you will sustain unsustainable policies:

Raquel Fernández and Jonathan Portes: Argentina’s Lessons for Greece: “The first lesson from Argentina is that…

…if the economics are on your side, you can and should ignore politicians prophesying disaster. The vast majority of economists (outside of Germany) agree that Greece’s debt should be written down and its fiscal policy relaxed. There is also little doubt that this is the view of senior economists within the IMF…. The second lesson of the Argentine crisis is that a short period of political turmoil can cost surprisingly little compared to a long period of mindless pursuit of misconceived policies…. Sacrificing Greek interests in the name of European or systemic financial stability may have once been the correct path for the IMF to pursue, but the crisis there is well past the point at which these policies ceased being justifiable. Now that Greece’s ineffectual and unpopular government has been swept away (another accurate prediction), it is time for the rest of Europe to clean up the financial mess…

February 16, 2015

Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch