Open letter to the Greek Prime Minister
6Jun
Dear George,
A few days after the 2009 election that brought you to power, you told your cabinet in a televised meeting: “We are anti-authoritarians in authority”. Most of your cabinet, men and women who had been craving authority for years, looked at you incredulously, while your detractors mocked you. You seemed rather lonesome at that moment. And yet, to the degree that I know you, you were utterly authentic in uttering that thought.
Since then much poisoned water has flowed under the proverbial bridge. The utopian declarations were swamped by an angst-ridden effort to save the country. It forced you not only to clench your teeth, and to drown out your utopian self, but also to renounce some of your basic convictions about what ought, and what ought not, to be done by those in authority. To the extent that I know you, I am convinced you considered your harsh decisions to have been the best of a hideous lot. And I can imagine your loneliness just after you took each one of them.
Thus we arrived in May 2010, a juncture where you were ambushed by the most momentous decision any peacetime Prime Minister has had to face hitherto. You know that we disagreed on whether it was the correct decision. It matters little now. They convinced you that the deal you put your signature to was a genuine bailout; a lifejacket offered after a shocking shipwreck for the purposes of allowing the shipwrecked a chance to buy time and find their way, through stormy waters, toward some terra firma. I considered the same ‘bailout’ a massive ball-in-chain, attached to our collective ankles, dragging the whole of the eurozone toward the bottom (surplus and deficit nations alike, North and South bound together in a deathtrap). You chose to follow the advice of your counsellors, and of the captains of finance, judging that the ‘bailout’ was, indeed, buying you precious time. Nevertheless, to the extent that I know you, your decision filled you with angst and sadness.
For months now you knew that the ‘bailout’ was failing because it was in its DNA to fail (and not because it was not followed as best as it could have been by your government). We, economists, as you well know, disagree on almost everything. History has, however, taught us two lessons: (1) You cannot save the bankrupt by means of expensive, new loans; and (2) Swinging austerity cannot and will not reduce the deficits and debts of a macro-economy caught in a savage recession, especially when it is unable to devalue its currency and, to boot, forced to operate in a recessionary global and regional environment. Last year’s ‘bailout’ violated both principles. Is it any wonder it failed?
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