Europe’s Lapse of Reason
Joseph E. Stiglitz, Project Syndicate
JAN 8, 2015
Across the Atlantic, there are few signs of even a modest US-style recovery: The gap between where Europe is and where it would have been in the absence of the crisis continues to grow. In most European Union countries, per capita GDP is less than it was before the crisis. A lost half-decade is quickly turning into a whole one. Behind the cold statistics, lives are being ruined, dreams are being dashed, and families are falling apart (or not being formed) as stagnation – depression in some places – runs on year after year.
The current mess stems partly from adherence to a long-discredited belief in well-functioning markets without imperfections of information and competition. Hubris has also played a role. How else to explain the fact that, year after year, European officials’ forecasts of their policies’ consequences have been consistently wrong?
These forecasts have been wrong not because EU countries failed to implement the prescribed policies, but because the models upon which those policies relied were so badly flawed. In Greece, for example, measures intended to lower the debt burden have in fact left the country more burdened than it was in 2010: the debt-to-GDP ratio has increased, owing to the bruising impact of fiscal austerity on output. At least the International Monetary Fund has owned up to these intellectual and policy failures.
Europe’s leaders remain convinced that structural reform must be their top priority. But the problems they point to were apparent in the years before the crisis, and they were not stopping growth then. What Europe needs more than structural reform within member countries is reform of the structure of the eurozone itself, and a reversal of austerity policies, which have failed time and again to reignite economic growth.
Now Greece is posing yet another test for Europe. The decline in the Greek economy since the start of the crisis is in many ways worse than that which confronted America during the Great Depression of the 1930s. Youth unemployment is over 50%. Prime Minister Antonis Samaras’s government has failed, and now, owing to the parliament’s inability to choose a new Greek president, an early general election will be held on January 25.
The left opposition Syriza party, which is committed to renegotiating the terms of Greece’s EU bailout, is ahead in opinion polls. If Syriza wins but does not take power, a principal reason will be fear of how the EU will respond. Fear is not the noblest of emotions, and it will not give rise to the kind of national consensus that Greece needs in order to move forward.
The issue is not Greece. It is Europe. If Europe does not change its ways – if it does not reform the eurozone and repeal austerity – a popular backlash will become inevitable. Greece may stay the course this time. But this economic madness cannot continue forever. Democracy will not permit it. But how much more pain will Europe have to endure before reason is restored?
On Verge of Victory, Europe’s Ascendant Left Declares “Subservience is Over”
by Jon Queally, Common Dream
Friday, January 23, 2015
Syriza and Podemos have become the mouthpiece of the anti-austerity movement in southern Europe while Tsipras and Iglesias have emerged as key political leaders who emerged from the grassroots, street-level protest movements which rose in opposition to the severe economic policies imposted by elite forces following the financial crisis that began in 2008. In relatively short time, both Syriza and Podemos went from being non-existent political entities to standing on the doorstep of taking power.
With national elections in Greece just days away, and Syriza’s polling numbers only improving, Alexis Tsipras announced that his party is prepared to “overthrow” the status quo and vowed to implement swift changes to undo the austerity policies-imposed at the behest of foreign creditors and attached to a bailout package offered by the European Central Bank and the IMF-that have left the Greek economy in tatters. Standing before the large crowd, Tsipras announced that by Monday, “[Greece’s] national humiliation will be over. We will finish with orders from abroad.”
Syriza’s answer to austerity, he continued, would be this: “The bailout is over. Blackmail is over. Subservience is over.”
Taking the podium to address the thousands gathered, Iglesias indicated the fate of the Greek and Spanish people-both crushed by unemployment and the gutting of the public sector-were intimately tied. But, Iglesias declared, “The wind of democratic change is blowing in Europe.” Less than one year since its inception, Podemos is now polling ahead of Spain’s ruling party. Though national elections in Spain could happen later this year, they have not yet been scheduled.
Ahead of the Greek election on Sunday, the latest polling in the country shows Syriza has built on its previous lead over the ruling New Democracy party, now led by Prime Minister Antonis Samaras.
Though Prime Minister Samaras has tried to counter the rise of Syriza by telling Greek voters that its leftwing policies will lead the nation to ruin, experts and economists argue that it has been the austerity policies imposed across Europe, though most severely imposed in nations like Greece and Spain, that have been the clearest culprits of economic ruin.
Syriza stretches poll lead as Greek election campaign ends
Helena Smith, The Guardian
Friday 23 January 2015 06.06 EST
Greece’s anti-austerity party of the left, Syriza, has stretched its election lead to six points, putting it on course for a historic victory in Sunday’s crucial elections.
With the incumbent prime minister, Antonis Samaras, warning of economic catastrophe if Syriza prevails, and Europe looking on nervously, the shortest election campaign in Greek postwar history concludes on Friday.
Barely four weeks after the failure of parliament to elect a president, triggering the ballot, Greece’s fate now lies in the hands of 9.8 million voters. All the polls show, with growing conviction, that victory will go to Syriza. A poll released by GPO for Mega TV late on Thursday gave the far leftists a six-percentage-point lead over Samaras’s centre-right New Democracy, the dominant force in a coalition government that has held power since June 2012. A week earlier, GPO had the lead at four percentage points.
Syriza has threatened to “cancel austerity” and stop interest payments on Athens’ monumental debt – moves that will almost certainly put it on a collision course with the international creditors that have injected €240bn into Greece since its brush with bankruptcy five years ago.
Analysts maintain that Syriza’s ability to attain an outright majority will be difficult. With pressure mounting from the EU and IMF to “respect” the commitments made as the price of aid, speculation has been rife that the party might prefer to enter a coalition government that would enable it to forge ahead with the structural reforms and budget cuts demanded in exchange for the biggest financial assistance programme in global history.
But Tsipras put paid to that. The leftists, who have never held office in the near 200 years of the Modern Greek state – and who, after a bloody civil war, were hounded and imprisoned for decades – wanted to win an absolute majority that would allow them to govern unimpeded, he insisted.
“We are asking for a clear mandate, crystal clear, undiluted, indisputable,” he told the crowd. “The time of the left has come.”
If there was any question about whether the anti-establishment rebels had ambitions of plotting a similar course elsewhere in Europe, it was firmly dispelled when Tsipras was joined on the podium by Pablo Iglesias, the leader of Spain’s anti-austerity Podemos movement. To the strains of Leonard Cohen’s First We Take Manhattan, Then We Take Berlin, the duo punched the air and Tsipras, putting his arm around Iglesias, announced that the anti-austerians were poised to challenge the old order across the continent.