Yanis Varoufakis has an op-ed in the New York Times today. The theme being how great it would be for Greece if Syriza came to power.
I’ll highlight some of the article and point out why Varoufakis is mistaken in his beliefs.
This wouldn’t be a bad thing for Europe or the United States. The policies currently imposed upon Europe’s periphery are worsening the crisis, threatening Europe’s integrity and jeopardizing growth. A Greek government that rejects these self-defeating policies will do more help than harm.
It sounds good doesn’t it? But we have to look at what is happening and what has happened. There have been socialist parties in power in Greece for years and the last socialist government was in 2012. Headed by the leader of the World Socialist Movement no less.
Perhaps Varoufakis is saying what Greeks need is more socialism, the reason the government is in trouble is that previous governments were not socialist enough?
Varoufakis then goes onto say how “bankers” fear the left-wing.
Big Finance is worried about what may happen elsewhere if a left-wing party wins in Greece. This instinct is natural for bankers.
Again, Varoufakis is mistaken.
Banks have profited massively from lending to profligate governments and have done for years. There is nothing more frightening to a central banker than a government that says it does not want to borrow money and which wants to run a balanced budget.
In reality, there is nothing bankers love more than left-wing governments who want to borrow increasing amounts of money in the name of the people.
Varoufakis then goes on to say something completely ridiculous
Indeed, right now, Syriza may be Europe’s best hope.
I can only assume he is unaware of Syriza’s strategy to get the Greek government out of its hole.
Tsipras’s (the leader of Syriza) answer to the Greek crisis is to simply blackmail Germany into giving Greece money on an ongoing basis.
Tsipras and Syriza want to make Greece a German protectorate, Tsipras and Syriza do not want to fix the badly run government in Greece. They want to maintain the status quo and if that means giving up sovereignty to Germany then so be it.
And this is who Varoufakis appears to support?
Varoufakis goes on
They also know that Europe’s approach to the crisis, involving increasingly harsh austerity and larger loans, has failed miserably.
To say this is being economical with the truth is an understatement and at worst it is simply misleading.
Europe’s “approach” to the Greek crisis has been very simple. The Greek government needs to stop spending so much, it needs to make its budget more balanced. It really is that simple.
And yet to Varoufakis this “approach” is flawed. Not spending more than you earn is a recipe for failure according to Varoufakis. I know, its absurd.
The problems in Greece have been caused in large part by the last Socialist government, a government of the left.
Successive governments have indebted the Greek people against their will to nightmare proportions and most recently you have had a government that is attacking those with the least. Why on earth would you condone a party which wants to concentrate even more power in the hands of government? What happened to once bitten, twice shy?
And Varoufakis then wraps up the piece with his answer
The basic requirements for reform could be met within existing European treaties. They include a mutualization of servicing sovereign debt to be mediated by the E.C.B.;
At the start of the article Varoufakis says that bankers fear leftist governments and yet at the end of the piece Varoufakis, as a leftist, wants to hand even more power to bankers under a leftist government. Sorry, why exactly would bankers fear being given more power?
But these kind of contradictions are not unique to Varoufakis. Anyone that has an irrational distrust or phobia of capitalism suffers from the same contradictions in their arguments because they cannot bring themselves to acknowledge that people can be trusted and people are basically good.
And as if to put the cherry on the cake Varoufakis ends with this
Syriza plans to fight both rising hunger and a xenophobic neo-Nazi party, Golden Dawn, with school lunches and food stamps
This is a noble cause no doubt. I also want to give children school lunches and food stamps but I am in the same situation as the Greek government, I simply do not have the money to do so.
If the government really wanted to help those that needed it, it would not be taxing people from their first Euro of income, it would not be forcing the poorest in society to pay a 23% tax on their food. To give two examples.
It would be far more efficient and fair for the government not to take the money from the poor in the first place but no, Syriza is not proposing anything like this and neither is Varoufakis.
Varoufakis’s master plan, much like those of Paul Krugman who also writes in the NY Times, is that governments have the solution to the current crisis and that central banks simply need to be given more power to print more money.
As I said, as the days go by and people are becoming more educated with regards to basic economics, this position is becoming more are more radical whereas the concept of sound money is becoming more and more mainstream.