Modest Proposal Not Totalitarian

Yanis Varoufakis is still doing the PR rounds for his modest proposal. Here is the latest piece.

It contains the usual basic errors, for example

Put bluntly, our elites committed a cardinal sin by placing our Peripheral nations into a European version of the Gold Standard which, like the original Gold Standard, (1) occasioned massive capital inflows into the deficit regions that built up gigantic bubbles and (2) caused a permanent depression in the same deficit countries once the bubbles burst

A completely inaccurate statement.

Somehow Varoufakis believes that Greece moving from the Drachma to the Euro somehow caused tons of extra cash to pour into the Greek economy in the form of loans from foreigners to Greeks. Of course this did not happen on anything like the scale Varoufakis in implying.

He then says that the bursting of this bubble will cause a permanent depression. In other words, Greeks paying back these loans is shrinking the Greek economy. There is only way one this can be true and that is if the loans were squandered rather than invested.

This type of statement is typical of Varoufakis and it stems from his self-denial regarding the ECB’s key role in causing the Greek crisis.

Varoufakis is implying that the Greek people who have borrowed all this money from foreign banks are unable to pay the loans back. This is simply not true.

The reality is this. The Greek central bank, the Greek government along with the ECB and large international banks manipulated the financial statements of the Greek economy in order for a Greek entry into the Eurozone to be politically acceptable.

The ECB has then continued to lend money to the Greek government based on figures it knew were hopelessly optimistic.

See the video below for an explanation of the mechanics of the system. The video cuts to the point where he discusses the mechanics but the whole video is well worth watching.

In short, it is the ECB that was the source of these damaging capital inflows that Varoufakis talks about and it is the Greek government that squandered the money and now finds it impossible to pay back these loans.

The crisis in Greece has nothing to do with the Euro itself and everything to do with gross mismanagement and possible fraud on the part of those controlling the Euro currency. The people in Greece are victims of this mismanagement  they are not in any way the cause.

But this is one example of Varoufakis’s gross misunderstanding, the biggest issue with the article and the best example of Varoufakis’s self-denial about the cause of the crisis in Greece is this.

The last point of your Modest Proposal 2.0 calls for the establishment of a program of social solidarity to ensure the existential minimum needs of all citizens and to prevent the current crisis to be pretext for the rise of totalitarianism.

The Modest Proposal may indeed want to prevent totalitarianism but it is the one thing that it is sure to create.

The Modest Proposal wants to enable the unelected European Commission to be able to tax the population of Europe in order for it to be able to spend the money how it sees fit.

In short the Modest Proposal is pushing for taxation without representation and if one looks at history this can lead to civil war, the one thing Varoufakis wants to avoid.


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