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<nettime> Joseph E. Stiglitz: how I would vote in the Greek referendum
Patrice Riemens on Tue, 30 Jun 2015 00:14:43 +0200 (CEST)

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<nettime> Joseph E. Stiglitz: how I would vote in the Greek referendum

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Joseph E. Stiglitz: how I would vote in the Greek referendum

Neither alternative ? approval or rejection of the troika?s terms ?
will be easy, and both carry huge risks

(The Guardian, Monday 29 June 2015)

The rising crescendo of bickering and acrimony within Europe might
seem to outsiders to be the inevitable result of the bitter endgame
playing out between Greece and its creditors. In fact, European
leaders are finally beginning to reveal the true nature of the ongoing
debt dispute, and the answer is not pleasant: it is about power and
democracy much more than money and economics.

Of course, the economics behind the programme that the ?troika? (the
European Commission, the European Central Bank, and the International
Monetary Fund) foisted on Greece five years ago has been abysmal,
resulting in a 25% decline in the country?s GDP. I can think of
no depression, ever, that has been so deliberate and had such
catastrophic consequences: Greece?s rate of youth unemployment, for
example, now exceeds 60%.

It is startling that the troika has refused to accept responsibility
for any of this or admit how bad its forecasts and models have been.
But what is even more surprising is that Europe?s leaders have not
even learned. The troika is still demanding that Greece achieve a
primary budget surplus (excluding interest payments) of 3.5% of GDP by

Economists around the world have condemned that target as punitive,
because aiming for it will inevitably result in a deeper downturn.
Indeed, even if Greece?s debt is restructured beyond anything
imaginable, the country will remain in depression if voters there
commit to the troika?s target in the snap referendum to be held this

In terms of transforming a large primary deficit into a surplus,
few countries have accomplished anything like what the Greeks have
achieved in the last five years. And, though the cost in terms of
human suffering has been extremely high, the Greek government?s recent
proposals went a long way toward meeting its creditors? demands.

We should be clear: almost none of the huge amount of money loaned to
Greece has actually gone there. It has gone to pay out private-sector
creditors ? including German and French banks. Greece has gotten but
a pittance, but it has paid a high price to preserve these countries?
banking systems. The IMF and the other ?official? creditors do not
need the money that is being demanded. Under a business-as-usual
scenario, the money received would most likely just be lent out again
to Greece.

But, again, it?s not about the money. It?s about using ?deadlines? to
force Greece to knuckle under, and to accept the unacceptable ? not
only austerity measures, but other regressive and punitive policies.

But why would Europe do this? Why are European Union leaders resisting
the referendum and refusing even to extend by a few days the June 30
deadline for Greece?s next payment to the IMF? Isn?t Europe all about

In January, Greece?s citizens voted for a government committed to
ending austerity. If the government were simply fulfilling its
campaign promises, it would already have rejected the proposal. But it
wanted to give Greeks a chance to weigh in on this issue, so critical
for their country?s future wellbeing.

That concern for popular legitimacy is incompatible with the politics
of the eurozone, which was never a very democratic project. Most
of its members? governments did not seek their people?s approval
to turn over their monetary sovereignty to the ECB. When Sweden?s
did, Swedes said no. They understood that unemployment would rise
if the country?s monetary policy were set by a central bank that
focused single-mindedly on inflation (and also that there would be
insufficient attention to financial stability). The economy would
suffer, because the economic model underlying the eurozone was
predicated on power relationships that disadvantaged workers.

And, sure enough, what we are seeing now, 16 years after the eurozone
institutionalised those relationships, is the antithesis of democracy:
many European leaders want to see the end of prime minister Alexis
Tsipras? leftist government. After all, it is extremely inconvenient
to have in Greece a government that is so opposed to the types of
policies that have done so much to increase inequality in so many
advanced countries, and that is so committed to curbing the unbridled
power of wealth. They seem to believe that they can eventually bring
down the Greek government by bullying it into accepting an agreement
that contravenes its mandate.

It is hard to advise Greeks how to vote on 5 July. Neither alternative
? approval or rejection of the troika?s terms ? will be easy, and both
carry huge risks. A yes vote would mean depression almost without end.
Perhaps a depleted country ? one that has sold off all of its assets,
and whose bright young people have emigrated ? might finally get debt
forgiveness; perhaps, having shrivelled into a middle-income economy,
Greece might finally be able to get assistance from the World Bank.
All of this might happen in the next decade, or perhaps in the decade
after that.

By contrast, a no vote would at least open the possibility that
Greece, with its strong democratic tradition, might grasp its destiny
in its own hands. Greeks might gain the opportunity to shape a future
that, though perhaps not as prosperous as the past, is far more
hopeful than the unconscionable torture of the present.

I know how I would vote.

Joseph E. Stiglitz, a Nobel laureate in economics, is University
Professor at Columbia University

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