Greek Protesters Are Better Economists Than the European Authorities

[Donnachaidh]

http://www.truth-out.org/greek-protesters-are-better-economists-european-authorities/1308352464

Imagine that in the worst year of our recent recession, the United States government decided to reduce its federal budget deficit by more than $800 billion dollars – cutting spending and raising taxes to meet this goal. Imagine that, as a result of these measures, the economy worsened and unemployment soared to more than 16 percent, and then the president pledged another $400 billion in spending cuts and tax increases this year. What do you think would be the public reaction?

It would probably be similar to what we are seeing in Greece today, including mass demonstrations and riots, because that is what the Greek government has done. The above numbers are simply adjusted for the relative size of the two economies. Of course the U.S. government would never dare to do what the Greek government has done – recall that the budget battle in April that had House Republicans threatening to shut down the government resulted in spending cuts of just $38 billion.

What makes the Greek public even angrier is that their collective punishment is being meted out by foreign powers – the European Commission, European Central Bank (ECB), and the International Monetary Fund (IMF). This highlights perhaps the biggest problem of unaccountable, right-wing, supra-national institutions. Greece would not be going through this if it were not a member of a currency union. If it had leaders that were stupid enough to massively cut spending and raise taxes during a recession, those government officials would be replaced. And then a new government would do what the vast majority of governments in the world did during the world recession of 2009 – the opposite, i.e. deploy an economic stimulus, or what economists call counter-cyclical policies.

And if that required a renegotiation of the public debt, that is what the country would do. This is going to happen even under the European authorities, but first they are putting the country through years of unnecessary suffering, and taking advantage of the situation to privatize public assets at fire sale prices and restructure the Greek state and economy so that it is more to their liking.

More at the link --

[xchrom]

1. recommend

[WCGreen]

2. It can't happen here, right?