The Greek elections this week were fascinating to watch and were an earthquake in Europe more broadly. The ridiculous "austerity" program imposed on Greece, Spain, and Italy has been a monstrous disaster as some economists like Paul Krugman and Joseph Stiglitz predicted all the way back in 2009 and 2010.
What I find most ironic is that the primary EU member state which pushed for the huge spending cuts in Greece was Germany. Its ironic because after WWII Greece forgave most of Germany's war debt to help it get back on its feet. The other irony is the forgetfulness of how heaping debt on Germany after WWI led directly to the rise of Nazi Germany and WWII.
We now have two full centuries of economic data and theory to work with. What's clear is that supply-side, laissez-faire economic policy a la the Hayekian/Friedmanite variety does not work. We now have mountains of evidence. In times of crisis deficit spending by the government is the best and often only way to get a nation's economy back on solid footing. The Greeks know this all too well now.
With the resounding election of Alexis Tsipra and Syriza, Greece is pointing a new way forward for Europe. Spain's elections are next and anti-austerity parties there are leading in polls as well.
Paul Krugman's column is a good read. I love the inclusion of stats used by the ECB and conservative economists and how -- as he and other predicted -- those estimates were laughably wrong. The only reason conservative economic theory survives in this day and age and in spite of two centuries of evidence is that such policies benefit the wealthiest of the wealthy who stand to benefit the most at the expense of entire national economies like Greece. There is another way if people would just listen to folks like Krugman and Stieglitz and pay attention to evidence, not wishful thinking.#greece #eu #europe #economics #politicaleconomy