Posted tagged ‘professor varoufakis’

A Response to Professor Varoufakis’s Thesis that Greek Crisis is not Home-made

October 31, 2012

By Con George-Kotzabasis

Professor Varoufakis, we have crossed swords before several times on your website but no blood was spilt. Your thesis delivered with panache was highly interesting, provocative, fascinating, and alluring, but from a negative point of view. Like an exotically seductive woman flaunting dissolutely her charms but refuses to be seduced. You likewise refuse to see or acknowledge that your proposition is made-up from a selectivity of facts and by leaving other facts out you let your guard down as these neglected facts will release the Aeolian winds to demolish your argument in one wind gust. The fact is that  there are many countries within  Europe that are not in crisis, such as Sweden, Denmark, Holland, Luxemburg, Austria, and Finland, not to mention others. My question therefore is why the European and global crisis did not also embroil these countries in it as well, as it did with Greece and other southern European countries? Why the general predatory capitalist practices of the dominant countries of the Eurozone affected only some countries of the EU and not others?

The reality is that government dirigisme and its ill-fated profligacy of over spending on borrowed funds was the cause of the crisis that engulfed those countries of the south, and especially Greece, within the whirlpool of sovereign debt. The virus of the malaise did not have exogenous origins, as you wrongly suggest, but originated from the mal-practices of socialist governments and followed inevitably by conservative ones—how else could they have a chance to be elected in government?—with their fatal predilection for big government, and Greece was the example par excellence.

But as we all know a crisis is a developmental process and during its course the remedies applied to it particularly when they are wrong can exacerbate it instead of curing it. And as you correctly point out austerity without economic growth, especially in conditions of continued recession, is a recipe of disaster, as the statesman Antonis Samaras also pointed out two years ago. But it is a grave mistake to confuse the cause with the remedy and to build one’s case on the wrongness of the cures, as encapsulated in some of the policies of the two Memoranda imposed by the European lenders upon Greece, as the cause of the crisis in Greece.

In my judgement therefore your thesis that the crisis in Greece has exogenous origins and not endogenous ones is totally wrong and highly misleading. You are peddling shoddy goods wrapt-up in the dignified robes of academe hoping to make an easy but intellectually disrespectful sale. And the strength of your argument can be measured by the kind of opponents you have had in your debates up till now. None of them were real opponents and all of them were fellow travellers sailing with the compass of your ideological position. I remember when you met a real opponent to your thesis you banned him from your website, and I was rather surprised at the time that with your Kazantzakian character you would have debarred someone expressing opposing views to your own. But it is easy to be right when you hear only your own voice.

Also, your recycling theory from countries with surpluses to countries with deficits is in my opinion fundamentally flawed. What prudent investor would invest on a seat in the Titanic? Most of these countries that have incurred those bottomless deficits were and are economically uncompetitive and this was the primal reason why they were embroiled in this abysmal “balance of payments crisis,” as the eminent financial commentator Martin Woolf argues.

The crisis is profoundly complex to be fixed by tailor-made academic economic nostrums as your Modest Proposal suggests. It will be resolved by the method of science, i.e., by trial and error, and that is why, moreover, will not be without pain for the majority of people, after the grave and fatal errors committed by their past governments. The Schumpetarian principle of “creative destruction” will be the pivotal characteristic in this process of economic restructuring, and statesmen of the calibre of Antonis Samaras will play a decisive role toward its resolution.



Professor Varoufakis Plays Poker with other People’s Money with Greece at Stake

May 27, 2012

By Con George-Kotzabasis May 26, 2012

Professor Varoufakis in his Le Monde piece expresses the view “that it is in Europe’s interest that Greece resists the ‘terms and conditions’ of its bailout package while staying within the eurozone.” But he flippantly disregards the danger that Greece by doing so might find itself out of Europe. It is true that his proposal does not “blackmail Europe” –although a recalcitrant and malicious person could say that his blackmail is like being a little bit pregnant. But he does not tell the whole truth: that he is playing high stakes poker with other peoples’ money. All the European leaders and high technocrats, bar none, have unanimously said that any repudiation by Greece of its “bailout commitments” would lead to its exodus from Europe. How credible, therefore, is Varoufakis’ implied assertion that they are bluffing and they would not cut off Greece from its European moorings, as the cost to Europe of such an action would be astronomical, when so strongly and pellucidly have put their credibility and reputation on the line about Greece’s exit? Are these two attributes so cheap in the minds of those who bear them and who hold such high positions in Europe?

Moreover, behold professor Varoufakis’ impeccable logic. He remarks that President Hollande’s “willingness notwithstanding” to be the “circuit-breaker…is hampered by the state of the French state’s finances.” How then Greece could be the “circuit-breaker” when its finances are immeasurably worse than France’s? Where Greece will find the funds, once Europe turns off the tap, to pay pensions, public servants, the running costs of hospitals and schools and other public institutions once it bails out of its commitments?

Beware of Varoufakis bearing gifts!