Joseph Stiglitz, Thomas Piketty and Other World-Renowned Economists Demand End to Greek Austerity

The economists called their letter a “plea for economic sanity and humanity.”

Martin de Bourmont June 5, 2015

Economist Thomas Piketty was one of more than two dozen signatories of the letter. (Universitat Pompeu Fabra / Flickr)

In an essay pub­lished on Fri­day morn­ing in the Finan­cial Times, 26 of the world’s most renowned eco­nom­ic minds pro­claimed their sol­i­dar­i­ty with Syriza, Greece’s rul­ing anti-aus­ter­i­ty party.

The article’s authors — a group that includes Joseph Stiglitz, Thomas Piket­ty, Mar­cus Miller and for­mer Prime Min­is­ter of Italy Mas­si­mo D’Alema — sum­ma­rized their mes­sage as a plea for eco­nom­ic san­i­ty and human­i­ty.” Argu­ing that the fate of the Euro­pean Union depends on the abil­i­ty of Greece and its cred­i­tor insti­tu­tions to com­pro­mise, they demand­ed that the Euro­pean Union pro­vide for­bear­ance and finance to pro­mote struc­tur­al reform and finan­cial recov­ery,” and that Greece demon­strate cred­i­ble com­mit­ment” to reform and play­ing a pos­i­tive role in the EU.”

At the cen­ter of the arti­cle is austerity’s fail­ure to rem­e­dy Greece’s eco­nom­ic woes. Aus­ter­i­ty dras­ti­cal­ly reduces rev­enue from tax reform,” they write and restricts the space for change to make admin­is­tra­tion account­able and social­ly effi­cient.” More­over, they con­tin­ue, the con­stant con­ces­sions required by the gov­ern­ment mean that Syriza is in dan­ger of los­ing polit­i­cal sup­port and thus its abil­i­ty to cre­ate a pro­gram that will bring Greece out of the crisis.”

At stake, they say, is noth­ing less than the fail­ure of Greek democ­ra­cy and the rise of much more rad­i­cal and dys­func­tion­al chal­lenges, fun­da­men­tal­ly hos­tile to the EU.”

Found­ed in 2004 as a coali­tion of left­ist par­ties, Syriza came to pow­er in Jan­u­ary 2015. Hav­ing vowed to repeal the aus­ter­i­ty mea­sures imposed upon the Greek gov­ern­ment by the Euro­pean Com­mis­sion, the Inter­na­tion­al Mon­e­tary Fund (IMF) and the Euro­pean Cen­tral Bank in the wake of the glob­al finan­cial cri­sis, Syriza now faces the dif­fi­cult task of turn­ing its promis­es into realities.

Some, includ­ing Amer­i­can Sen­a­tor Bernie Sanders, fear that Syriza’s fail­ure to achieve its goals will mean a sub­stan­tial increase in pop­u­lar sup­port for Greece’s fas­cist Gold­en Dawn par­ty. A polit­i­cal vic­to­ry for Gold­en Dawn pre­sum­ably num­bers among the chal­lenges” to democ­ra­cy and the EU Stiglitz et al. pre­dict in the event of Syriza’s fail­ure to end austerity.

If the Euro­pean Union fails to ade­quate­ly address the wide­spread suf­fer­ing caused by aus­ter­i­ty, Syriza may also choose to leave the Euro­zone, there­by default­ing on its loans. Such a deci­sion could under­mine not just the Euro­pean Union’s integri­ty, but could call its very legit­i­ma­cy as a supra­na­tion­al orga­ni­za­tion into question.

The econ­o­mists’ essay appeared in the Finan­cial Times at a moment when prospects look increas­ing­ly grim for both Greece and Syriza. This week, the Orga­ni­za­tion for Eco­nom­ic Coop­er­a­tion and Devel­op­ment (OECD) released pre­dic­tions of ris­ing unem­ploy­ment in tan­dem with a bal­loon­ing debt-to GDP ratio. These set­backs can only deep­en what even the Euro­pean Union refers to as a Greece’s human­i­tar­i­an cri­sis.”

Whether or not the Euro­pean Union will heed the 26 econ­o­mists’ call for an end to aus­ter­i­ty remains to be seen. 

Mar­tin de Bour­mont is a Sum­mer 2015 edi­to­r­i­al intern at In These Times. He grad­u­at­ed from Dick­in­son Col­lege with a bachelor’s in polit­i­cal sci­ence and pre­vi­ous­ly worked as an edi­to­r­i­al intern for La Croix in France.
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