Economists Krugman and Stiglitz on Why Greeks Should Vote ‘No’ on the Referendum
(Truthdig) Now that Greece has become the first advanced nation to fall into arrears with the International Monetary Fund, the nation has reached a crucial crossroads: Should it concede to the demands of the “troika” — the institutions representing creditor interests—or continue to reject austerity and prepare to ditch the euro?
Amid mass protests, tumbling markets and bank closures, Greece will hold a referendum Sunday to decide.
Recent opinion pieces by Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman maintain that Greece must keep going it alone and vote no.
Stiglitz writes in The Guardian “… 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%.”…
According to Krugman, “Greece should vote no, and the Greek government should be ready, if necessary, to leave the euro.”
His explanation in The New York Times states:
To understand why I say this, you need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes.Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.
So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.
One of the comments: “ It’s time for the rich to take a hit. Debt jubilee. It should be considered an alternative to the guillotine.” – Caro