Translated from my original article in Greek.
I’ve said numerous times, especially in person-to-person discussions, that neoliberalism is nothing but financial lysenkoism. I won’t bother to analyze or explain the absurd, nonsensical assumptions on which neoliberalism is based, neither will I examine its deeply antidemocratic and antisocial character. This has been done far more thoroughly by commentators and analysts much better than yours truly.
But I’ll dwell on a myth we all grew up with. We were raised to believe that german economic and political thought is based on reason, on Gründlichkeit. Alas, we see that German decision makers, led by the infamous Wolfgang Schäuble, think completely irrationally. I’ll remind all of you Herr Schäuble’s recent proposal for a «temporary Grexit that will last from five to ten years.» Here, we have only two scenarios:
- The «temporary» Grexit leads Greece’s economy to further destruction;
- The «temporary» Grexit improves the greek economy’s competitiveness and helps Greece, with a new currency, quickly repay a large chunk of its debt and bounce back.
Let’s have a look at the first scenario. Let us assume that, exiting the eurozone, our economy is utterly ruined. In this case, any recovery will only come after decades of pain. So, the «temporary», five-to-ten-year Grexit is very likely to last a lot longer. And I wouldn’t bet that, if and when recovery comes, our country will satisfy the criteria for a re-entry into the eurozone. After all, Greece didn’t satisfy those criteria back then, like Germany itself didn’t, as Paul De Grauwe explains in his article «The Politics of the Maastricht Convergence Criteria» (at Vox | archived at archive.is). To recap: Speaking strictly on financial terms, if this «temporary» Grexit ruins Greece, then Grexit will be anything but temporary.
And now, let’s look at the second scenario. Suppose that the new currency allows Greece to repay (at a fixed 1:1 initial exchange rate with the euro) a sizable chunk of its debt, or even cancel it and, afterwards, devalue the currency to support its tourism and its export activities. In that case, Greece, having stayed out of the eurozone for five years, manages to regain its sovereignty, especially regarding its economic policy, achieve a good growth, become competitive and provide a good living standard for its citizens. If all this happens, can anyone tell me exactly why it would want to get back into the asphyxiating eurozone straitjacket, with the brutal, arbitrary actions of the ECB and the EC Commission, and the blackmailing, mob-like demand for brutal, humiliating, punitive austerity?
I see only two things that might be happening with Dr. Schäuble: He’s either economically illiterate (which is something the best economic analysts in the world agree upon) or he’s taking us all for fools. Or both. I, for one, can find no logic in his proposals.