Yanis Varoufakis's Blog, page 101
June 5, 2018
Interviewed by Vanity Fair Italia on the new 5S-Lega government – Read the original Q&A in English
So, Italy has finally a government. New Premier is Giuseppe Conte, a technician who was never elected. Do you think this is acceptable?
The new government has the consent of the majority of parliament. So, it is legitimate. My regret is that the Left has failed to garner enough electoral support to put in place a progressive alternative to xenophobic populism.
Would you call it the “government of change” (like Di Maio name it)? Or it’s just the same politics but with other slogans?
It would be a mistake to assume that this government will mimic the previous ones by changing nothing. Donald Trump has proven that rightwing xenophobic governments can change much. What is not clear, to say the least, is whether this is change for good or for bad.
Paolo Savona has been “transferred” to another ministry (European policies). Do you approve the choice?
The question is not who gets what office but what gets done. Will the Tria-Savona duo manage to put forward constructive proposals to the Eurogroup and back them up with a credible disobedience strategy when Berlin says no? This is the real question.
Would he been “dangerous” for the Italy at the ministry of finance?
Not more dangerous for Italy than the policies that are being pursued since 2009…
Many observers defined the new government (the program and the ministers) just a confused mix of left and right wing. Like a minestrone. Do you agree?
I would liken it to something Dr Frankenstein might have created, putting into one body the parts of several dead agendas: The Presidential ministers, that will continue business as usual, the Xenophobes, like Salvini, who promote racism as the solution, the ‘flat’ tax nonsense of American neoliberals, and a standard guaranteed minimum income which is being sold, fraudulently, as a ‘universal basic income’.
This morning, Repubblica first page was: “Populists at the government”. Do you agree? Does Italy has populists at the government now?
It does. But it also has populists like Renzi and D’ Alema in the opposition – figures of a pseudo-left who have for years practised what I refer to as Establishment-Populism: promises to everyone that, as long as the Establishment’s playbook is adhered to, everyone will be better off
From 0 to 10, according to you how probable is the Italexit?
If the current policies and stasis remain, 10. If the eurozone is reformed 0.
Today, would you invest in Italian bonds? Or would you prefer german Bund?
I would invest in neither. Europe is not the place for patient, non-speculative investment because it is being run by speculative short-termists.
Could you give me a definition (a phrase, an image, an anecdote or an adjective) for these men?
– Luigi Di Maio (New Deputy Prime Minister)
Heterologous
– Giuseppe Conte (New Prime Minister)
Figurehead
– Sergio Mattarella (President of Italian Republic)
Salvini’s unconscious helper
– Matteo Salvini (New Deputy Prime Minister)
Xenophobe-in-Chief and Italy’s next Prime Minister
– Paolo Savona (New Minister EU Policies)
The Fall Guy
– Giovanni Tria (New Minister of Finance)
The Great Unknown
Interviewed by Il Fatto Quotidiano on developments in Italy, Europe and Greece. Here is the original Q&A in English
Greece is about to exit from the notorious memorandum, the austerity plan signed with the troika. Public finance has improved at a high price for the population as we all know.
I fear you have been misinformed. The only thing that runs out this year is the loans from the troika. The austerity will get harsher and Greece will to deeper and deeper into its debt bondage until… 2060.
Do you believe that your country would be better off if it had left the Eurozone?
What I know is that we should not have accepted the 3rd bailout and the new austerity conditions it came with in 2015. And if the troika wanted to throw us out of the euro for doing the right thing, it would be regrettable and painful but, by now, Greece would indeed be much better off.
You told that you were attacked by the EU institutions when you asked for a debt restructuring and a reform of EU rules. Could you tell us how did the institution reacted to your requests and how they managed to break Tsipras initial beliefs?
They pretended they did not hear, use the European Central Bank to asphyxiate the banking system and the state and, in parallel, made promises to Tsipras that they would treat him well if he surrendered – promises that they never meant to keep and which they did not keep.
In the summer of 2015, before the referendum, you had in fact a plan for the Grexit, prepared – you said – in agreement with Prime minister Tsipras. But you state that even ECB, German finance ministry and Italian current minister, Pier Carlo Padoan, have one. What do you know about this last one?
I have seen no details. But I do know the European Central Bank, the Bank of Italy and various Italian governments do have a plan of how to respond to a crisis that, overnight, freezes Italy out of the euro. Let me put it differently: It would be criminally negligent not to have such as plan. It would be akin to the Ministry of Defence not having a plan for what to do if Italy were to be attacked by an enemy.
How does the Greek debt crisis of 2015 compare, in your opinion, with the current Italian situation?
There are important similarities and important differences. Both are countries are caught up in a conundrum: we are far worse off due to the euro but at the same time a euro exit would be very, very painful. It is as if we are in a burning house without exits. Another similarity is that both our countries are constantly under threat from Berlin and Frankfurt that, if we do not do as we are told, our ATMs will stop functioning and people will lose their deposits – while, at the same time, if we do as we are told, our societies will stagnate. Turning to the main difference, in 2015 our government did not want Grexit whereas any 5S-Lega government would welcome a financial crisis that forces Italy out of the euro. And given Italy’s size, that would mean the end of the euro.
Do you see a parallel between Tsipras’ decision to sign the memorandum and go to new elections and president Mattarella choice to prevent the formation of a Five Star-League government because of his disapproval of the finance minister designate?
Tsipras called the referendum in order to lose it and, thus, justify his surrender to the troika. Mattarella operated on behalf of the troika.
You wrote that President Mattarella made “a major tactical blunder”, “fell right into Salvini’s trap” and made a “fantastic gift to Salvini’s party”. Which consequences do you predict with regard to the Italian’s attitude towards the EU and the euro?
The continuation, and possible acceleration, of the steady loss of trust in European institutions amongst the Italian public.
With the second debt/gdp ratio after Greece, Italy is actually very dependent on the market in order to refinance that debt. Isn’t it inevitable for the markets to react badly to the leak about a plan for “Italexit”?
Italy is heavily dependent on the markets but, at the same time, the markets are heavily dependent on Italy! If Italy defaults countless very rich people will lose a great deal of money. In this sense, it is time both for the Italian government and the markets to grow up and to face up to the simple reality that everyone must have contingency plans while, at the same time, designing and implementing the reforms to the eurozone that would allow a country like Italy to stay in the euro without suffocating – the very reforms that Berlin is vetoing.
Italy has also a huge imbalance in the Target 2 system, 442 billion euros. Would an exit mean that we should repay that amount?
Of course not. These are accounting figures that make sense only within the eurozone. If they eurozone dies these figures evaporate into thin air.
Do you believe that Italy should anyway leave the Eurozone?
No, I don’t. But nor do I think that Italy can/should stay in the eurozone under rules that condemn the median Italian citizen to permanent stagnation.
What about the consequences, indeed: devaluation of the new currency, fall of households income (to make the devaluation work, the wages shouldn’t rise), redenomination of mortgages and bank loans. Do you believe that some countries should prefer these outcomes to a “memorandum” imposed by EU institutions?
Yes, Italexit would be painful and have dire consequences. It would be a terrible short, sharp, shock. But, at the same time, staying in the euro as things are, and with Berlin’s point-blanc refusal to reform the euro, Italians are facing a slow death by a million small, individually insignificant, cuts. This is why we shall be announcing on 13th June in Milano that DiEM25 Italia will be contesting the next elections in Italy, national and European: To propose an alternative to stagnation within the euro and Italexit.
Your movement, DiEM25, has put forward an European New Deal which provides, among the other proposals, to “save the Eurozone by ending self-defeating austerity and minimising the cost of its disintegration in case of its occurence”. What does it mean in practice?
It means the redeployment of the European Investment Bank, the European Central Bank, and the European Stability Mechanism, within the letter of their existing rules and charters, in order to deal simultaneously with the public debt crisis, the banking crisis, the crisis caused by under-investment and, finally, the rise of poverty all over Europe.
June 3, 2018
Live at ‘Politics and Prose’, Washington DC
Yanis Varoufakis discusses his books, Adults in the Room and Talking to my Daughter About the Economy, at Politics and Prose on 10th May 2018
In his eye-opening memoir, Adults in the Room, Varoufakis, Greece’s former Finance Minister, recounts his frustrating struggle to resolve Greece’s debt crisis without resorting to austerity measures. His book give us a valuable inside look at discussions with officials of the European Union and International Monetary Fund as well as with policy makers in Washington and other capitals. Founder of the Democracy in Europe Movement 2025, an international grassroots organization dedicated to restoring democracy to Europe, Varoufakis as a father is all too aware of the legacy today’s fraught economic policies will leave to the next generation. Couched as a series of fatherly letters, Talking to My Daughter about the Economy is an accessible primer on the history, elements, ideals, and problems of economics, including issues of inequality, climate change, and the chronic risk of global instability.
More more, click here and here
‘Politics and Prose Bookstore’ is Washington, D.C.’s leading independent bookshop, founded by Carla Cohen and Barbara Meade in 1984
The terrible prophesies of Brexit – op-ed in literary magazine FIVE DIALS
The unifying force behind the variety of real grievances motivating the Leavers was the shared feeling, particularly in England, of a people who had been treated for too long like livestock that had lost its market value.With every Treasury or Bank of England prognosis of Brexit’s disastrous impact on GDP, the pound, share prices, etc., many who felt (perhaps wrongly) that they had little left to lose could not wait for these terrible prophecies to materialize – assuming, as they did, that the predicted horrors would afflict an establishment who had it coming. ‘Let’s see their GDP go south like mine,’ was how one such soul expressed it to me during the pre-referendum campaign.
Precisely because the discontent that motivated Brexit was so ill-defined, its victory at the polls has failed to bring lasting joy to the winning side. News reports on the negotiations with Brussels infuriate a majority of Leavers who can’t care less about the legalities and economic minutiae, since these were never the issue.
The nearest a majority of Leavers get to feeling good these days is when they hear establishment figures lament the gigantic costs of Brexit upon the communities that voted heavily to leave the EU: it makes them secretly crave precisely such a painful, costly, disastrous hard Brexit. Why? Because they see in it a splendid opportunity to revive the spirit of the Blitz in communities in desperate need for something like it.
Against this psychological backdrop, the worst possible outcome is not a run on the pound, further stagnation in productivity, a loss of GDP growth, or the emigration of Nissan from Newcastle or some bankers from the City of London.
No, my great fear is that the new, almost impenetrable division that the Brexit debate brought to (mainly) England will become permanent.That it will be perpetually underpinned by the nebulous, self-reinforcing discontent we first saw in 2016. That, in 2020, the most regressive parts of the British establishment will be stronger and more in control than ever. And that their triumph will, in a never-ending loop of mutual buttressing, prevent a genuine revolt by the good people who had good cause to feel like livestock whose market value had crashed.
For the FIVE DIALS’ site, click here.
June 2, 2018
June 1, 2018
With his choice of prime minister, Italy’s president has gifted the far right – THE GUARDIAN
While it is true that Italy is in serious need of reforms, those who blame the stagnation on domestic inefficiencies and corruption must explain why Italy grew so fast throughout the postwar period until it entered the eurozone. Was its government and polity more efficient and virtuous in the 1970s and 1980s? Hardly.
The singular reason for Italy’s woes is its membership of a terribly designed monetary union, the eurozone, in which the Italian economy cannot breathe and which consecutive German governments refuse to reform.
[image error]
Italian president names interim prime minister until fresh elections
In 2015 the Greek people elected a progressive, Europeanist government with a mandate to demand a new deal within the eurozone. In the space of six months, under the guidance of the German government, the European Union and its central bank crushed us. A few months later, I was asked by the Italian daily newspaper Corriere della Sera if I thought European democracy was at risk. I answered: “Greece surrendered but it was Europe’s democracy that was mortally wounded. Unless Europeans realise that their economy is run by unelected and unaccountable pseudo-technocrats, committing one gross error after another, our democracy will remain a figment of our collective imagination.”
Since then, the pro-establishment government of Italy’s Democratic party implemented, one after the other, the policies that the unelected bureaucrats of the EU demanded. The result was more stagnation. And so, in March, a national election delivered an absolute parliamentary majority to two anti-establishment parties which, despite their differences, shared doubts about Italy’s eurozone membership and a hostility to migrants. It was the bitter harvest of absent prospects and withering hope.
After a few weeks of the kind of common in countries like Italy and Germany, the Five Star Movement and League leaders Luigi Di Maio and Matteo Salvini struck a deal to form a government. Alas, President Sergio Mattarella used the powers bestowed upon him by the Italian constitution to prevent the formation of that government and, instead, , a former IMF employee who stands no chance of a vote of confidence in parliament.
Had Mattarella refused Salvini the post of interior minister, outraged by his promise to expel 500,000 migrants from Italy, I would be compelled to support him. But, no, the president had no such qualms. Not even for a moment did he consider vetoing the idea of a European country deploying its security forces to round up hundreds of thousands of people, cage them, and force them into trains, buses and ferries before sending them goodness knows where.
No, Mattarella chose to clash with an absolute majority of lawmakers for another reason: his disapproval of the finance minister designate. Why? Because the said gentleman, while fully qualified for the job, and despite his declaration that he would abide by the EU’s rules, had in the past expressed doubts about the eurozone’s architecture and has favoured a plan of EU exit just in case it was needed. It was as if Mattarella declared that reasonableness from a prospective finance minister constitutes grounds for his or her exclusion from the post.
Beyond his moral failure, the president has made a major tactical blunder
What is so striking is that there is no thinking economist anywhere in the world who does not share concern about the eurozone’s faulty architecture. No prudent finance minister would neglect to develop a plan for euro exit. Indeed, I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany. Is Mattarella telling us that the Italian finance minister is banned from thinking of such a plan?
Beyond his moral failure to oppose the League’s industrial-scale misanthropy, the president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.
Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is, but as the defender of democracy against the Deep Establishment. He has already scaled the moral high ground with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”
If Mattarella takes solace from the fact that previous Italian presidents managed to put in place technical governments that did the establishment’s job (so “successfully” that the country’s political centre imploded), he is very badly mistaken. This time around he, unlike his predecessors, has no parliamentary majority to pass a budget or indeed to lend his chosen government a vote of confidence. Thus, the president is forced to call fresh elections that, courtesy of his moral drift and tactical blunder, will return an even stronger majority for Italy’s xenophobic political forces, possibly in alliance with the enfeebled Forza Italia of Silvio Berlusconi.
And then what, President Mattarella?
Yanis Varoufakis is the co-founder of DiEM25 (Democracy in EuropeMovement). He is also the former finance minister of Greece
Click here for the Guardian’s site
May 31, 2018
Complete text of my interview with Corriere Della Sera’s Aldo Cazzullo (in English)
Dear Professor let us start from the beginning? Why did you decide to resign after OXI’s victory in the Greek referendum?
Because that very night, when I spoke to Prime Minister Tsipras, he declared his readiness to turn the NO, our people’s majestic 62% OXI vote, into a YES. Staying would have meant endorsing the overthrowing of a people by its… government.
Did you know or did you expect that Tsipras would accept an even harder austerity plan than the one rejected by the Greek people?
Of course. The troika were not interested in policies that worked for Greece or for Europe. Indeed, they were not even very interested in getting their money back – for if they did care about their money, they would have accepted the moderate proposals I put to them which would have generated more income, more taxes and, ultimately, more repayments to our creditors. No, they were only interested in one thing: Crushing the Greek Spring and humiliating Tsipras so as to signal to the peoples of Ireland, Portugal, Spain, Italy and, ultimately, France that they will suffer if they dare vote for governments that do not obey Berlin and Frankfurt. Tsipras’ humiliation via brutal new austerity was the priority. Our priority ought to have been to honour that NO.
What are your relations with Tsipras today? What are you predictions about the next Greek elections?
My relation with Tsipras is non-existent for a simple reason: We have nothing to talk about! In order for him to continue to do what he does he needs to tell himelf a story that he knows I know that he knows to be… untrue!
As for the election results, it is too early to tell. Syriza and New Democracy are struggling to convince the people that each of them will be better at implementing measures that everyone knows will fail. This causes widespread despondency and apathy, boosting abstention and the de-legitimation of politics. Our new party, MeRA25, will do well, I hope, as long as the voters learn about us; as long as we manage to break down the complete media silence about us and the total exclusion of our representatives from TV and radio stations. As we say, our only opponent is the… couch which keeps disappointed but politicised, progressive people from going to the polling stations on election day.
What’s your political project today?
Across Europe, it is to turn the May 2019 European Parliament elections into a transnational campaign against both the Deep Establishment’s business-as-usual and the nationalists’ false promises. To this effect, our Democracy in Europe Movement, DiEM25, has inaugurated, together with other political forces across Europe, including of course in Italy, a transnational progressive list, #EuropeanSpring, with which to succeed in putting forward a progressive, hopeful, ambitious, credible alternative.
As for Greece, my project is to help turn MeRA25, DiEM25’s new political party, into an instrument by which to end Greece’s Great Depression.
The Other Europe with Tsipras list gathered 4%of votes during last elections. How much would a Varoufakis list score?
There will be no Varoufakis list! The time for ‘saviours’ and persona-led parties is well and truly over. I am happy to be one of the many co-founders of DiEM25 and of our #EuropeanSpring. And I am proud of being part of Europe’s first transnational political party aiming to save all our countries from the false dilemma between the troika or exit, between pro-Europe and anti-Europe, between an authoritarian establishment and an authoritarian anti-European nationalism.
Which ones are your interlocutors and allies in Italy? What do you think about Liberi e Uguali the party of Mr D’Alema and Vendola?
The reason we formed DiEM25 in the first place was the diagnosis that old wine in new bottles will not help revive the spirits of progressives in Italy or in the rest of Europe. The performance of parties like Liberi e Uguali in Italy, the social democrats and the Left in Germany, and other such parties elsewhere confirmed this.
So, our main interlocutors are our members, the activists of DiEM25 Italia who, recently, held twenty regional constituency meetings to construct a national political structure involving 10,000 citizens and, with this structure, to join in our transnational #EuropeanSpring movement. Rather than indulging the old school of politics, we refuse to enter into negotiations with politicians with a view to divide positions and share offices. Instead, we are concentrating on cultivating a new school of politics which concentrates on talking only about policy proposals and ideas of what must be done. In this context, we place a great deal of emphasis of local government, municipalist movements & solutions. It is in this context that we are working, for example, with Napoli Mayor Luigi de Magistris in constructing our transnational #EuropeanSpring
Having established that Italy, and the rest of Europe, needs a new political movement along the lines of DiEM25, we have made the courageous decision to contest the national and, of course, the European Parliament elections in Italy. Our members are currently debating the final details and the manner in which we shall construct as broad a coalition as possible against both the incompetent establishment and the xenophobic nationalists. On 13th June we shall be announcing our decisions in Milano.
Many things happened in Italy in the last hours. Do you regret that a Lega-5S government was not born?
I regret that President Mattarella had no problem with Salvini being Interior Minister given his promise to throw half a million migrants out of the country
I regret that not even for a moment did he consider vetoing the idea of a European country deploying its security forces to round up hundreds of thousands of people, cage them, and force them into trains, buses and ferries before sending them goodness knows where
I regret that Matteo Renzi missed his opportunity to insist that Berlin accepts a policy re-think that would make our countries sustainable within the eurozone – thus putting Salvini and de Maio in the driving seat
Finally, I regret that President Mattarella’s only concern was to block the appointment of a finance minister that voiced reasonable concerns about the euro’s architecture (concerns that all decent economists have, even ones supporting the euro vehemently) and who believed that Italy should have a plan for exiting the euro just in case it is needed (a plan that everyone has, including the ECB, the German government, every major bank etc.)
Could the two populism get together against the Brussels and Berlin elite?
You are asking someone who sees populism as a clear and present threat to democracy and to the prosperity for the many. There is a profound difference between being popular and being populist. Populists exploit fear and anger to garner power in order to use it against the majority. If Brussels and Berlin lose to populism, we all lose. This is why DiEM25 is so keen to create a democratic, Europeanist alternative to both (A) the authoritarian incompetence of Berlin-Brussels, and (B) to the xenophobic populists.
Do you know Mr Salvini and if yes what do you think about him?
No, I have never met him.
You said that the 5 stars movement is not a left party. What are they then? Could they still be considered an anti-system movement?
They began as an anti-system movement combining some ideas that would benefit the common people with increasingly xenophobic views. They are appealing to Italians who are being held back by corruption and by austerity – and who, wrongly, turn against the foreigners, the ‘others’. Having said that, I am convinced that 5S has risen high only because the Left has failed so spectacularly.
Does still make sense to distinguish between a political left and right? Or if the new division is among the people and the elite, those on top or those at the bottom, between globalist and nationalist? (sovereign-ist)
As long as we live under capitalism, the Left-Right divide will be pertinent and inescapable. As long as there is a distinction between those work but do not own the company and those who own the company (or parts of it) without working in it, the tug of war between capital and labour, profit and wages will be central in determining social outcomes. And so will the Left-Right distinction. But, having said that, there are moments in history, like the 1930s and the post-2008 period, when the crisis of capitalism is so deep, and democracy so much under treat, that room is created for a minimum common program between anti-systemic liberals, Marxists, ecologists, even progressive conservatives. This is why we say that, while I and many of my DiEM25 colleagues are unapologetic left-wingers, DiEM25 is more than a left-wing movement. It is rather the meeting place of democrats eager to find an alternative both to the inane establishment and to the nationalists.
President Mattarella has rejected Professor Savona as minister of finance because he is supposedly anti-German. Does a sort of German arrogance exist? Do the German pretend to dictate rules to other UE countries?
The problem with the German elites is that they are refusing to be hegemonic and, thus, end up being authoritarian. The German political class continues to behave as if Germany is a small open economy whose net exports are only due to the skill and hard work of their engineers and whose surpluses are well earned. They deny the macroeconomic effects of their policies upon their partners and insist, puzzlingly, on celebrating their surpluses while admonishing others for having… deficits. In the end, German savers are forced by the laws of economics to entrust their savings to foreigners whom they end up despising for being indebted to them. Free riding comes in two varieties: (1) Wanting to live off other people’s money. And, (2) Wanting to benefit from the low exchange rate that other people’s moneylessness causes. It is clear that no Union can survive in this manner. Unfortunately, there seems to be no likelihood of a change in Berlin now that the new social democratic finance minister has proven more austere and less imaginative than even Dr Wolfgang Schauble was.
While presenting Professor Savona, the Bild wrote he is the new Varoufakis. Are they wrong?
Of course. The profound difference is that I was desperate to keep Greece in the euro sustainably, which required that I clash with the troika whose policies (and refusal of the necessary debt restructure within the euro) were making this impossible. In contrast, existing the euro is the not-so-secret dream of the Lega (the party behind the choice of Mr Savona).
You know the US very well. What do you think about Trump and his ideologist Bannon who was in Italy last March 4 and who is supporting a national ( sovraninist) government?
Mr Bannon is, undoubtedly, an ultra-dangerous belligerent who wants catastrophic regime change (Libya and Iraq style) in countries where, if he succeeds, developments will turn the world into an even more treacherous place than it already is, with many more millions of refugees flooding our shores. Mr Trump, on the other hand, is trying to control the diminution of American power through a process of economic shock-and-awe that stuns Germany and China into submission. The combination of his scandalous corporate tax cuts, the new tariffs, and his pulling out of the Iran deal are part of this overarching program. However, I have little doubt that, if he succeeds, the result will be a new global recession that, ultimately, undermines American interests as well.
Has Angela Merkel come to a political end? Who’s coming next?
Yes. Mrs Merkel is now an enfeebled Chancellor, totally at the mercy of those in her party that are already plotting her replacement. Of course, she is totally to blame, having squandered enormous political power since 2010 that she could have used to unite Europe, rather than divide it via the awful policy mix of universal austerity for the many and socialism for the bankers. Sadly, her successor, whomever it is, will make us feel nostalgic for Mrs Merkel – just like Mr Scholz managed to make me miss Dr Schauble!
What about Renzi?
He wasted his many opportunities to make a positive difference. I shall mention two: First, the opportunity to go to Brussels to demand, as the Prime Minister of the 3rd largest eurozone country, that the EU considers changes to the eurozone rules that would make our countries sustainable within the euro area. He chose, instead, to demand Italy’s right to bend the existing rules – thus looking in German eyes like a spoilt child. Secondly, in June/July 2015 he had an opportunity to defend the then Greek government’s arguments in favour of an immediate debt restructure and a humane fiscal policy. Instead of helping Europe demonstrate that it could be a decent place for deficit countries like ours, he aided Merkel to throttle Tsipras and push him into capitulating. On the day of that capitulation, he celebrated that “they” had gotten “rid of Varoufakis”. The road toward his own downfall was thus paved.
What do you think about the Italian left? the PD is devided amoung the followers of Renzi willing to a position the party on the political centre, and the post-communist pushing more on the left
Very little, sadly. Unfortunately, my friends on the Italian Left still believe that they can stitch together a coalition without a clear, European-wide agenda, forgetting that the whole they are constructing is even less than the sum of the parts. I wish this were not so, so that we could support them. But it is so and this is why DiEM25 has made the momentous decision to contest elections in Italy: because we need a progressive movement that ushers in a new school of principled politics.
Is Corbyn a good model for revamping the European left?
Jeremy Corbyn has already made a gigantic contribution to the quality of politics in Europe, and not just left-wing politics. He has shown that it is possible to activate politically millions of disenfranchised young people that the establishment traditionally dismisses as apolitical, Generation Y etc. And he has proven that a principled position can cut through the walls erected in our way by systemic media doing the job of an authoritarian oligarchy. Having said that, we must not forget that the UK is quite different to our continental countries – which means that, while we must learn from Jeremy, we can’t just copy his techniques. We need our own strategy which, in the case of Europe, must be transnational – like the one DiEM25 has been putting together since February 2016.
What do you think about Macron?
I have spoken a great deal about the French President, praising his solidarity to me personally in 2015 and explaining that he understands that the present architecture of the eurozone is unsustainable. On the other hand, I also said that, ever since he rose to the Presidency, he has adopted legislation that is socially regressive (e.g. cutting taxes on the rich while diminishing the incomes of weaker citizens), awfully authoritarian (e.g. he made permanent security legislation that clashes with civil liberties) and self-defeating. He also put forward proposals about eurozone reform which, while in the right direction, were too lukewarm. Worse still, he did not back them up with any credible threat to Berlin – which led Mrs Merkel and the German establishment to bury them. The result is that, given France’s inability to flourish in the present architecture of the eurozone, Mr Macron is a spent force. He looks and sounds good but his capacity to make a difference has been wasted and will, from now on, lose his authority little by little.
What about Podemos in Spain, discussing about Pablo Iglesias new villa in these days?
Podemos blew fresh wind into the progressive side of politics when it managed to give voice to the Indignados. My concern is not the new villa that Pablo and his partner have purchased. Even though I understand the reactions against this purchase, the notion that those speaking for the dispossessed must be themselves dispossessed is not one that I can adopt. No, my concern is Podemos’ reluctance to articulate a coherent economic and social policy framework that answers to specific questions such as: “If elected, what will you do in the Eurogroup? What is your policy on non-performing bank loans and how will you implement it against resistance from the ECB?” Without such a policy framework, progressive movements like Podemos can never win elections. This is why at DiEM25 we are putting so much emphasis in presenting a rational, comprehensive policy agenda that answers all these burning questions.
What do you think about a potential Cottarelli government?
First, let me say that this is not a personal matter. I know Carlo Cottarelli from his days at the IMF, I worked with him in 2015, and I hold him in some personal esteem. His problem is that, unlike Mario Monti, he cannot count on anything like a parliamentary majority. His will be a stopgap, caretaker government that will hold the ‘fort’ until a new election strengthens the ultra-right further, to the detriment of migrants, progressive Italians and our common goal to turn Europe into as realm of shared prosperity.
May 30, 2018
Merkel’s Comeuppance is Europe’s – and the World’s – Misfortune – Project Syndicate op-ed
To continue reading for free click here
May 29, 2018
The Open Letter sent to me in 2015 by Paolo Savona & Giulio Tremonti, two former Italian ministers, on reforms to the EU that they considered necessary
Rome, July 24, 2015
To Yanis Varoufakis and Dominique Strauss-Khan
Dear Yanis, dear Dominique,
There is a place on earth that represents Europe’s very roots: Greece. Let us begin there.
Athens, April 28, 1955. Albert Camus’ conference on “The future of Europe”.
On this occasion, participants agreed that the structural characteristics of European civilization are essentially two: the dignity of the individual; a spirit of critique.
At that time (1955), human dignity was a focus of much debate in Europe.
Nobody doubted, however, the European “spirit of critique”. There were no doubts about the rationalist, Cartesian, Enlightened vision, which was agent and engine of continuous progress on the continent, as much in terms of technical-scientific domination as for political, social and economic domination.
Today, more than half a century later, we might well invert these two: human dignity is widely appreciated throughout Europe, albeit challenged by dramatic problems generated by immigration; it is the force of reason in Europe that no longer underlies continuous progress.
Why is this so? What happened?
It was not some shadowy curse that descended upon the continent. It was not some evil hand that sowed our fields with salt. So what did happen?
Just as the dinosaurs died off because an asteroid slammed into the planet, so was dinosaur Europe struck by 4 different phenomena. Each was revolutionary even when taken alone, but all together, one after another, they proved enough to cause an explosion, an implosion, paralysis: enlargement, globalization, the euro, the crisis.
And that is not all. During the process of political union, we took a wrong turn at one point. We failed to unite that which could be and needed to be united (such as defense). Instead, we united that which did not need to be united (for example, the size of vegetables).
This is why, in Europe today, it is not “more union” that we need. What we need is to propose, discuss and design new “articles of confederation”.
Dear Yanis, dear Dominique, we agree on the fact that life and civilization cannot be reduced to mere calculations of interest rates; we agree that today, in Europe, it is not the technicalities that need changing but the political vision. History teaches us that in order to reach our goal we must change what is inside people’s heads or – at the very least – admit that mistakes have been made. We agree that the piazzas of protest are to be avoided, but that we must find a new road, down which we can all walk, regardless of our country or political party of origin.
Paolo Savona, Emeritus professor of Political economy
Giulio Tremonti, Senator of the Italian Republic
“L’avenir de la civilisation européenne – entretien avec Albert Camus”, Union Culturelle Gréco-Français, Athènes 1956.
May 28, 2018
New York Magazine – Interviewed by Felipe Ossa: “Yanis Varoufakis Has Some Ideas About How to Save the Future”
Varoufakis, 57, has since become a vocal critic of politics in the European Union and a torch bearer for progressive ideas across the continent.
This March he launched a new party in Greece — where the conservative media continue attacking him as a narcissist and relentless self-promoter — MeRA 25, which aims to restructure Greece’s debt yet again and reverse some austerity measures. The country, he says, is turning into a desert of human capital, as the young emigrate to flee an E.U.-imposed “debt bondage.”
The U.S. edition of Varoufakis’s book, Speaking to My Daughter About the Economy: or, How Capitalism Works — and How it Fails, was just released. It sets out to demystify some of the major economic issues of our time for readers of all kinds, including 14-year-olds.
I spoke to Varoufakis over the phone last week. The interview has been edited and condensed for clarity and length.
So, in what ways does capitalism work and in what ways has it failed?
Capitalism has liberated us. It has generated incredible new technologies and wealth — I love the idea of a robot doing all the chores. But at the very same time, out of the same kind of proverbial production line, it has generated the most spectacular horror and depravity. It’s remarkably contradictory.
Speaking of robots: Your daughter is 14. What sort of jobs do you think will be available for her generation?
My greatest worry about my daughter is that increasingly her generation is being divided into two lumps, two groups of people. Those who will be doing more demeaning jobs, being the appendices of some kind of digital system, so they become part of that machinery in a way that resembles Charlie Chaplin’s Modern Times. And the second group who are beginning their lives as interns struggling to acquire a profile that at some point in life they’ll be able to sell to the highest bidder, of some large corporation, maybe for the highest salary but always living their working lives in a state of precarity and a state of angst.
Grim.
I think that’s how many young people view things today.
So what’s one way to improve young people’s lot?
A universal basic dividend. We need to face up to the fact that [corporate] profits are increasingly produced socially; a result of cooperative, collaborative large-scale projects, many of them financed by the state and state institutions and many of them generated surreptitiously by each one of us. Every time you search something on your Google engine, you’re contributing to the capital of Google. A part of their shares [would] be contributed to a public growth fund so that we can produce a universal basic dividend, distributed to members of society that have contributed — maybe inadvertently — to the production of that social capital.
At least at the initial stage, you can say to [these companies]: Every time you have an IPO or you raise new capital, you take, say, 10 percent of the shares and you deposit them in a public equity fund.
Until we’re prepared to do that, we’re not going to find what it takes in order to stabilize this destabilizing process.
But is that at all feasible?
There’d be resistance from the ExxonMobils, the General Motors, the older corporations, but the newer big tech companies, I think some would support the idea. I know Bill Gates would.
Why not universal basic income — just ensuring everyone gets a check from the government?
My proposal is a counterpoint to universal basic income. It’s very difficult in today’s environment to convince a blue-collar worker who’s working day and night and is very insecure about his job that you’re going to tax him to give money to someone to sit home and watch television. [Also it would] jeopardize the existing welfare state.
The idea of universal basic dividend is we’re saying “Forget taxes”; this has nothing to do with taxation.
How would this work across borders? Apple is U.S.-based. Would Europeans get a dividend too?
It would give us a fantastic opportunity to do what we have to do anyway: greater collaboration across borders. So instead of having trade wars, which Trump seems to think in his infinite wisdom we need now, we collaborate. Let’s say the European Union authorities and the American authorities agree that the distribution of Google shares among two equity funds — the American and the European —should be pro-rata in proportion to the revenues of Google in Europe and the United States. This might sound utopian. But I’d refer you to the Bretton Woods conference of 1944 which designed the postwar financial system, where the degree of collaboration and cooperation achieved was much higher. There was political will and some more far-sighted politicians.
Unemployment remains stubbornly high in parts of Europe, in particular in Greece. Why has the U.S. managed to generally keep it lower over the last couple of decades?
The main reason is that [in the States] you have a Federal Reserve that is within its remit to adjust the money supply to achieve full employment. We don’t have that in Europe; [the European Central Bank] has only a mandate for price stability. You [also] have a federal budget which plays a massively important recycling role. You have an economy like California and you have an economy like Missouri; it’s like having Germany and Greece in the same economy. But you have Social Security payments in Missouri that are funded by taxes raised in San Francisco.
What about the argument that tighter labor-market regulations are partly to blame for higher unemployment in some European countries?
I would never deny anyone the right to humiliate themselves with such hypotheses.
Think of Greece as the laboratory of neoliberalism. Greece is now more flexible in terms of its labor markets than Bangladesh. We have effected in the last eight years measures and policies that would be a neoliberal or libertarian’s wet dream. We have a 60 percent reduction in social security payments, 48 percent reduction in state pensions. We have abolished … collective bargaining, so unions are cosmetic, they play no role in setting wages. Libertarians would expect a massive boost in employment [and the] eradication of youth unemployment. Instead: What has happened? We have a great depression, we’ve lost 28 percent of nominal GDP, similar to what happened in the United States in 1929 and one in two families has no members that work.
When you look at Trump, what do you see?
Trump has to be seen as a symptom of the failure of Barack Obama.
He’s trying to use the exorbitant power of the American financial system in order to put the brakes on a process that weakens the global position of the United States. He’s using stealth and deliberate strategies of generating instability, engendering fear amongst friends and foes in Europe and in China and in the rest of the world. For example: pulling out of the Iran deal had nothing to do with weapons or Iran, it was a way of trouncing Angela Merkel and showing to the Germans that he can order German companies out of Iran and back into the United States against the edicts and wishes of Germany.
Confrontation could possibly yield short-term benefits for some American corporations and for American power, but in the medium- to long-term it’s going to destabilize the world in which Americans are going to have to live.
What failure of Obama’s are you talking about?
Remember that Obama would never have won if not for the 2008 collapse of the financial sector. He rode into the White House on a wave of consternation and discontent. And after having won the presidency he immediately appointed the very same people who were responsible for the exuberance and extravagance of Wall Street: Timothy Geithner and Larry Summers.
He became the plaything of forces beyond his control, of Wall Street, and of those whom he had just bailed out. The anger turned against him … and in the end he had people who voted for Obama in 2008 voting for Trump in 2016. The banks had to be bailed out, but the bankers didn’t.
The most ironic and ridiculous sight, speaking as an outsider, is the Democratic Party blaming the victory of Trump on Russia and Facebook. From where I stand, this is one of the most laughable claims I’ve never heard.
So what should you have done differently in Greece?
I [shouldn’t] have trusted my own prime minister and my own colleagues and cabinet because our defeat was a result of their capitulation. This is the greatest regret. I don’t hold grudges against creditors, against my opponents in the European Union, and the International Monetary Fund — they were doing their job.
I put all my energy into extending [the negotiations] by three months so as to give creditors and our side more space during which to find an honorable compromise. The creditors were simply not interested in compromise … what they were interested in was to overthrow or crush our government, but that was not all. I was hoping that that three-month period would have been used by our side as well, to steel ourselves for any confrontation. I should not have struck the deal, I should have forced things to a head, in the first four weeks. Had we done that we would have been far more united, the creditors would not have made use of the three-month period to divide and rule over us.
What if that had meant pulling out of the euro — a Grexit —which many pundits believed would have been catastrophic for the Greek economy, leading to runaway inflation, a sharp rise in the cost of imported goods and even steeper unemployment?
We’d be better off today if we had. Getting out of the euro was not my preference, but what we now have — the extension of our debt bondage within the euro and a great depression that’s foreseeable for the next decade — is certainly the worst possible outcome.
You recently started a new party in Greece, MeRa 25. The platform includes restructuring the national debt and to tie repayments to growth, cut taxes on small businesses, and end austerity by allowing the government to run a smaller budget surplus. What do you hope these, and your other proposals, will accomplish?
End Greece’s great depression. Imagine in the United States, if you hadn’t had a New Deal in 1933. Imagine that the crash of 1929 produced a Great Depression beyond a decade. Imagine the state of this nation. This is the state of Greece today. I wish I didn’t have to start a new party — it’s the last thing in my life that I want is to be part of the political game. [We’re a] tangible and credible alternative to a process of desertification of the country as the young are leaving it.
Which country’s economic management do you admire the most right now?
China.
That’s not the answer I was expecting.
I would never admire a dictatorial communist party. But you asked me about economic policies. The economic policy pursued by Beijing has been exemplary.
How so?
In 2008, we owe [the fact] that the great recession that hit the United States did not become a great depression to two factors: one is the Fed printing all this money — not that they used it as they should — and the second is China.
They intentionally inflated their existing credit bubble, creating a lot more private debt, lifted their investment levels to unprecedented levels, on purpose, to replace the lost exports due to the global recession by local investment spending and therefore to buy enormous time — a decade — for the European Union and America, to get their act together. Of course, we didn’t.
And then when that bubble started bursting, around 2013, they were very smart in the way that they deflated without bursting it. And then when the recession was beginning to be smelt in the air they boosted their bubble again in 2015, that’s what stopped the American economy from going into a double-dip recession.
So they’ve been very skilled at managing their macroeconomy in a way that has been very beneficial to the rest of the world.
But isn’t at least some of this possible because they could ram their policies through in a way you couldn’t in a democracy?
As a committed democrat I would never agree to this, that’s my line and I’m sticking to it!
I think it is perfectly possible in well-functioning democracies to have smart policies that stabilize a macroeconomy. You had it in the United States in the 1940s and the 1950s, even in the early-to-mid 1960s.
You don’t have that now because of the toxic after-effects of the period of financialization and of the discontent following its collapse. But I will never concede the point that you need to have a dictatorship to make things work.
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