Yanis Varoufakis's Blog, page 99
July 27, 2018
At the Edinburgh Festival, in conversation with Jeremy Corbyn (20/8) on reviving socialism, with Maria Alyokhina (Pussy Riot) on despotism, and with Shami Chakrabarti on liberty (18/8)
My first event will take place on Saturday 18 August, 13:30 – 14:30 , at the Baillie Gifford Main Theatre where I shall be joined with Pussy Riot’s Maria Alyokhina to discuss the different varieties of totalitarianism that we are currently threatened with, her fight for free speech against the forces of Vladimir Putin’s regime, her hunger strike protest while in prison, as well as the work she is now doing to help Russian prisoners at home.
Immediately afterwards, on Saturday 18 August and in the same venue at 15:15 – 16:15, I shall be discussing with Shami Chakrabarti (Labour member of the House of Lords) the Economics of Liberty: democracy, liberty, internationalism and radical Europeanism.
On the next day, Sunday 19 August 20:15 – 21:15 (again at the Baillie Gifford Main Theatre), I will be given the opportunity of a solo presentation of the theme: GIVING DEMOCRACY NEW LIFE; reflecting on the 2008 Global Capitalist Crisis, the Greek and European crisis, Brexit, Trump, other such horrors – as well as the prospects of a Progressive International spanning DiEM25 in continental Europe, Corbyn’ Labour in the UK, Bernie Sanfers’ Political Revolution in the US, President Amlo in Mexico etc.
Finally, on Monday 20 August 20:30 – 21:30 (at the Baillie Gifford Main Theatre) I shall have the pleasure to host Jeremy Corbyn in a discussion on the theme of THE RESURGENCE OF SOCIALISM; an opportunity to discuss the renaissance of the left, the future of democracy, and the task of building a Progressive International so as to counter both the clueless establishment and the Nationalist International (inspired by Donald Trump in the United States and revanchist racist forces in Europe).
Η αποτυχία της κυβέρνησης στο θέμα του χρέους μεγεθύνεται και επισημοποιείται: Η ΕΚΤ δεν πρόκειται να συμπεριλάβει ποτέ τα ελληνικά ομόλογα στην Ποσοτική Χαλάρωση ενώ τράπεζες και δημόσιο “στέλνωνται” ξανά στον ELA
Στην μηνιαία, καθιερωμένη συνέντευξη τύπου, ο Πρόεδρος της ΕΚΤ ήταν σαφής:
“Τα ελληνικά κρατικά ομόλογα δεν πληρούν τις προϋποθέσεις για υπαγωγή τους στο Πρόγραμμα Ποσοτικής Χαλάρωσης. Το waiver (σημ. η εξαίρεση που επέτρεπε την αποδοχή ελληνικών ομολόγων από την ΕΚΤ) λήγει με την λήξη του προγράμματος.”
Με αυτά τα λόγια οι τελευταίες ελπίδες της κυβέρνησης ότι η “ενισχυμένη επιτήρηση”, το νέο όνομα της Μνημονιακής διαδικασίας, θα αρκούσε ώστε η τρόικα – και συγκεκριμένα η ΕΚΤ – να ελαφρύνει λίγο τα επιτόκια του σχετικά μικρού ποσοστού του δημόσιου χρέους μας που παραμένει στα χέρια ιδιωτών, έγιναν καπνός. Μαζί με αυτές εξαϋλώθηκαν οι ελπίδες πως, λόγω της Ποσοτικής Χαλάρωσης, το κόστος μελλοντικού δανεισμού (δηλαδή, έκδοσης νέων ομολόγων) θα μειωνόταν. Αυτό σημαίνει ότι, από τον επόμενο μήνα, ελληνικό κράτος και ελληνικές τράπεζες θα ξαναβρίσκονται στο έλεος της ακριβής ρευστότητας του γνωστού πλέον ELA, το ύψος του οποίου η ΕΚΤ πρόσφατα μείωσε στα €8 δις.
Η αποτυχία της κυβέρνησης να βρει λύσεις για το χρέος είναι τόσο παταγώδης όσο και… επίσημη. Ακόμα και ο πιο δύσπιστος αντικειμενικός παρατηρητής κατανοεί ότι η συνθηκολόγηση του καλοκαιριού του 2015 δεν έφερε τίποτα περισσότερο από την μονιμοποίηση της Χρεοδουλοπαροικίας μας.
July 26, 2018
Behind Greece’s forest fires: a tragic reminder of our collective responsibility as Europeans
ATHENS – A biblical calamity befell Attica last Monday. I saw its first sign in the late morning at Athens airport, where I was seeing off my daughter to Australia. A strong whiff of burning wood caused me to look up to the sky, where a whitish-yellow sun beckoned, surrounded by the telltale eclipse-like daytime darkness that only thick, sky-high smoke can cause.
By the early evening, the news began cascading in. Many of our friends’ and some of our relatives’ houses in East Attica were destroyed. Forest fires had run amok, spreading toward the heavily built-up coastline, cutting the settlement of Mati and the town of Rafina off from Athens and forcing residents to flee toward the sea.
I first learned of casualties when told of the plight of activists belonging to our political movement, DiEM25. The flames destroyed their house in Mati, along with every other house on their street; but at least they escaped with their lives. Barely. Their next-door neighbors perished; when their corpses were discovered the next morning, they were crouched together, their three-year-old girl in the middle of a heartbreaking huddle.
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On The Jolly Swagmen podcast, discussing economics, the economy, politics, Europe & Greece
Joe speaks with former Greek Finance Minister Yanis Varoufakis, the man who defied Europe to save Greece – and failed. Yanis, the suave economics professor turned unexpected politician, has recently announced he will run for Prime Minister of Greece at the next national elections. He is the author of multiple books including And The Weak Suffer What They Must?, Adults in the Room, and Talking to My Daughter About the Economy.
Topics discussed
What three core economics concepts should a person know in order to be a minimum effective citizen? [4:30]
What percentage of citizens in a Western nation like US, Australia or Greece actually understand basic economics?[8:40]
Why government spending is not analogous to household spending. [9:14]
Game theory and the prisoner’s dilemma from the guy who wrote a textbook about them. [14:52]
Who were Yanis’ parents and how did they meet? [21:24]
Insiders vs. outsiders. [26:56]
The prevailing atmosphere in an insolvent post-2010 Greece. [32:50]
How does a country become insolvent? [43:04]
Why Greece needed debt restructuring. [45:02]
The cold logic behind why the Troika wished to impose more loans on Greece. [50:32]
What is Angela Merkel like as a leader and a person? [55:00]
The Greek Bankers threaten Yanis and his family, who move to the US. [57:45]
Staring down the Troika, as Finance Minister of Greece. [1:01:02]
Does game theory apply to the negotiations between Greece and the Troika? [1:09:39]
Whose idea was the Greek Bailout Referendum and why did it lead to Yanis’ resignation? [1:12:04]
Is Alexis Tsipras an insider or an outsider? [1:15:43]
What motivated Alexis Tsipras to accept the european programme? [1:17:10]
What general lessons did Yanis take from the Greek government-debt crisis? [1:18:09]
Is there such a thing as “too much” government debt? [1:20:08]
What is Yanis’ advice to the Australian Treasurer? [1:21:22]
DiEM, Yanis’ new democratic movement. [1:22:42]
Selected links
Follow Yanis Varoufakis: Website | Twitter
Game Theory: A Critical Introduction, by Sean Hargreaves-Heap and Yanis Varoufakis
Adults in the Room, by Yanis Varoufakis
Yanis’ other books: The Global Minotaur, And The Weak Suffer What They Must?, and Talking To My Daughter About The Economy
“I Am In Blood Stepp’d In So Far”, Macbeth quote
DiEM25
July 21, 2018
Free Gaza now!
No one can be free if one person is in chains, let alone a whole people. It is in the interests of all, Jews & Arabs, Europeans & Americans, Asians & Africans that the blockade of Gaza and the collective abuse of its people ends now!
July 20, 2018
L’autre Europe de Yanis Varoufakis: Radio France Culture
Yanis Varoufakis, ancien ministre des Finances grec, auteur de Et les faibles subissent ce qu’ils doivent ? : comment l’Europe de l’austérité menace la stabilité du monde, chez Actes Sud.
L’ancien ministre des finances grec Yanis Varoufakis lors de la manifestation internationale du 1er mai 2018 à Athènes. •Crédits : GIORGOS GEORGIOU / NURPHOTO – AFPCLICK HERE FOR THE PODCAST
Contre une Europe de l’austérité, quelle alternative ?
Il n’y a qu’un seul adversaire, c’est la crise, qui a fragmenté l’Europe et l’a poussé à perdre son âme. C’est semblable à l’enchaînement des années 1930 : crise provoque establishment, puis montée au pouvoir des extrêmes.” Yanis Varoufakis
Bête noire de Bruxelles pendant la crise grecque, économiste iconoclaste et engagé, Yanis Varoufakis est l’auteur de « conversation entre adultes », récit d’une tentative de sauvetage de la Grèce, et de « Et les faibles subissent ce qu’ils doivent ? », chez Actes Sud, à l’automne dernier, sur les causes profondes de la crise.
Il n’y a pas de reprise en Grèce. Nous avons perdus 25% de notre économie, 1M de Grecs sont partis, 1 famille sur 2 est au chômage intégral, et la seule cause de la croissance est l’enrichissement des plus riches.” Yanis Varoufakis
L’ancien ministre des finances du gouvernement Tsipras continue à faire entendre sa voix : dissidente ? Dissonante ? Indépendante ? au sein du concert européen, et tente aujourd’hui de rassembler à gauche en vue de prochaines échéances.
Les propositions de Macron pour démocratiser l’Europe sont bonnes, mais sa manière de négocier est la mauvaise. Il cède à l’Allemagne sans contrepartie, au lieu d’adopter une politique gaulliste plus ferme.” Yanis Varoufakis
Il présentera ce soir les grandes axes de son programme commun (Diem25, mouvement paneuropéen et transnational, fondé en mars cette année) et lancer son “Printemps Européen”, une liste transnationale à laquelle se rattacherait notamment le mouvement Génération de Benoît Hamon.
Je propose un New Deal pour l’Europe qui lancerait un vaste questionnement constitutionnel et démocratique pour que les Européens, enfin, choisissent l’Europe qu’ils veulent.” Yanis Varoufakis
BIBLIOGRAPHIE
Conversations entre adultes, dans les coulisses secrètes de l’EuropeYanis Varoufakis Les liens qui libèrent, 2017
Ushering in a new school of principled politics: a discussion between Yanis Varoufakis (DiEM25) & Aldo Cazzullo (Corriere Della Sera) – openDemocracy
“The reason we formed DiEM25 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.”
Aldo Cazzullo, Corriere Della Sera (AC): Let us start from the beginning? Why did you decide to resign after OXI’s victory in the Greek referendum?
Yanis Varoufakis (YV): 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.
AC: Did you know or did you expect that Tsipras would accept an even harder austerity plan than the one rejected by the Greek people?
YV: 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.
AC: What are your relations with Tsipras today? What are you predictions about the next Greek elections?
YV: 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 most 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.
AC: What’s your political project today?
YV: 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.
AC: The Other Europe with Tsipras list gathered 4% of votes during the last elections. How much would a Varoufakis list score?
YV: 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.
AC: Who are your interlocutors and allies in Italy? What do you think about Liberi e Uguali the party of Mr D’Alema and Vendola?
YV: 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 on local government, municipalist movements and 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 June 13 we shall be announcing our decisions in Milano.
AC: Much has happened in Italy in the last few hours. Do you regret that a Lega-5S government was not born?
YV: 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.)
AC: Could the two populisms get together against the Brussels and Berlin elite?
YV: You are asking someone who sees populism as a clear and present threat to democracy and to 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.
AC: Do you know Mr Salvini and if yes what do you think about him?
YV: No, I have never met him.
AC: You said that the 5 Star movement is not a left party. What are they then? Could they still be considered an anti-system movement?
YV: 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.
AC: Does it still make sense to distinguish between a political left and right? Or is the new division among the people and the elite, those on top and those at the bottom, or between globalist and nationalist or (sovereign-ist)?
YV: 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 who 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.
AC: President Mattarella has rejected Professor Savona as minister of finance because he is supposedly anti-German. But isn’t there a sort of German arrogance whereby Germans aim to dictate rules to other EU countries?
YV: 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.
AC: Introducing Professor Savona, the Bild wrote he is ‘the new Varoufakis’. Are they wrong?
YV: 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 restructuring within the euro) were making this impossible. In contrast, exiting the euro is the not-so-secret dream of the Lega (the party behind the choice of Mr Savona).
AC: You know the US very well. What do you think about Trump and his ideologist Bannon who visited Italy last March and who is supporting a national ( sovereign-ist) government?
YV: 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.
AC: Has Angela Merkel reached end of her political career? Who’s next?
YV: Yes. Mrs Merkel is now an enfeebled Chancellor, totally at the mercy of those in her party who 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!
AC: What about Renzi?
YV: 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 third 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.
AC: What do you think about the Italian left? the PD is divided among followers of Renzi willing to position the party on the political centre, and the post-communists pushing more to the left.
YV: 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.
AC: Is Corbyn a good model for revamping the European left?
YV: 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.
AC: What do you think about Macron?
YV: 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 authority little by little.
AC: What about Podemos in Spain, and the current discussion about Pablo Iglesias’ new villa?
YV: 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.
AC: What do you think about the prospects for a Cottarelli government?
YV: 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.
A shorter version of this interview first appeared in Italian in Corriere Della Sera, the Italian daily on May 31, 2018.
July 19, 2018
Reality & Nightmare: A brief assessment of the Eurozone’s ‘reforms’ – in Der Freitag, Issue 26, 2018
In 2010, the Greek debt crisis was dismissed as a Greek problem – which it undoubtedly was – to hide the fact that our bankruptcy was an ugly symptom of Eurozone design flaws, which is why Greece also caused a domino effect across the continent. The fact that the Greek state bankruptcy is still unresolved ten years after it occurred reflects the profound disagreements between the Franco-German axis on how the Eurozone should be reshaped. While three Presidents of the French Republic and one German Chancellor could not agree on the institutional changes that would make the Eurozone sustainable,
Macron’s election as French president created new hope. His proposals included: a common budget for the eurozone with a secure debt instrument and the possibility of quasi-federal tax collection. A common unemployment and mutual bank deposit insurance and a common fund to provide new funds to stunted banks, thus creating the basis of a true banking union. An investment fund that would mobilize untapped savings throughout Europe without continuing to burden the Member States with fiscal resources. At the same time, the French Government seemed in principle to accept the proposal that I had made as Greek Minister of Finance:
Berlin has been praising Macron for a year now, as it shoots one after another of its proposals from the sky. Since Merkel and Macron met in Meseberg last week, Macron’s agenda is all that remains to try to sanctify his humiliation. As for the “solution” of the Greek debt question, which is widely acclaimed in the media, the cruel reality allows one to disagree: the Greek government has been offered comfortable repayments until 2033 in exchange for an unlimited strict austerity policy and annual repayments from 2033 to 2060 in Amount of about 60 percent of state tax revenues.
Can we at least say that Germany benefits from Merkel’s stalling tactics? Not in the least. While gigantic surpluses are accumulated in German banks thanks to a huge trade surplus and capital flight from countries such as Italy, this flood of liquidity keeps interest rates at zero, thus destroying the old-age pension of the legendary Swabian housewife and thus causing them to turn their backs on Merkel and herself to turn to the AfD or Horst Seehofer.
At this stage, when Merkel denies the reality, Europe faces its worst nightmare: an external threat from a US president who is determined to divide Europe to dominate us. And with an internal threat in the form of the nationalist International, headed by Italy’s Vice-Premier Matteo Salvini: a 1930s politician who purposely sows the seeds of xenophobia to appeal to the lowest instincts of a majority of Italians. Salvini takes advantage of the fact that the average income of Italians has been falling steadily for two decades due to the construction flaws of the Eurozone and points to the EU’s failure to spread the burden of incoming migrants across Europe.
It is a sign of the collapse of a system when its authorities celebrate their dubious successes as the foundations collapse. The EU is falling apart as our beleaguered leaders congratulate themselves on their good work. That is why our Movement Democracy in Europe Movement, DiEM25, calls on all progressive Europeans to unite, regardless of nationality or party affiliation, with the nationalist International and the establishment.
Yanis Varoufakis is an economist, politician and co-founder of DiEM25
Translation: Holger Hutt
This article is part of the current issue of Der Freitag.
For the current table of contents, click here
If Trump wants to blow up the world order, who will stop him? op-ed in The Guardian
Mon 11 Jun 2018 16.23 BST
Donald Trump’s early departure, and his subsequent refusal to endorse the G7 communique, has thrown the mainstream press into an apoplexy reflecting a deeper incomprehension of our unfolding global reality.
In a bid to mix toughness with humour, Emmanuel Macron had quipped that the G7 might become the … G6. That’s absurd, not least because without the United States, capitalism as we know it (let alone the pitiful G7 gatherings) would disappear from the planet’s face.
There is, of course, little doubt that with Trump in the White House there is an awful lot we should be angst-ridden about. However, the establishment’s reaction to the president’s shenanigans, in the United States and in Europe, is perhaps an even greater worry for progressives, replete as it is with dangerous wishful thinking and copious miscalculation.
Some put their faith in the Mueller investigation, assuming that Mike Pence would be kinder to them as president. Others are holding their breath until 2020, refusing to consider the possibility of a second term. What they all fail to grasp is the very real tectonic shifts underpinning Trump’s uncouth antics.
The Trump administration is building up a substantial economic momentum domestically. First, he passed income and corporate tax cuts that the establishment Republicans could not have imagined even in their wildest dreams a few years ago. But this was not all. Behind the scenes, Trump astonished Nancy Pelosi, the Democrat’s leader in the House of Representatives, by approving every single social program that she asked of him. As a result, the federal government is running the largest budget deficit in America’s history when the rate of unemployment is less than 4%.
Whatever one thinks of this president, he is giving money away not only to the richest, who of course get the most, but also to many poor people. With demonstrably strong employment, especially among African American workers, inflation under control and the stock market still buoyant, Donald Trump has his home front covered as he travels to foreign lands to confront friends and foes.
The US anti-Trump establishment prays that markets will punish his profligacy. This is precisely what would have happened if America were any other country. With a fiscal deficit expected to reach $804bn 2018 and $981bn in 2019, and with the government expected to borrow $2.34tn in the next 18 months, the exchange rate would be crashing and interest rates would be going through the roof. Except that the US is not any other country.
As its central bank, the Fed, winds down its quantitative easing program by selling off its stock of accumulated assets to the private sector, investors need dollars to buy them. This causes the number of dollars available to investors to shrink by up to $50bn a month. Add to this the dollars German and Chinese capitalists need to buy US government bonds (in a bid to park their profits somewhere safe) and you begin to see why Trump believes he will not be punished by a run either on the dollar or on government bonds.
Armed with the exorbitant privilege that owning the dollar presses affords him, Trump then takes a look at the trade flows with the rest of the G7 and comes to an inescapable conclusion: he cannot possibly lose a trade war against countries that have such high surpluses with the US (eg Germany, Italy, China), or which (like Canada) will catch pneumonia the moment the American economy catches the common cold.
None of this is new. Richard Nixon also confronted Europe’s establishment in 1971 while Ronald Reagan brutally squeezed the Japanese in 1985. Even the language was not less uncivilised – recall the summary of the Nixon administration’s attitude in the inimitable words of John Connally: “My philosophy is that all foreigners are out to screw us, and it’s our job to screw them first.” Today’s US aggression toward its allies is distinguished from those episodes in two ways.
First, since the 2008 collapse of Wall Street, and despite the subsequent re-floating of the financial sector, Wall Street and the US domestic economy can no longer do what they were doing before 2008: that is, absorb the net exports of European and Asian factories through a trade surplus financed by an equivalent influx of US-bound foreign profits. This failure is the underlying cause of the current global economic and political instability.
Second, unlike in the 1970s, Europe’s decade of mishandling the euro crisis has seen to it that the Franco-German establishment is now disunited and on the run – with xenophobic, anti-European nationalists taking over governments.
Trump takes one look at all this and concludes that, if the US can no longer stabilise global capitalism, he might as well blow up existing multilateral conventions and build from scratch a new global order resembling a wheel, with America its hub and all other powers its spokes – an arrangement of bilateral deals that ensures the US will always be the largest partner in each, and thus be able to exact a pound of flesh through divide and rule tactics.
Can the EU create a “Europe First” anti-Trump alliance, perhaps involving China? The answer has been given already, following Trump’s annulment of the Iran nuclear deal. Within minutes of Chancellor Angela Merkel’s statement that European companies would stay in Iran, every single German corporation announced it was pulling out, prioritising the fat tax cuts Trump was offering them within the United States.
In conclusion, we have good reason to be appalled by Trump: he is winning against a European establishment that wallows in perfect ignorance of the forces undermining it and paving the ground for appalling developments. The onus falls on progressives in continental Europe, in the UK, and in the United States, to put on the agenda an Internationalist New Deal – and to win elections campaigning on it.
In my rare optimistic moments, I imagine an alliance of Bernie Sanders, Jeremy Corbyn and our Democracy in Europe Movement, DiEM25, giving the Nationalist International led by Trump a run for its money. A few years ago, a Trump triumph in the US, Europe and beyond sounded even more farfetched than this. It is worth a try.
A letter to my daughter about the black magic of banking…
This is not a new contradiction. It reflects the problematic relationship the powerful have always had with the state. While they fear the state will intervene to curb their self-enrichment, they also sorely need it. The inequality that market societies generate—gigantic concentrations of wealth alongside widespread deprivation and poverty—makes them jittery. What other than a mighty state can protect them when the grapes of wrath have grown too heavy for the vines and the desperate masses congregate threateningly outside their fenced villas? But, then again, if the state has sufficient power to keep the riff-raff at bay, it will also have enough power to confiscate their property and throw them into the street if the government were to fall into the hands of those thronging crowds.
One of the most prevalent arguments they make against the state is that wealth is produced individually, by heroic individuals. Taxation is therefore seen as an unjustifiable confiscation of what is rightfully theirs. Nothing could be further from the truth. To see this, let’s go back to the beginning of market societies for a moment—to the time when the serfs were being kicked off their ancestral lands.
How do you think the landowners managed to get rid of the serfs so efficiently? The answer is: with the help of the state. The king and his government lent the landowners a hand, sending their soldiers in to put down any rebellion by the peasants. And how do you think the new order, underpinning market society, was maintained? How were the majority living under conditions of abject dehumanization in the slums of Manchester, Birmingham, and London kept under control when a few streets away the minority lived in the lap of luxury? To put it simply, private wealth was built and then maintained on the back of state-sponsored violence.
State-sponsored violence isn’t the only thing governments have provided for the powerful since then. Whenever the state has used its revenues to pay for roads, tunnels, and bridges by which goods can be transported, to maintain the hospitals and schools that deliver workers’ health and education, to support the downtrodden and unemployed, to police the towns and cities, or to organize in any way the peaceful and stable functioning of society—whenever it has done any of these things (and many more besides), the state has provided the conditions in which individuals, especially the most powerful ones, have been able to pursue their path to wealth. Seen from this angle, the state has always provided the rich with a magnificent insurance policy. And the rich have returned the favor by doing all they can to avoid paying their premiums.
In fact, it is not just the state that provides the conditions for wealth creation. If you think about it, all wealth has always been produced collectively—through recycling and through a gradual accumulation of knowledge. Workers need entrepreneurs to hire them, who need workers to buy their goods. Entrepreneurs need bankers to lend to them, who need entrepreneurs to pay interest. Bankers need governments to protect them, who need bankers to fuel the economy. Inventors cannibalize the inventions of others and plagiarize the ideas of scientists. The economy relies on everyone.
Public debt: the ghost in the machine
While consistently demanding that the state continue to provide the conditions in which their wealth can grow, every time the high and mighty have received the bill for the state’s services from the tax office, they have grunted, moaned, whinged, and protested. And since the powerful have great in influence over the state, this has led to a curious phenomenon: the taxes asked of them have always tended to be low in relation to the amount the state has actually spent, directly or indirectly, on their behalf. As for the workers, their wages have for most of history barely been sufficient to feed themselves and their children, so their taxes have never amounted to a sufficient sum either. So where has the additional money come from? The answer is: public debt. And who has provided the government with the requisite loans? The bankers, of course! And where have the bankers found the money? I hardly need tell you that they have conjured it from thin air. You can start to see how paying low taxes works doubly in the bankers’ favor.
Yet, watching television, listening to politicians worry themselves sick over the size of the national debt and making all sorts of promises to rein it in, you might be fooled into thinking that government debt—or public debt, as it is known—is an awful thing, something like the smallpox virus, in need of permanent eradication. The argument made by those who consider the state an obstacle to private business is that a government that spends beyond its means and can’t balance its books is heading for disaster. Don’t fall for that nonsense. While it is true that too much public debt can cause major headaches, too little is also a problem. Even Singapore, whose government is forced by law not to spend more than the money it receives in taxes, finds it essential to borrow money. Why? Because a market society’s bankers need public debt as surely as fish need water to swim in. Without public debt, market societies can’t work.
When the government borrows, say, $100 million from a banker for, say, a ten-year period, in return it provides the banker with a piece of paper, an IOU, by which it legally guarantees to repay the money in ten years’ time as well as pay an additional yearly amount to the banker in interest—say, $5 million a year. This IOU is called a bond, implying that the government is now bound for ten years to whoever possesses this piece of paper. Given that the rich refuse to cough up the kind of taxes that would make government borrowing unnecessary, the state issues bonds and “sells” them to banks and rich people in order to pay for the things that keep the whole show on the road: streets, hospitals, schools, police, and so on. By spending this money on its various projects—buying supplies, paying salaries—the government directly boosts the whole recycling process of the economy from which everyone benefits, including the banks.
But this is far from being the only reason that government bonds are useful to bankers. The one thing that bankers hate most is cash: money sitting around in their vaults or on their spreadsheet not being lent in return for interest. But as has hopefully become clear by now, banks become precarious and vulnerable if even a few depositors want their money back all at once. At that point bankers need to have access to something that they can sell in a jiffy so as to pay demanding depositors. Government bonds are perfect for this. To the extent that everyone trusts that the government will be true to its word, its bonds will always be in demand. Indeed, they are exceptional in this way—no other debt can be recycled quite as easily. This means that bankers love government bonds: not only is a bond a loan that earns a nice rate of interest very safely (so much so, in fact, that it can also be used as collateral for taking out further loans from other banks), but it can also be used as a commodity—a piece of property exactly like a painting or a vintage car that can be sold immediately if the banker is in urgent need of cash. Bonds are, in bankers’ parlance, “the most liquid of assets.” As such, they lubricate the banking system to keep its cogs and wheels turning.
In fact, in bad times, when bankers pick up the phone to the government and demand that the state’s central bank bail them out, it does so not just by creating new money, as we have already seen, but also by issuing even more bonds and using them to borrow more money from other bankers, often foreign ones, to pass on to the local bankers.
You can begin to see why public debt is something much, much more than ordinary debt. It is a manifestation of our market society’s power relations, the necessary response to the refusal of the rich to pay their share. It is also a shock absorber that allows accident-prone bankers to avoid many of the major mishaps that would otherwise occur in its absence. It is like an elastic band holding everything together, capable of stretching during the bad times to prevent the system from breaking.
Since the first human looked up at the night sky and wondered why she felt overwhelmed by its immensity, we have felt certain that there is something deep inside us, something indeterminate that gives us our capacity for wonder, dread, hope. Philosophers and writers have referred to that something as the ghost in the machine, the intangible power that makes us who we are. Allow me to suggest that when you hear politicians, economists, and commentators talk about public debt as if it is a curse, you remind yourself that it is a lot more than that. It is the ghost in the machinery of market societies that makes them function, however well or badly they do. And when the powerful or their spokespeople demonize the state, scoffing at the government and at public debt, remember that they need the state as badly as they need their kidneys and livers…
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From Talking to My Daughter About the Economy, by Yanis Varoufakis, courtesy Farrar, Straus and Giroux. Copyright 2018 by Yanis Varoufakis.
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