http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/
Five leading economists
warn the German chancellor, “History will remember you for your actions
this week.”
The never-ending austerity
that Europe is force-feeding the Greek people is simply not working. Now Greece
has loudly said no more.
As most of the world knew it
would, the financial demands made by Europe have crushed the Greek economy, led
to mass unemployment, a collapse of the banking system, made the external debt
crisis far worse, with the debt problem escalating to an unpayable 175 percent
of GDP. The economy now lies broken with tax receipts nose-diving, output and
employment depressed, and businesses starved of capital.
The humanitarian impact has
been colossal—40 percent of children now live in poverty, infant mortality is
sky-rocketing and youth unemployment is close to 50 percent. Corruption, tax
evasion and bad accounting by previous Greek governments helped create the debt
problem. The Greeks have complied with much of German Chancellor Angela
Merkel’s call for austerity—cut salaries, cut government spending, slashed
pensions, privatized and deregulated, and raised taxes. But in recent years the
series of so-called adjustment programs inflicted on the likes of Greece has
served only to make a Great Depression the likes of which have been unseen in
Europe since 1929-1933. The medicine prescribed by the German Finance Ministry
and Brussels has bled the patient, not cured the disease.
Together we urge Chancellor
Merkel and the Troika to consider a course correction, to avoid further
disaster and enable Greece to remain in the eurozone. Right now, the Greek
government is being asked to put a gun to its head and pull the trigger. Sadly,
the bullet will not only kill off Greece’s future in Europe. The collateral
damage will kill the Eurozone as a beacon of hope, democracy and prosperity,
and could lead to far-reaching economic consequences across the world.
In the 1950s, Europe was
founded on the forgiveness of past debts, notably Germany’s, which generated a
massive contribution to post-war economic growth and peace. Today we need to
restructure and reduce Greek debt, give the economy breathing room to recover,
and allow Greece to pay off a reduced burden of debt over a long period of
time. Now is the time for a humane rethink of the punitive and failed program
of austerity of recent years and to agree to a major reduction of Greece’s
debts in conjunction with much needed reforms in Greece.
To Chancellor Merkel our
message is clear; we urge you to take this vital action of leadership for
Greece and Germany, and also for the world. History will remember you for your
actions this week. We expect and count on you to provide the bold and generous
steps towards Greece that will serve Europe for generations to come.
Sincerely,
Heiner Flassbeck, former State
Secretary in the German Federal Ministry of Finance
Thomas Piketty, Professor of
Economics at the Paris School of Economics
Jeffrey D. Sachs, Professor of
Sustainable Development, Professor of Health Policy and Management, and
Director of the Earth Institute at Columbia University
Dani Rodrik, Ford Foundation
Professor of International Political Economy, Harvard Kennedy School
Simon Wren-Lewis, Professor of
Economic Policy, Blavatnik School of Government, University of Oxford
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