The Greek government of Prime Minister Alexis Tsipras of Syriza has scheduled a national referendum asking Greek voters to accept or reject a package of austerity measures, including tax increases and cuts in governmental expenditures, as a condition for continued financial assistance from the European Commission, European Central Bank (ECB), and International Monetary Fund (IMF). Apparently, Tsipras is attempting to utilize the referendum as a bargaining chip in negotiations with European creditors in order to demonstrate the unanimity of the Greek electorate behind a more moderate, self-constructed set of institutional reforms and expansion of fiscal revenue sources (e.g. increases in corporate income tax rates and value-added taxes) less onerous to the broader Greek economy. It is difficult to discern whether Tsipras is proceeding in a disingenuous manner - clearly, Syriza's electorate voted Tsipras into office with a mandate to take a hard line against the Troika and prevent the imposition of further austerity measures on the Greek economy. To the extent that it is always preferable for political leaders to seek democratic approval for major national fiscal policy initiatives of this nature, I approve of the idea of holding a referendum to solicit the approval of the Greek electorate for a new austerity package. On the other hand, I am sure that Tsipras is counting on a "no" vote next sunday, because approval would constitute an implicit no confidence vote by the Greek electorate against Syriza and Tsipras.
With this in mind, I think it is time for the Greek electorate to conclude, resoundingly, that Greek membership in a single European currency zone was a bad idea and that long term Greek economic development stands to benefit from departure and reestablishment of its own national currency or (preferably) consolidation with other regional economies into a currency zone with more thoroughly harmonized interregional macroeconomic fundamentals. Such a move would recognize that the dream of the Euro is, itself, the major stumbling block to economic growth and development in the European periphery and that the only European state that ever stood, unambiguously, to gain from a single currency was Germany*. Moreover, while the notion that European political unity is cemented by the presence of the Euro enjoys some degree of validity, such a view neglects the role of continent-wide free trade and conscious national-level political commitment to the project of European unity, the sort of commitment that has been threatened thanks to the adverse effects of monetary consolidation. It is time for the Greeks to stand up for their own economic sovereignty and for all Europeans to realize common ground on the idea that they have more to lose from the economic contortions demanded by continued monetary union.
*Addendum: In the interest of being a little more fair to the Germans, the Euro is only an "unambiguous" benefit to the German economy from the standpoint of export industry, and exports maintain a privileged source of economic growth for Germany. The transition from the old German Mark had to generate a relative devaluation, hurting businesses and consumers reliant on import commodities. Likewise, since the onset of the sovereign debt crisis, Germany, as the principal beneficiary of the transition to a single European currency and the strongest national economy in the Eurozone, bore a disproportionate share of the burden in providing financial support to Greece and other ailing peripheral national economies. Being number one has its costs. That said, Germany will suffer the most from a breakup of the Eurozone when the smoke finally clears from the departure of the peripheral economies. Assuming that a Euro without Greece will experience some degree of monetary appreciation relative to the U.S. dollar and other currencies, it's only a matter of time before Spain, Portugal, and perhaps even Italy start feeling the pain of having a currency poorly suited to their position within Europe and vis-à-vis non-European trading partners. In an interdependent world, increasingly embracing the logic of free trade, maintenance of a structurally lop-sided currency zone, to the detriment of weaker member economies, as a suture for political unity across Europe, is non-sensical.
No comments:
Post a Comment