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FACTDROP: Greece’s Debt Crisis in Context


Greece’s Debt Crisis in Context

Πηγή: Political Economy Research Institute
By C.J. Polychroniou
September 2011

"...A similarly strong argument made against a single European currency was that sustainable convergence in the European Union could be achieved only at the expense of even higher rates of unemployment. According to this argument, Eurozone economic and fiscal policy must lead to real unit labor cost convergence, otherwise unemployment would reach unsustainable levels. Yet, real convergence (growth, wealth creation, real wage costs, unemployment, productivity) in a neoliberal economic environment, the critics implied, is a chimera. Indeed, the critics have proven to be right, at least on this point: the euro has led to greater economic and social inequality among the various national economies, has exacerbated the problem of unemployment in the peripheral economies, and has produced huge transfers from the periphery to the core. But to have expected the political and financial elite in Greece to engage in such reflections and ponder whether it was wise for the country to enter the euro when it did would be equivalent to expecting a shark to twist and turn away at the smell of blood. The easy access to international credit with low interest would not only help to sustain the growth model and strategy of the last thirty years, but would also greatly expand opportunities for bribery, kickbacks, and payoffs for the political class. As for the academic neoliberal economists, who were staunch advocates of Greece joining the euro, the best they could do was hedge their bets on the unfounded hope that the single currency would lead to increased productivity and speed structural adjustments within the Greek economy."
Greece’s Debt Crisis in Context

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