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Joseph Stiglitz, Thomas Piketty and Other World-Renowned Economists Demand End to Greek Austerity

26 top world economists say austerity is not working, won't and can't. The future of the EU is at stake in the negotiations between Greece and its creditor institutions, now close to a climax. To avoid failure, concessions will be needed from both sides. From the EU, forbearance and finance to promote structural reform and economic recovery, and to preserve the integrity of the Eurozone.

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Economist Thomas Piketty was one of more than two dozen signatories of the letter. , Universitat Pompeu Fabra / Flickr // In These Times

In an essay published on Friday morning in the Financial Times, 26 of the world's most renowned economic minds proclaimed their solidarity with Syriza, Greece's ruling anti-austerity party.

The article's authors - a group that includes Joseph Stiglitz, Thomas Piketty, Marcus Miller and former Prime Minister of Italy Massimo D'Alema-summarized their message as a "plea for economic sanity and humanity."  Arguing that the fate of the European Union depends on the ability of Greece and its creditor institutions to compromise, they demanded that the European Union provide "forbearance and finance to promote structural reform and financial recovery," and that Greece demonstrate "credible commitment" to reform and playing "a positive role in the EU."

At the center of the article is austerity's failure to remedy Greece's economic woes. "Austerity drastically reduces revenue from tax reform," they write "and restricts the space for change to make administration accountable and socially efficient." Moreover, they continue, "the constant concessions required by the government mean that Syriza is in danger of losing political support and thus its ability to create a program that will bring Greece out of the crisis."

At stake, they say, is nothing less than the failure of Greek democracy and the rise of "much more radical and dysfunctional challenges, fundamentally hostile to the EU."

Founded in 2004 as a coalition of leftist parties, Syriza came to power in January 2015. Having vowed to repeal the austerity measures imposed upon the Greek government by the European Commission, the International Monetary Fund (IMF) and the European Central Bank in the wake of the global financial crisis, Syriza now faces the difficult task of turning its promises into realities.

Some, including American Senator Bernie Sanders, fear that Syriza's failure to achieve its goals will mean a substantial increase in popular support for Greece's fascist Golden Dawn party. A political victory for Golden Dawn presumably numbers among the "challenges" to democracy and the EU Stiglitz et al. predict in the event of Syriza's failure to end austerity.

If the European Union fails to adequately address the widespread suffering caused by austerity, Syriza may also choose to leave the Eurozone, thereby defaulting on its loans. Such a decision could undermine not just the European Union's integrity, but could call its very legitimacy as a supranational organization into question.

The economists' essay appeared in the Financial Times at a moment when prospects look increasingly grim for both Greece and Syriza. This week, the Organization for Economic Cooperation and Development (OECD) released predictions of rising unemployment in tandem with a ballooning debt-to GDP ratio. These setbacks can only deepen what even the European Union refers to as a Greece's "humanitarian crisis."

Whether or not the European Union will heed the 26 economists' call for an end to austerity remains to be seen.

[Martin de Bourmont is a Summer 2015 editorial intern at In These Times. He graduated from Dickinson College with a bachelor's in political science and previously worked as an editorial intern for La Croix in France.]
 

Reprinted with permission from In These Times. All rights reserved. Portside is proud to feature content from In These Times, a publication dedicated to covering progressive politics, labor and activism. To get more news and provocative analysis from In These Times, sign up  for a free weekly e-newsletter or subscribe to the magazine at a special low rate.

Excerpts from the letter to the Financial Times:

In the Final Hour, A Plea for Economic Sanity and Humanity

June 5, 2015
Financial Times

The future of the EU is at stake in the negotiations between Greece and its creditor institutions, now close to a climax. To avoid failure, concessions will be needed from both sides. From the EU, forbearance and finance to promote structural reform and economic recovery, and to preserve the integrity of the Eurozone. From Greece, credible commitment to show that, while it is against austerity, it is in favour of reform and wants to play a positive role in the EU...

In a letter to the FT in January, several of us said: "We believe it is important to distinguish austerity from reforms; to condemn austerity does not entail being anti-reform." Six months on, we are dismayed that austerity is undermining Syriza's key reforms, on which EU leaders should surely have been collaborating with the Greek government: most notably to overcome tax evasion and corruption. Austerity drastically reduces revenue from tax reform, and restricts the space for change to make public administration accountable and socially efficient. And the constant concessions required by the government mean that Syriza is in danger of losing political support and thus its ability to carry out a reform programme that will bring Greece out of the crisis. It is wrong to ask Greece to commit itself to an old programme that has demonstrably failed, been rejected by Greek voters, and which large numbers of economists (including ourselves) believe was misguided from the start...

How Greece is treated will send a message to all its eurozone partners. Like the Marshall plan, let it be one of hope not despair.

Prof Joseph Stiglitz
Columbia University; Nobel Prize winner of Economics

Prof Thomas Piketty
Paris School of Economics

Massimo D'Alema
Former prime minister of Italy; president of FEPS (Foundation of European Progressive Studies)

Prof Stephany Griffith-Jones
IPD Columbia University

Prof Mary Kaldor
London School of Economics

Hilary Wainwright
Transnational Institute, Amsterdam

Prof Marcus Miller
Warwick University

Prof John Grahl
Middlesex University, London

Michael Burke
Economists Against Austerity

Prof Panicos Demetriadis
University of Leicester

Prof Trevor Evans
Berlin School of Economics and Law

Prof Jamie Galbraith
Dept of Government, University of Texas

Prof Gustav A Horn
Macroeconomic Policy Institute (IMK)

Prof Andras Inotai
Emeritus and former Director, Institute for World Economics, Budapest

Sir Richard Jolly
Honorary Professor, IDS, Sussex University

Prof Inge Kaul
Adjunct professor, Hertie School of Governance, Berlin

Neil MacKinnon
VTB Capital

Prof Jacques Mazier
University of Paris

Dr Robin Murray
London School of Economics

Prof Jose Antonio Ocampo
Columbia University

Prof Dominique Plihon
University of Paris

Avinash Persaud
Peterson Institute for International Economics

Prof Mario Pianta
University of Urbino

Helmut Reisen
Shifting Wealth Consultancy

Dr Ernst Stetter
Secretary General, FEPS (Foundation fro European Progressive Studies)

Prof Simon Wren-Lewis
Merton College Oxford