AntiNote: The following is an extended excerpt of a radio interview, edited for readability.
Last Saturday, 17 January 2015, host Chuck Mertz of Chicago’s This is Hell! Radio spoke with Yanis Varoufakis, a political economist and candidate with the SYRIZA party running in this weekend’s parliamentary elections in Greece.
With the Left blogosphere tying itself in knots either celebrating or denouncing SYRIZA’s broadening political success, we at the Antidote Writers Collective—as is our habit, and since Greece is a context very close to our hearts—are still gathering ourselves and preparing a contribution which does neither, or both. In that spirit, we simply wish to disclaim that our publication of this interview, just as with any of the material we share, should not be interpreted as an unquestioning endorsement of the views expressed within it.
That said, we find Yanis’s statements worthy of considered attention, especially with regard to the (still) rising threat of neo-fascism in Europe. Expect much more on this topic in the near future.
Transcribed and printed with permission. Listen to the whole interview:
“We borrowed the largest sum in human history. As an insolvent nation. On condition that we would shrink our income! That’s not austere.”
Chuck Mertz: An anti-austerity revolution may be taking hold across Europe from Greece to Spain. Here to tell us about that potential revolution: Yanis Varoufakis. He is a member of the SYRIZA party, and is running for a seat in the Greek parliamentary elections on Sunday, January 25th.
Good afternoon, Yanis.
Yanis Varoufakis: Good afternoon to you and to everyone who is listening.
CM: We’re told by the IMF that economies must become more “austere”—cut public services, renegotiate pubic pensions, cut public sector pay and labor rights, open up markets to foreign investment, take limits off of financial services—that’s the only way out of debt and to avoid bankruptcy, which would lead to an economic collapse.
Why, in your opinion, is austerity the only solution that we are ever given for fixing the economies of Europe?
YV: It’s a one hundred percent political issue; it has nothing to do with economics. The IMF position has been tested in the last three years—to the full—in an experimental laboratory called Greece.
Greece has had the largest fiscal consolidation, in peacetime, of any country during the last three hundred years. We’ve cut, cut, and cut. Wages have collapsed by 46%. The state budget has been shrunk by 38%. We have undergone vicious liberalization of the labor market, to the extent that there are effectively no controls on employers anymore. They can do what they please—not formally, but at least in practice. We’ve had total liberalization or privatization of almost every sector—including, of course, banking.
The result has been that Greece lost about 28% of its nominal GDP; youth unemployment has reached 63%; employment has crashed by one third, and the state is in a state of perpetual bankruptcy. Now, those of us who believe in science and the empirical testing of propositions should take this exercise in austerity very seriously, and ask questions about the sensibility of the proposition that you just described.
CM: The main thing guiding the US view of Greece is our dominant media—and our dominant media has a litany of stereotypes about Greece and Greeks that almost becomes racist. The way the “Greek problem” is described here in the United States by our dominant media is that Greek public sector workers were overpaid, that their retirement was far too early, that their pension was far too high, and that Greeks made an art of avoiding taxes. So according to our dominant media narrative here, the reason that the Greek economy went under was simply because the Greek government was overspending and Greek workers were not producing enough.
What’s your reaction to that stereotype, which is repeated over and over here in the US media?
YV: Every huge lie is founded on a plethora of small truths. There are many small truths in the dominant narrative about Greeks. I do not want to defend everything about Greece. There’s a lot about Greece that I can’t stand, personally. It is true that there has been tax evasion (actually, tax immunities, like in the United States as well). It’s true that, though public sector workers were not “overpaid,” they underproduced—and they underproduced because the Greek state was hopelessly inefficient.
I can go on with a litany of such malignancies that typify the Greek social economy. But none of that explains the crisis that we find ourselves in. Greece has been like that for the last 150 years. The reason you and I are talking about Greece is because we have had a systemic crisis in Europe, and Greece—for the reasons that we just discussed—was the canary in the coalmine. It was the weakest link of the chain, but it’s not responsible for the chain reaction.
Even if Greece were not part of the European monetary experiment, the European Union, the systemic crisis of the Eurozone would still be at hand, and would still be unraveling and creating a great deal of havoc for the international economy.
Let me put it very simply: before the crisis, what we had in Greece and in the rest of the European periphery was what I call “Ponzi growth”: growth based on increasing, accelerating unsustainable borrowing. When Lehmann Brothers went under and we had a credit crunch internationally, that money disappeared, those loans dried up, and the bubbles burst in Ireland and Spain, all the way to Greece.
And then we moved into the second phase: from Ponzi growth to Ponzi austerity. Now, I don’t have a problem with the idea of an austere life. The idea that people actually are careful with their money, and they put some money aside, and they pay for their children’s education instead of paying for a Mercedes Benz—that’s all great, as far as I’m concerned.
The problem is we don’t have austerity. We have Ponzi austerity. In other words, austerity which is kept alive by means of ever-increasing unsustainable debt. If you look at Greece over the last four years: we’ve had all this cutting; we’ve had all this “austerity” in the form of reduced wages, pensions, state benefits and all that. Do you know what happened to our public debt? It went up from 120% to 175% of GDP. We borrowed the largest sum in human history. As an insolvent nation. On condition that we would shrink our income!
That’s not austere. That’s not a way of living in an austere Protestant fashion. This is highly exuberant, highly spendthrift, and the opposite of what austerity should be. The only reason this is happening is because, of course, these loans have not been used for the purpose of digging Greece out of the hole, saving Greece. This is a cynical transfer of losses from the books of the banks—primarily northern European banks—onto the shoulders of the taxpayers.
And this they have the audacity to refer to as “austerity.”
CM: When I was reading about you and doing some research on your work, I kept seeing the term tax evasion. And I kept thinking, why do I have a feeling that tax evasion was an ‘art’ not practiced by the poorest people who are now paying for bailing out the banks, but by the richest of the people?
Was tax evasion something that was done simply by the most powerful and the most wealthy? Are we blaming the poorest in Greece for a strategy that was embraced mostly by the richest?
YV: Absolutely. To a certain extent it wasn’t even tax evasion, it was outright immunity from taxation. They had found ways—legally—of never paying any tax. You go to the suburbs of northern Athens, which are splendid and leafy, you see mansions, swimming pools, tennis courts and all that. They pay hardly any tax, because they all belong to offshore companies. It’s as if those mansions are not in Greece. It’s as if they are in no-man’s-land, because they are not paying tax anywhere else, either.
On top of that, you have “transferred pricing” by large corporations—declaring losses in Greece even if they are profitable. To make it simple: they have some postbox company in the Cayman Islands (or in Luxembourg for that matter). And let’s say they have $100 million worth of profits in Greece, and then they buy a piece of paper—it could be toilet paper—from their postbox company in Luxembourg for $101 million. There they have a loss in Greece; they pay no taxes!
Under those circumstances, I can assure you that the weaker members of Greek society feel less guilty if they manage to avoid paying 23% general sales tax. So this is what happens. You introduce tax immunity for the powerful and the mighty, and that corrupts the whole body politic.
The weakest people have to live on $400 or $500 a month in a country that is more expensive than the United States of America (the cost of living is higher in Greece than it is in the United States, believe it or not). You can imagine trying to eke out an existence for four or five hundred dollars or euros a month. And when you go into a corner shop where the shopkeeper is also struggling under a lot of taxation from the state—the state has to get its taxes from somewhere, so it gets them from the little people—you both prefer to transact under the table and pay no taxes.
And you know what? It is the shopkeeper’s duty to themselves and their family to do so. It’s the only way of surviving.
The problem is, it’s a kleptocracy. Sadly, this crisis, instead of being a great opportunity to fix this situation, to get rid of the kleptocracy and to make the big tax cheats pay, the bailout money that we’ve been getting from our European partners and from the International Monetary Fund is being used to build another kleptocracy.
So now we have new magnates owning the banks that have bankrupted us. They borrow on behalf of the state from our partners. On the basis of that money, the bankrupt bankers sponsor bankrupted media, which propel and disseminate toxic propaganda—in a form of discursive terrorism prior to an election—so that the population votes in a way that is consistent with the interests of these kleptocrats, and the whole thing is given another spin.
“Unless somebody says “No” to this Ponzi austerity where we keep borrowing while cutting, we are going to end up in a postmodern 1930s. And we know very well who benefits from that kind of depression.”
CM: You mentioned Lehman brothers. A lot of people say that it isn’t all the stereotypes I was mentioning. It isn’t because tax evasion was an art form. It isn’t because the pension system was too big. It wasn’t because public sector workers were retiring at an early age or being overpaid. A lot of people, as you were saying, blame the banking sector, blame Lehmann Brothers for essentially stealing money from Greece, and that’s what led to the collapse.
Is there any way that Greece could get that money back? Because here in the US, among the Left, among progressives, a lot of people point towards Iceland’s saying “No” to the bailouts, and how that was a major success.
If SYRIZA gets into power next Sunday in the parliamentary elections, can you simply say “No” to the banks and the bailouts and the debt that has already been accrued by Greece?
YV: That’s exactly what we plan to do.
A very simple, short word, beginning with an ‘N’ and ending with an ‘O’ is going to be our nuclear weapon. And it’s a nuclear weapon that we are going to be ready to use against this vicious cycle that leaves corpses in its wake, and a great deal of human misery—and which in the end only solidifies and reinforces the misanthropes, the bigots, the racists, the Le Pens in France and the Golden Dawns in Greece.
But let me pick up on what you said about Lehmann Brothers. Lehmann Brothers had very little connection to Greece. The problem here in Europe was the German and the French banks—which were connected to Lehmann Brothers, of course, but let’s not take that chain too far. Here in Europe we had the banks from the surplus countries—which within a monetary union means selling more than you are buying from other countries. If you sell more than you buy—a good example is Germany—a lot of capital flows into the banks of Frankfurt and accumulates in those banks.
There’s nothing that bankers hate more than idle money in their banks. They need to lend it out. The German public and economy was not interested in borrowing these huge reservoirs of cash, so the banks dumped it somewhere else. And they dumped it in the periphery. Why? Because the periphery was starved of capital, for anything from mortgages to consumer spending to investment in small businesses and so on. So Deutsche Bank and others took all these reservoirs of capital and dumped them on the Irish, on the Spanish, on the Greeks, and so on.
This flow of capital from Germany (and from France to some extent) to our countries created huge rallies in asset prices. That created the semblance of growth, and made people feel that they were getting richer, so they got credit cards and started spending more money. This was the Ponzi growth period. So the reason we are in the state we are now is of course because it is the fate of Ponzi growth to die—and to die suddenly, as happened in 2008.
And then you have debt deflation. The banks go bankrupt, the developers go bankrupt, the state goes bankrupt because economic activity drops. The tax take goes down, the state pays more money in unemployment benefits and so on, and so what they do is this: in an environment where the private sector is already deleveraging, the public sector imposes austerity. It cuts spending. So both private spending and public spending come down.
And what is the sum of private and public spending? It’s the nominal national income. When national income shrinks and debt doesn’t shrink, we end up in a situation where we are more and more indebted, with less and less money. That deters investment further, and gives the whole process a very vicious dynamic.
And I think that unless somebody says “No” to this Ponzi austerity where we keep borrowing while cutting, we are going to end up in a postmodern 1930s. And we know very well who benefits from that kind of Great Depression. It’s the Nazis, it’s the bigots, and it’s the racists.
CM: Are you saying that there is a structural problem within the EU that makes it unsustainable? Is this something that you would have the European Union address if you got into office?
YV: You are precisely right. The way we created the Eurozone back in the late 1990s did two things. Firstly it removed all shock absorbers, and secondly it ensured that when the shock comes it will be gigantic. A five-year-old understands that this is a problem. You are asking for trouble, and guaranteeing that when trouble comes there’s nothing you can do to absorb the shock.
To try to do this through more cutting and more borrowing is simply extending the worst banking practices ever, writ large on the canvas of the whole of the European Union.
So either we’re going to have to reform the Eurozone and the European Union, or I’m very much afraid—and I’m saying this as a committed European—Europe is going to fragment. It’s already fragmenting, but it will fragment to such an extent that you folks on the other side of the Atlantic are going to have a very serious job on your hands trying to contain the aftereffects.
CM: Do you think Europe is better off or worse off with the euro?
YV: Far worse off. But this is a very important point. I actually campaigned against the EU in the 1990s, and I was called an eccentric leftwing idiot. But the point I wanted to make—and this is a very important point—is that we shouldn’t hate the Eurozone.
This is something I’m trying to impress upon any audience interested in hearing me: it’s one thing to say we should not have entered into the Euro, we should not have created it. It’s quite another to say that we should get out of it.
If we try to get out of it, we are not going to go to the place where we would have been had we not entered it. That path simply doesn’t exist, and we would fall off a cliff. So those of us who despise the Euro—I think we have a moral duty to try to fix it. Because when it fragments (and it may very well fragment), it is the weakest members of our society that would suffer the most.
Fault lines will appear on the European continent somewhere along the Rhine and the Alps, with the whole of northern Europe, roughly speaking, falling under the spell of a new Deutschmark—there’s going to be a lot of recession and a lot of unemployment but a stable currency—and the rest of Europe will have stagflation (if you remember the 1970s: high inflation, high unemployment). Nobody wants that. The vast majority of Europeans (and indeed, may I say, the whole of the world) are going to suffer from that. So we need to urgently fix it.
But the only way of fixing the Euro is for a government like the one we will form—we hope—to say “No” to this inanity that presents itself as an intelligent technocratic economic policy.
“We’ve become more sensible, we’ve become more coherent in our thinking. We’ve managed to temper our tone—but not sell our soul.”
CM: You have a counterpart in Spain, a political party there called Podemos that has an anti-austerity platform very similar to yours. And then there were anti-austerity protests in Kiev, Ukraine, in December (which were not covered here in the US whatsoever).
Is there a growing anti-austerity movement in Europe? Or is this just a temporary anomaly, and the same old people are going to come back into power ultimately?
YV: I’m no prophet. But I can tell you this. You mention Podemos in Spain—there are similar movements even within established parties in other countries. We have a chance now, with the Greek election on Sunday, to create a glimmer of hope in Europe that will then become infectious throughout Europe.
The policies that are being pursued now are unsustainable anyway. It’s not a question of willpower or political will—they are going to fail. If we, if the Left fails to create a humanist narrative that replaces the existing neoliberal idiocy with an alternative that actually works for the people of Europe and turns the European Union from what it has become—which is an iron gate—into a real, shared prosperity, the only people that are going to rise up are the neofascists.
They adopt anti-austerity narratives as well. If you listen to Marie Le Pen, who is the leader of the racist National Front in France, and you separate out what she says on the economy, and on Europe, she sounds splendid. She has all the right arguments. The devil has a lot of tunes, and some just happen to be tunes that I sing along to as well, when it comes to criticism of austerity. And this is terrible. This is awful. This is a repetition of the 1920s and ‘30s.
Let me say this (it may shock some of our listeners): if you take a Josef Goebbels speech from 1926 and you isolate some paragraphs that are critical of German capitalism at the time, they were absolutely spot-on. You see, we tend to think of the Nazis just as crazy monsters—which of course they were. But contemporaries of ours fail to understand why it is that they rose to power. In the midst of their mad racist bigoted misanthropic narrative, there were elements of “speaking truth to power” regarding the failings of capitalism.
Now we have the same thing here in Europe. Even here in my country, we have the most vile of Nazi parties called Golden Dawn. I’ve read some sentences of theirs, where they are critical of austerity, that are sentences I could use. And this frightens me. Because I know that if we, the Left, the progressive, humanist Left—if we fail, these are the people that will rise up, and it won’t just be me and you that end up in the concentration camp. It will be the whole society—of course primarily the migrants, who have already been on the receiving end of verbal abuse, of discrimination, and of violent attacks.
This is a dirty war for the integrity and soul of Europe.
CM: You have an amazing post at your blog, and that is your “modest proposal” for the way in which the Eurozone and the Greek economy could be reformed. You believe that at stake in Sunday’s January 25th elections is “Europe’s integrity, democracy’s delicate fabric, the prospect of averting the emergence of a postmodern 1930s, and a chance to reclaim our continent as a locus of shared prosperity.”
Are Greece’s and Europe’s choices either slipping toward fascism or sliding towards socialism? Are those the two choices?
YV: We’re very far off from sliding towards socialism. Let’s face it. I’m a committed leftwinger; I’ve been a leftwinger as long as I can remember. That creates a major responsibility for me to accept the failings of the Left in the past. We have produced, in the name of humanity, a great deal of inhumanity. And we have never recovered from that failure of the past.
We are nowhere near convincing even ourselves that we have a viable socialist economic model. We must create one. This is why I’m a leftwinger: I believe that in the end we do have a dilemma between socialism and barbarism. But we’re not saying it.
You mention the modest proposal. The reason it’s “modest” is because it’s not socialist, really. What it tries to do is to stabilize capitalism, because if capitalism gets further destabilized it’s not the Left that benefits. It’s not socialism that springs out of it. In the 1920s and ‘30s, we know very well what sprang out of the destabilization of capitalism. And back then the Left was much stronger, much more powerful, and was occupying a higher moral ground than it has since then.
So as far as I’m concerned, we need to take it one step at a time. First we need to create a broad coalition with rational people who might not share our leftwing positions but who do share the fear that democracy—yes, bourgeois democracy, liberal democracy—is being jettisoned. We need to end this vicious cycle from austerity to authoritarianism and authoritarianism to great depression. Once we stabilize that, we will hopefully get a chance to recreate a vision of socialism that will eventually prevail.
CM: One last question for you, Yanis, and it’s the Question from Hell. It’s the question we hate to ask, you might hate to answer, or our audience will hate your response.
You are running for a parliamentary seat; the SYRIZA party is running for a much larger representation within the Greek parliament on Sunday, January 25th. Why did SYRIZA lose in the past, and what explains the change in popularity of SYRIZA within the polls?
YV: If you look at the previous electoral results, SYRIZA was a small, tiny leftwing/ecological “rainbow coalition” on the fringes of big politics. We were happy to get four percent of the vote and a couple members of parliament here and there. Suddenly there was a historical moment—that we didn’t design, we had not anticipated. It just hit us. Like 1929 changed the world, 2008 changed the world. And 2010 in Greece destroyed the Greek economy, and in the process caused the implosion of the political scene.
The socialist party, PASOK—which was a social democratic party that had, by the late 1990s, sold its soul to the devil, if you know what I mean—in 2009 they enjoyed 46% of the vote. Do you know where they are now? At less than 3%. There was a jolt to the political scene, and we were thrust onto center stage.
We didn’t win in 2012. We came very close. But even coming close in 2012—it was a miracle. Imagine a small “rainbow coalition” of radical Left groups in the United States going from nothing to 30% of the vote over a few months. You can imagine the effect of that on everybody’s spirit and soul. The last two years were two years of consolidation and of the evolution of the party from a protest coalition into a party of government.
This is not a simple evolutionary path; it’s a minefield. But I think we’ve done a pretty good job. When you grow that quickly from 3% to 35% and you become a potentially governing party, there is always a danger that you become co-opted by the establishment and that instead of changing the world, the world changes you. We haven’t done that.
We’ve become more sensible, we’ve become more coherent in our thinking. We’ve managed to temper our tone—but not sell our soul.
CM: Yanis, I wanted to share this one thing with you. A friend of mine has moved to Greece just recently. The reason was because they fear a global economic collapse, and they want to be outside of the United States when that happens.
So if there’s a global economic collapse, how much safer is it in Greece than in the US?
YV: We’re in an interconnected world. I’m personally an internationalist. No place is an island. We are all in this together, and we should all struggle together for what is good and decent.
CM: Yanis, I really appreciate you being on the show with us this morning. Really a pleasure.
YV: I can assure you the pleasure was mine.
