Austerity Has Failed: An Open Letter from Thomas Piketty et. al.

Reblogged The Nation

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.

Five leading economists warn the German chancellor, “History will remember you for your actions this week.” 

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.

“Right now, the Greek government is being asked to put a gun to its head and pull the trigger.”—Piketty, et al.

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.


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

Note: Global campaign group Avaaz organized this open letter to Angela Merkel on the back of a petition, signed by over half a million Europeans, demanding an end to the failed austerity program in Greece.

4 thoughts on “Austerity Has Failed: An Open Letter from Thomas Piketty et. al.

  1. yann bastiaans 12/07/2015 — 8:11 pm

    These events are worrying me… as I cannot understand the hidden agenda of the Germans. Sometimes I have the idea “das Viertes Reich” has come, crushing anything and anyone unwilling to march along with the demands they make without consideration for the common people and their suffering… I makes me very sad, indeed…

    Liked by 1 person

    1. INCOMESCO / Jesi 12/07/2015 — 8:53 pm

      Thank you Yann for the visit and comments. I think, the “system” which is prevailing is responsible where Angela are playing the game and the countries like Greece are suffering.

      Liked by 1 person

  2. thefeatheredsleep 16/07/2015 — 9:26 pm

    Brilliance. Thanks for this. Really agree.

    Liked by 1 person

    1. INCOMESCO / Jesi 16/07/2015 — 10:30 pm

      Thank you so much for the comments.

      Liked by 1 person

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